Legal Question in Business Law in California

I'd start with having the company's accountant do an audit looking for embezzlement. If they find it, call the police.

Send the suspected culprit on a two-week vacation or to an overseas convention, then have the books audited in his absence. CPAs are trained to look for money leaks, including embezzlement. Give the auditor as much of a head start as possible before the suspect knows there is an audit under way, so he or she won't have an opportunity to do additional cover-up.

I would start by giving the owners a confidential memo stating in writing what you suspect and why, and suggesting that an audit be performed. Give as much detail as possible. Unless you are an officer of the company with authority to act in this area, and even if you are, it is ultimately up to the owners to decide what to do. You should also look into whether they have any insurance that would cover this type of loss.

IMPORTANT NOTICE: The above response is not intended to, and does not, create an attorney-client, fiduciary or other confidential relationship with the responder. Neither does it constitute the providing of legal advice or services or the giving of a legal opinion by the responder. Such a relationship can only be created, and legal advice and/or legal services provided, pursuant to a written agreement with the responder. Accordingly, no obligations of any kind are assumed with respect to any matter or question presented. It should also be noted that legal issues are often time sensitive and legal rights may be lost or compromised if you do not act in a timely fashion.

If the owners don't care enough to file criminal or civil charges, there is nothing you can do without their authority. Prepare a thorough report to all owners with request for audit and suggest filing charges if embezzlement is shown.