Business Lawyer Serving Dallas, McKinney, and Businesses Across North Texas
Most business relationships are built on trust—trust that your partner, employee, or advisor is acting in good faith and looking out for the company’s best interests. But when that trust is broken and someone with a fiduciary duty abuses their power for personal gain, it can lead to serious financial harm and long-term consequences. If you suspect misconduct by someone in a trusted role, here’s what you need to know.
What Is a Fiduciary Duty?
A fiduciary duty is a legal obligation to act in another party’s best interest. It’s more than just a handshake agreement—it’s a responsibility that carries serious legal weight.
In business, fiduciary duties often arise in relationships such as:
- Business partners or shareholders
- Corporate officers and directors
- Trustees or those managing company assets
- Employees with access to finances or trade secrets
- Advisors like accountants or legal counsel
Fiduciaries must act honestly, avoid conflicts of interest, and prioritize the interests of the business or individual they serve. When they don’t, they may be liable for breach of fiduciary duty.
How Fiduciary Duty and Fraud Overlap
Fraud and breach of fiduciary duty are closely linked—but not identical. Fraud involves intentional deception for personal gain. Breach of fiduciary duty occurs when someone in a trusted role fails to act in the best interests of the party they serve.
When the two intersect, things get serious. You may be dealing with:
- A business partner secretly diverting funds
- An executive using insider knowledge for personal gain
- A trustee mishandling company or investor assets
- A shareholder concealing key information for self-benefit
In these cases, the fiduciary didn’t just make a mistake—they used their trusted position to commit fraud.
Red Flags That May Indicate a Breach
Not every poor decision amounts to a breach, and not every breach involves fraud. But when we investigate these claims in Dallas-area businesses, here are some signs we often see:
- Unexplained financial losses or hidden transactions
- Partners or officers making key decisions without disclosure
- Conflicts of interest that weren’t reported
- Discrepancies in shareholder distributions
- Self-dealing or using company assets for personal reasons
If something feels off, especially in relationships involving money, management, or decision-making, it’s worth taking a closer look.
What to Do if You Suspect a Breach or Fraud
If you believe someone with a fiduciary duty has committed fraud, take a step back and act strategically. Here’s a general approach we recommend:
- Document your concerns. Keep detailed records, emails, and financial reports that support your suspicion.
- Avoid accusations—at first. Confronting the person too early could lead to the destruction of evidence or retaliation.
- Consult with an attorney. A business fraud attorney can assess the situation, preserve evidence, and advise on next steps.
- Protect the company. This may include freezing access to funds, reviewing contracts, or notifying other stakeholders.
- Prepare for litigation if necessary. Breach of fiduciary duty and fraud can both be grounds for civil lawsuits seeking damages, restitution, or even injunctions.
Remedies for Breach of Fiduciary Duty and Fraud
If misconduct is confirmed, Texas law allows several remedies:
- Monetary damages for lost profits or misappropriated funds
- Injunctions to stop ongoing harm
- Disgorgement of any profits the fiduciary made from the breach
- Rescission of contracts entered into under pretenses
- Removal of the fiduciary from their role
These remedies are designed to protect the integrity of your business and punish abuse of trust.
Turn a Breach of Trust Into a Path Forward
Fraud involving fiduciary duty isn’t just a legal issue—it’s a betrayal. And while emotions can run high, the right legal approach focuses on facts, strategy, and resolution.
If you believe someone in a trusted role has violated their obligations to your business, Ryan G. Cole Law is ready to help. We provide discreet and effective legal support to business owners across North Texas. Contact us today to schedule a consultation.