What to Do When Your Business Partner Scams You

Preserve all financial records immediately and do not confront your partner before getting legal advice. Contact a commercial litigation lawyer in Sydney as soon as possible. Your lawyer can advise on whether to apply for an urgent asset freezing order, how to commence civil proceedings to recover your money, and whether to report the conduct to police, ASIC, or the ACCC. Time is critical.

Common signs include unexplained shortfalls in accounts, payments to unknown vendors, your partner refusing financial transparency or audits, sudden unexplained personal wealth, business assets sold without your approval, and funds redirected to accounts you did not authorise. A partner who consistently lies about financial matters or controls all access to accounts is also a significant warning sign.

Yes. You can bring civil proceedings against a dishonest business partner for breach of fiduciary duty, partner fraud, misappropriation of funds, and misleading and deceptive conduct. Civil claims can be pursued regardless of whether police proceed with criminal charges, and they allow you to recover your losses and, in some cases, all profits the partner made from the fraud.

Yes, in serious cases. Business partner theft and partner fraud can result in prosecution for offences including dishonestly obtaining a financial advantage, larceny, false accounting, and money laundering. Criminal charges are initiated by police or prosecutors. Your role is to make a formal report and provide evidence. Civil proceedings can run simultaneously and should not wait for a criminal outcome.

Report to the right authority for your case: state police for general theft or fraud, the Australian Federal Police for large-scale commercial fraud, ASIC for director misconduct under the Corporations Act, the ACCC for misleading conduct under the Australian Consumer Law, and AUSTRAC if money laundering is involved. Always get a formal report reference number and seek legal advice on which reporting pathway fits your situation.

A Mareva injunction is an urgent court order that freezes a person’s assets to prevent them from being moved or dissipated before a court judgment. It can cover bank accounts, property, and other assets, and can be obtained within 24 to 48 hours in urgent cases. If there is a real risk your partner will move stolen funds, your lawyer can apply for this order as part of commencing proceedings.

Misappropriation of funds is when a business partner applies company money to their own personal use without authority. It is both a civil wrong, giving you the right to recover the funds through the courts, and a potential criminal offence under Australian law. What is commonly described as business partner embezzlement is prosecuted in Australia as fraud or dishonestly obtaining a financial advantage.

Yes, in most cases. If your business is a company, the shareholders agreement and company constitution typically provide mechanisms to remove a director or buy out a shareholder for cause, including fraud. If not, you can apply to the court for orders on just and equitable grounds. In a partnership, you may need an expulsion clause in the agreement, or you may need to apply for dissolution. A shareholder dispute lawyer can advise on the right approach for your structure.