Ask HN: Misuse of corporate funds in a small business

You're not overreacting -- this could turn into something more serious. Some people you find aren't really your friends until it's too late. Though I agree you probably don't want to get the police involved, and I'm not sure there would be anything they could do since it's probably a civil matter.

random ideas:

-- get a new card account, then use up available credit on the old card with a cash advance or some other reversable transaction. -- report the card as lost. -- send him a letter/email explaining (nicely) that he has until X date to repay the money or you will go to small claims court. There you wouldn't need a lawyer -- you'd only have to pay a filing fee, and a judgement in your favor could affect his credit rating, and give you a tool to force repayment.

It's over. You no longer have a friend or a co-founder. You may or may not have this business anymore.

What you have now is the situational equivalent of the Kubler-Ross stages of death. Your brain needs to cope with this. Your brain isn't coping yet.

What you do next will affect your future. Not because of this thief. Because your action will demonstrate to yourself that you can be jerked around and you will let people steal from you. OR NOT.

I had an employee embezzle from me. Not exactly the same but similar. I was ashamed and embarrassed. I'm a tax lawyer FFS. I should be smarter than that.

I had her arrested. It was time to stand up for myself. I suspect it is time for you to stand up for yourself.

Your company may be dead as a result of this. You don't have total control over that result. Your next business will do well if you insist that you be treated honorably and not be stolen from. As soon as you're willing to let _this_ company die for reasons beyond your control, you'll take action. Because you already, in your heart, know what to do.

There may or may not be ways to evict him and keep the company going. Don't hold onto this company at all costs. But do stand up for yourself here. If you don't the wheel will come around again and someone else will steal from you. And again until you insist that it stop. Then it will.

Agreed that you're not overreacting.

Seriously, this guy has shown himself to be fundamentally dishonest (both for starting this behavior after the rules of the game have been well established over a couple of years and then by neither stopping his theft or repaying as he promised). You're just not going to make things work with this guy and it's a lot broader than him taking money from the company that can't afford it, he's demonstrated that you can't trust him at all.

As philiphodgen says, either you remove him from the company (and don't delay) or you remove yourselves from it and let it die. You've given him the one chance he deserves, now is not the time for half-measures, including any compromise that includes him continuing to work with you in any way.

My father once worked at a very high level for a company where one of the founding partners started helping himself to anything he took a fancy to. The company was very profitable so it's not quite the same thing; getting rid of this partner was intensely painful and expensive (e.g. his demands for immediate cash when it came time for investment limited the options and caused everyone to take a needlessly big tax hit).

One lesson from the above is that if you do become successful the pain and difficulty is only going to be greater. If you were making 10/100/1000 times as much money how much might he be helping himself to? He feels entitled to the money....

Considering that you do NOT have vesting agreement and have serious troubles in communication with one of key founders -- you should consider your company dead. Try to cut losses: dissolve the corporation, distribute the funds, save your time, and start another company with the remaining founders you trust.