Embezzlement or a Reward for Sexual Favors? – A Dallas Case Demonstrates There Are Two Sides to Each Story

kkClients often want to know whether they have a winning case or a bullet-proof defense. Much of that, of course, depends on the law. But sometimes, an entire case may rise or fall on a credibility of a particular witness. A recent decision by the Dallas Court of Appeals is a great example of where the entire case came down to the credibility of two witnesses who gave different explanations for the same set of events.

In this case, a company sued the president’s personal assistant and bookkeeper for theft, breach of fiduciary duties, fraud, conversion, breach of contract, and unjust enrichment, alleging she forged checks and issued fraudulent vendor invoices to pay off her personal credit card bills with company funds to the tune of $377,000.

Her Story: The bookkeeper admitted that she issued checks to fictitious vendors, but testified that she did this at the direction of the company president, who promised her extra compensation if she became his mistress. The fictitious vendor invoices were necessary to hide the payments from his wife. She testified that he told her to “charge everything to her credit card,” and use particular vendor accounts and cancelled company checks to pay off the credit card bills, he signed the checks himself or authorized her to do it, and he received a copy of all cancelled checks every month. 

His Story: The president of the company denied having an affair with the bookkeeper or authorizing her to issue checks with company funds to pay her own credit card.  He admitted receiving monthly bank account statements that included images of cancelled company checks but said he never looked at them.

There were no other witnesses who testified about the affair or the payment scheme. Thus, it was the president’s word against the word of his former personal assistant and bookkeeper.

The Court’s Ruling: After hearing all the testimony, the trial judge concluded that: (1) the president of the company and the bookkeeper had an affair, (2) at some point he began giving her additional compensation i.e. payment of her credit bills; and (3) in an effort to conceal this additional compensation from his wife, he transferred funds to the bookkeeper from the company’s account through a scheme using checks paid to fictitious contract employees. Thus, all of company’s claims against the bookkeeper failed. The Court of Appeals agreed with the trial judge, stating that “the outcome of this case turned on which one of the two main witnesses was more credible, and, apparently, the trial judge found that the bookkeeper was a more credible witness.

Takeaway:  In a lawsuit – whether it involves a contract claim, a clash between partners, an employment matter, or any other dispute – a plaintiff must be ready to do both: tell his or her side of the story and anticipate what the opponent is going to say. In those cases where the only evidence is witness testimony (as opposed to documents), the credibility of such witnesses may be the deciding factor between a victory and a loss.  

Leiza represents COMPANIES and INDIVIDUALS in business and employment litigation. If you need assistance with a business or employment dispute contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

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