Financial fraud by a business partner – How to respond?

A client of our law firm, who is a partner in a capital company, reported a problem concerning his partner, who, without his knowledge or consent, had withdrawn several hundred thousand zlotys for his own benefit.

The client found out about this by chance while checking the company’s bank accounts. He therefore asked his partner what the basis for these payments was. The partner informed him that several years ago he had granted loans to the company in order to recapitalise it and, due to the company’s good financial situation, he had decided to repay the borrowed funds.
What is more, the client was not aware that the partner had made any loans or that these loans had high interest rates. When the client asked the partner to show him the agreements confirming the loan amounts and interest rates, the partner did not have the documents in question. However, he presented the client with account statements confirming transfers to the company. The amount of the transfers was, however, significantly lower than the amount ‘repaid’ by the partner.

After establishing the course of events with the client, we suggested that the client file a report with the public prosecutor’s office regarding the possibility of committing the crime of misappropriation. Pursuant to Article 284 § 1 of the Criminal Code: Whoever misappropriates another person’s movable property or property right shall be subject to imprisonment for up to 3 years.
Even if we assume that the client’s partner did indeed grant loans to the company, this does not mean that he can pay himself any amount for their alleged repayment. Such an action constitutes the offence of misappropriation. The opinion of the law firm was shared by the public prosecutor’s office, which brought criminal charges against the client’s partner and filed an indictment with the court.

Of course, the client’s goal is to recover the amount misappropriated by the partner. Criminal proceedings offer such possibilities. Pursuant to Article 46 § 1 of the Criminal Code: In the event of a conviction, the court may, at the request of the injured party or another entitled person, impose an obligation to repair the damage caused by the offence, applying the provisions of civil law.

It is worth noting that the recovery of debts in criminal proceedings is practically free of charge for the injured party, who does not bear, among other things, the costs of court fees as in civil proceedings.