Phase 1 — Classic Fraud Schemes · 8 min read
3 · Undisclosed Debt and Pledged Assets
Loans taken against company assets without partner knowledge or consent.
01Borrowing against the business
Company equipment, inventory, and receivables can be pledged as collateral, and company cash can be swept to service debt the other partners never approved. The liability sits off the books the partners see, or on a separate statement they never receive.
- UCC-1 filings naming the company that do not match any known lender.
- Unexplained monthly payments to a lender no partner recalls engaging.
- Equipment titled in the company name but listed as collateral on a personal loan.
- A line of credit drawn to its limit with no corresponding operating need.
Search the Secretary of State UCC database under the company name and every owner's name. Pledged collateral is public record.
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Buy the guidebookMore in Phase 1 — Classic Fraud Schemes
1 · Owner Withdrawals Disguised as Loans
Cash taken out of the company and recorded as a loan receivable instead of a distribution or salary.
2 · Gift Cards and Concealed Personal Spending
Gift cards bought as business expense and converted into anonymous personal spending power.
4 · Inventory Theft and Cash Skimming
The two oldest schemes — taking product before it is recorded, and taking cash before it is deposited.
5 · Customer Payments Diverted from the Business
Customer remittances redirected to an account the company does not own.