Is It a Crime to Go Out of Business? (The “Bust Out” Myth)

By: John Guidry

Every theft case needs intent. Unfortunately, most loss prevention officers just assume someone intends to steal an item simply because they forgot to pay for it.

But intent isn’t just about shoplifting versus forgetfulness.

• The Question: If you can’t pay your bills, are you stealing from the people you owe?
• The Corporate Version: Can a company borrow money hoping things will turn around, only to go out of business later? Is that fraud, or just capitalism?

What we are reviewing today is a Grand Theft case under the heading “Business Deal Gone Bad.” As you know, everyone who is owed money wants to transform that debt into a criminal act to force payment. But if that were legal, we wouldn’t need bankruptcy courts—we’d just prosecute everyone who missed a credit card payment.

Accused of fraud just because your business failed?

Debt is not a crime. Call John today at (407) 423-1117.

The Case: Szilagyi v. State

One of my favorite “business deal gone bad” cases is Szilagyi v. State, 564 So. 2d 644 (Fla. 4th DCA 1990).

• The Charge: The defendants were convicted of 14 counts of First-Degree Grand Theft (allegedly stealing over $190,000).
• The Business: They owned a jewelry manufacturing business (“Goldex, Inc.”) that fell behind on payments to 10 creditors.
• The Allegation: The creditors sent products that were never paid for. Instead of suing in civil court, they went to the police.

The “Bust Out” Theory The police investigator claimed this was a “Bust Out” operation. A “Bust Out” is where a fake company builds up credit just to max it out and skip town with the goods. The State argued the defendants never intended to pay.

The Defense: Failing is Not Stealing

The defendants were convicted by a jury and sentenced to 3 years in prison. However, the 4th District Court of Appeals reversed the conviction and dismissed the case entirely.

Why? The “Timing of Intent” Rule The Court explained that the State must prove felonious intent existed at the time of the taking.

• When the defendants ordered the jewelry, did they intend to steal it? Or did they intend to sell it and pay the bill, but failed?

The Evidence:

• The business had been running for years.
• They initially invested $30,000 of their own money (a lot in 1990).
• The Logic: Why dump $30k into a scam and run it for years just to rip off creditors later?

The Court reasoned:

“The conduct for which appellants were prosecuted… is in most respects identical to the conduct of a legitimate business enterprise that tries and fails.”

Because the State couldn’t prove they planned to fail from day one, it wasn’t a crime. It was just a bankruptcy.

John’s 2026 Update: The New Theft Thresholds

Note: While Szilagyi is still good law for intent, the numbers have changed.

1. The New Felony Threshold ($750) In the original article, we discussed old theft amounts.

• Current Law: As of 2026, the threshold for Grand Theft (Felony) is $750.
• If you owe a supplier $800 and they go to the police, they can technically file a felony complaint.
• Grand Theft 1st Degree: (The Szilagyi charge) now requires theft over $100,000.

2. The “Civil Theft” Letter Before the police ever get involved, you might receive a letter from a creditor’s lawyer threatening “Civil Theft” (Florida Statute 772.11).

• The Threat: “Pay us $10,000 (Triple Damages) or we will sue you for fraud.”
• My Advice: This is a tactic to scare you. Under Szilagyi, a business debt is rarely “Civil Theft” because there is no criminal intent. Do not pay it without talking to a lawyer, as payment could be seen as an admission of guilt.

3. The “Contractor” Trap The modern version of Szilagyi usually involves construction contractors.

• If you take a deposit for a kitchen remodel and run out of money before finishing, the Sheriff will likely try to arrest you for Grand Theft.
• The Defense: We use Szilagyi to argue: “He didn’t intend to steal the deposit. He bought materials and started the work. He just mismanaged the funds. That is a civil lawsuit, not a crime.”

Don’t Let Them Criminalize Your Debt

If a creditor is using the police as their personal collection agency, we need to step in. A failed business is not a crime scene.

Call me at (407) 423-1117. Let’s prove your intent.

About John Guidry II

John Guidry II is a seasoned criminal defense attorney and founder of the Law Firm of John P. Guidry II, P.A., located in downtown Orlando next to the Orange County Courthouse, where he has practiced for over 30 years. With more than three decades of experience defending clients throughout Central Florida since 1993, Guidry has successfully defended thousands of cases in Orange, Seminole, Osceola, Brevard, Lake, and Volusia counties. He has built a reputation for his strategic approach to criminal defense, focusing on pretrial motions and case dismissals rather than jury trials.

Guidry earned both his Juris Doctorate and Master of Business Administration from St. Louis University in 1993. He is a member of the Florida Bar and the Florida Association of Criminal Defense Lawyers. His practice encompasses the full spectrum of Florida state criminal charges, with a particular emphasis on achieving favorable outcomes through thorough pretrial preparation and motion practice.

Beyond the courtroom, Guidry is a prolific legal educator who has authored over 400 articles on criminal defense topics. He shares his legal expertise through his popular YouTube channel, Instagram, and TikTok accounts, where he has built a substantial following of people eager to learn about the law. His educational content breaks down complex legal concepts into accessible information for the general public.

When not practicing law, Guidry enjoys tennis and pickleball, and loves to travel. Drawing from his background as a former recording studio owner and music video producer in the Orlando area, he brings a creative perspective to his legal practice and continues to apply his passion for video production to his educational content.