You seem to be using the words "partner" and "corporation" interchangeably.  No matter what it is, you should get rid of the person who's committed fraud.  The other two partners should remove him and file whatever you need to with the state to clarify who the principals are.  If it's a corporation the same concept applies.  It is wrong and financially irresponsible to maintain a relationship with someone who has committed fraud.  You would certainly be within your rights to file criminal, as well as civil, charges against him.  You may contact me at 310-271-0606 for more -- or email back.  Best, Brenda Feigen