I have a llc business partner who made an initial capital contribution as required by the operating agreement for a

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Customer: I have a llc business partner who made an initial capital contribution as required by the operating agreement for a majority interest in our llc. after several years i began to wonder why there are no profits. as it turns out this member who has been in control of managing the llc has been repaying his initial capital contribution back to himself as a loan. since he is not allowed to treat his contribution as a loan is he embezzling money from the company
Answered by Legal Eagle in 1 min 10 months ago
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Jessica

Jessica

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Legal Eagle, Expert

Hello! Thanks for using JustAnswer. My name is ***** ***** I am an attorney ready to answer your questions with top-quality service. Just a few quick things before we get started:

  • I’m sorry to hear you are having these problems with your legal issue. I know that can be frustrating. However, we can get this resolved quickly;
  • We are transitioning to a new system to better serve you, so there may be a slight delay in my responses. Your patience is greatly appreciated.

Does your operating agreement allow them to treat the capital contribution as a loan?

Customer
no
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Legal Eagle, Expert

Interesting! Have you asked for an accounting or received one?

Customer
he shows a balance sheet where every dollar he put in as his capital contribution was given as a loan and repaid as a loan
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Legal Eagle, Expert

Understood! So you're just wondering what it is you can do here, correct?

Customer
i want to know if this is embezzlement or misappropriation of funds that he can be charged with
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Legal Eagle, Expert

Sure! How much money are we talking?

Customer
about $260 thousand
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Legal Eagle, Expert

Got it!

So under ILCS 720/16-1(a)(1), it's theft when a person knowingly obtains or exerts unauthorized control over the property of the owner.

Embezzlement of property valued between $500,001 and $999,999 is a Class 1 non-probational felony, leading to four to 15 years imprisonment and/or a fine of up to $25,000.

The local prosecutor is the only one who can bring charges of embezzlement against an individual. Partners cannot bring criminal actions on their own.

In this case, you could threaten to contact the police or the prosecutor's office if they don't reimburse the LLC. But remember it's up to the state to decide to charge.

Please let me know if this has answered your question fully. I hope this information is helpful to you. If you need additional assistance or have follow-up questions, please reply to my message below, and I will respond as soon as I can.

Customer
ok thank you
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Legal Eagle, Expert

Excellent! Did you have any other questions for me today?

Customer
no have a great day
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Legal Eagle, Expert

You bet! Thank you for trusting JustAnswer with your question. If you have additional concerns or need me to clarify anything, please let me know. I am happy to help. My name is ***** ***** I go by Legal Eagle on this site. Once you log back in, you can go to the “My Questions” page, and you’ll see our conversation. There, you will have a chance to “Request Legal Eagle”. Type in your question, and it comes to me. You can also click the link below. https://www.justanswer.com/law/expert-dmwesq/.

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