When Limited Partners Suspect General Partners of Fraud

Fraud suspicions are hard enough to investigate if you’re a business owner and call the shots. But what if you’re a limited partner (LP) in a business where a general partner (GP) is possibly engaged in mismanagement, self-dealing or fraud? With little control over the company, limited partners that suspect general partners of fraud face several challenges. The problem In a limited partnership, one or more general partners (GPs) manage the business while limited partners (LPs) contribute capital and share in the profits. LPs don’t run or manage the business. In fact, in most states, if they become involved in management decisions they can lose their LP status. Other states allow minor exceptions to this rule by, for example, allowing an LP to vote on issues that...