My father, PM, had been a licensed contractor and sole proprietor in the small town I grew up in since the late 90s. PM taught me the trade he practiced since the 80’s. After increasingly serious medical issues in recent years for PM and my mother, and arduous family negotiations, my wife helped set up a new business where my brother-in-law D (my sister’s husband with labor experience) and I partnered and purchased PM’s equipment, trucks, phone number, etc. so they could retire. We continue to pay parents monthly way over purchasing price for their retirement funding from the company, which is fine.
The corporation is three years old, I earned my contractor’s license last year and D is a manager and listed as the RO on my license as of this date. My wife spent the first nine months helping establish the business and handed everything over to D to continue. I am not business oriented and thus consumed myself with the necessary labor of the business and I trusted D and the non-employee bookkeeper M to operate the business along the lines of our partnership agreement, including making decisions jointly, having access to books and taking an equal draw. Business has been very good.
In all this time I have received only some of the reports I am entitled to quarterly once, and again when I started the investigation process last month, but was denied payroll numbers by M. I had had no access to the online bank account, books, tax logins, insurance, payroll, A/R or A/P, etc. and was given various excuses as to why. I am not included in communications and meetings with M. Also in this time my first son was born (Feb 2024) and although I went to work as soon as we returned from the hospital and worked as many hours as Dave scheduled me for, my family were barely making ends meet, especially in the winter, and our focus was on baby with no help. We assumed Dave was in the same boat, making sacrifices to grow the business. At my wife’s urging I finally got my bank login credentials last month and she has gone through each statement for the last 3 years.
I rarely get paystubs, and having no access to payroll reports through M we calculated the net payments from the bank statements where for over 3 years D has paid himself a salary totaling 81k over what I was paid without mention. He has not kept paper records, has commandeered our 30 year old business phone number to a private cell phone plan paid by the company, and has made various ATM withdrawals we cannot account for, for a total of 91k. In addition, he has presented himself as sole owner and makes business decisions as well as contractor decisions without consulting me. He is frequently hostile, threatening and undermining – such as stating he knew I would fail my licensure test before I had taken it. In addition to being bad for the business, it has been very stressful for my wife and I and he has developed a bad reputation as untrustworthy – a ‘hustler’.
We met a contract lawyer who drew up an official agenda for a long overdue shareholders meeting next week. We are of course interested in understanding the situation and finally getting some communication from D, however the termination of the bookkeeper M (a necessity since learning there was such a conflict of interest and she has been nothing but difficult) and the transference of records had been met with pushback which puts the business in immediate jeopardy for meeting obligations such as payroll, quarterly tax, etc. Whatever the result of the shareholder meeting, the books must be transferred and D must be removed from the bank account and the company.
Contract attorney mentioned some solutions for consolidating this company to only myself, restructuring the corporation or something. I don’t pretend to understand my options or corporate law, but I would be very willing to just call the 91k a ‘buy-out’ and give him a few weeks’ pay to amicably transfer phone number, financials, current client projects, etc and be bound to some degree of goodwill. I don’t know if his actions are criminal, civil or if I have any recourse at all. Even if this meeting goes well and he apologies, how do I proceed? I want to keep my parents and family housed and fed in spite of this upset.
Location: California