Embezzlement is a crime in which a person who has access to or lawful possession of money or property fails to return it to its owner, or uses it or spends it in a way it was not intended to be used or spent. The key characteristics of embezzlement are:
- The defendant had lawful possession or permission to possess or use the money or property. This is the main difference between embezzlement and theft. A person commits theft when they take something they never had permission to possess.
- The defendant converted or took the money or property for their own use, and not its intended use. Conversion includes more than taking, such as using up, selling the property, giving the money or property away to someone else, damaging property and changing its worth or value, or withholding the money or property from its owner.
- The defendant acted with intent. They intended to deprive the owner of the money or property permanently. They do not intend to give it back.
The crime of embezzlement can be a misdemeanor or a felony. Whether someone is charged with misdemeanor or felony embezzlement usually depends on the amount of money or the value of the property involved. For example, in Virginia, embezzlement is a misdemeanor if the value of the property is less than $200.
White Collar Crime
The term “white-collar crime” refers to nonviolent crimes typically perpetrated for financial gain. According to the FBI, “these crimes are characterized by deceit, concealment, or violation of trust.” These crimes are typically motivated by either gaining money or avoiding losing money, property, or services. Nevertheless, they may also be motivated by a need to secure a personal or business benefit.
The term itself is defined as a “crime committed by a person of respectability and high social status in the course of their occupation.” White-collar workers have historically been defined by office jobs and management, while blue-collar workers traditionally wore blue shirts while working in more physically demanding jobs.
White-collar crimes have grown exponentially as new technology, and financial products have created new means of committing such crimes. Additionally, the internet facilitates multiple new white-collar crimes, such as fraudulent emails requesting help by sending a substantial amount of money.
Some definitions of white-collar crime only include offenses by an individual to benefit themselves. However, the FBI defines these crimes as “large-scale fraud perpetrated by many throughout a corporate or government institution.” The agency names corporate crime among its highest enforcement priorities because these crimes cause substantial financial losses to investors. Additionally, the FBI states that these offenses have the potential to cause significant harm to the U.S. economy, as well as investor confidence.
Embezzlement Examples
The most common example of embezzlement involves an employee, such as an office manager, who has access to money in order to purchase supplies for the office. The office manager takes that money, or uses it to purchase things for themselves, without permission and with no intent to return it.
Another example of embezzlement would be an account or bookkeeper who illegally writes a check to themselves, or withdraws money from the business bank accounts. Either way, they have no plan to return the money they are stealing. As such, their actions could be considered embezzlement.
Embezzlement does not always have to involve money. However, embezzlement always results in the conversion of assets. By nature, most assets have monetary value. Because of this, if a non-monetary asset is embezzled, it would likely result in a monetary damages award as the asset's owner is deprived of their valuable asset.
Proving Felony Embezzlement
The exact elements required to prove embezzlement may differ from state to state, however generally the following must be shown:
- There is a relationship between the parties involved. Such as employer and employee, trustee and beneficiary, or investment banker and client.
- The defendant must have acquired the money or property or was entrusted with the money or property because of the relationship. The defendant was entrusted with the money or property as part of the relationship.
- The defendant must have taken or converted (used, damaged, gave away) the money or property.
- The defendant must have acted with intent to take or permanently deprive the legal owner of their money or property.
Evidence Needed to Prosecute Embezzlement
It is important to note that every case is different, and as such, the evidence needed to prosecute the crime of embezzlement will vary. Generally speaking, the following evidence may be used to prove embezzlement:
- Financial records;
- Incriminating statements from other employees;
- An actual confession of guilt from the suspect; and/or
- A pattern of taking money and/or property for personal use, as this is evidence of intent.
If it can be shown that the suspect employed a specific method or scheme in order to embezzle, it could be sufficient to prove the required element of intent. Insufficient evidence, as well as lack of intent, are the most commonly effective defenses against embezzlement.
Therefore, as an employer or business owner it is important to incorporate various different security protocols in order to ensure the safety of your company's assets. In the current age of technology numerous amounts of embezzlement crimes occur through the use of a company computer.
Thus, it is important for a company to implement a plan for computer security such as asset and inventory tracking software, computer information monitors, and various other computer security protections. Then, if an employee embezzles company assets, the employer would then have hard evidence to demonstrate the embezzlement occurred and the guilty party.
Fiduciary Relationship
In order for a person to be charged with embezzlement, a fiduciary relationship must have existed between the two parties involved. A fiduciary relationship involves one person placing their trust, confidence and reliance on another; the trusted person then has the duty to act for the benefit and best interests of the other party. The party who owes the duty is called the fiduciary, and the party to whom the duty is owed is known as the principal.
Fiduciary relationships are most common in situations in which a business has hired a bookkeeper, accountant, or payroll manager to oversee the financial aspects of their business. The person charged with embezzlement must have accessed the stolen funds by using their fiduciary privilege to access the stolen cash, blank checks, or financial accounts. Embezzlement charges also require that the fiduciary intended to steal the money from the principal. Meaning, the fiduciary was aware of the fact that their actions would result in the other party losing their own money.
Consequences of a Conviction for Embezzlement
The consequences of an embezzlement conviction will vary based on whether the crime was a misdemeanor, or a felony. As previously discussed, embezzlement is categorized as either a misdemeanor or a felony based on the amount of money stolen from the owner (or, principal). Consequences will also vary from state to state, as well as various other factors related to each specific case.
Many people often ask will I go to jail for embezzlement? Judges will consider the following when imposing a sentence:
- The amount of money embezzled;
- The time period over which the embezzlement occurred;
- The financial harm caused to the victim of the embezzlement;
- Whether the defendant intended to embezzle from the plaintiff; and
- Any prior embezzlement or financial crime convictions.
Felony embezzlement convictions are, of course, generally more severe and could include jail time. Such punishments could include:
- Extensive jail or prison time;
- Probation, or parole;
- Significant fines and/or restitution to the victim;
- Court ordered rehabilitation courses or programs;
- Being ineligible to hold a public or elected office;
- Having professional licenses, such as an accountant certification, revoked; and/or
- Permanent documentation of the conviction on their criminal record, which could negatively impact future employment opportunities.
Is Embezzlement a Federal Crime?
Embezzlement may be charged as a federal crime, depending on the facts of the case. Typically, embezzlement is only a federal crime if it involves embezzling federal money or property. The most common persons that are charged with the federal crime of embezzlement are governmental employees or elected officials embezzling public funds.
Penalties For Public Officials
If a public official is bound to be corrupt, they can be punished in many ways. The regulations vary from state to state, but common forms of punishment include:
- Termination
- Imprisonment
- Fines
- Loss of pay or benefits
- Loss of retirement benefits
Several elements may enhance the punishment for accepting a bribe as a public official. If the official works in customs or border patrol or issues identification or immigration documents, they may receive an enhanced penalty. This is in response to the increased security of our borders brought on by the threat of terrorism.
Employee Embezzlement
Employee embezzlement happens when a worker seeks to use company money, assets, or property that has been entrusted to them for their own private use or gain. For instance, a common form of embezzlement occurs when an employee is granted access to a company bank account. If they use their access to the account to withdraw funds for their own use, it could lead to an embezzlement charge.
Embezzlement is a serious white-collar crime that can lead to severe consequences. It can even lead to felony charges, depending on the value of the property or the amount of money stolen.
Embezzlement is different from simple theft by an employee. With embezzlement, the employee has been entrusted with care or ownership of the property in some way, usually for a temporary amount of time or in a limited fashion. With employee theft, the worker might not be authorized to handle the funds or property item.
Recognizing Employee Embezzlement
Embezzlement can sometimes be difficult to recognize because the employee is given some amount of authority to act and make decisions for the property that they are stealing. However, it may be detected over time if certain patterns of behavior begin to appear. Some signs of employee embezzlement include:
- Delayed bank transactions, especially business deposits
- Messy or disorganized ledgers and book-keeping documents
- Altered checks or questionable signatures
- Large credits or benefits issued out to one customer (the customer may be collaborating with the employee to move the funds)
- Unaccounted-for dips in profits
- Unnecessary or duplicate expenses
- Reports or testimony from other employees (these can often go ignored because employers sometimes fail to make connections between suspicious behavior and embezzlement)
- Changes in an employee's schedules, habits, or standards of living
Lastly, embezzlement can sometimes be discovered through simpler means. For instance, many embezzlement cases are brought due to employee behavior being caught directly on camera or through e-mail exchanges.
Suspecting an Employee of Embezzlement
As an employer, you have every right to investigate suspected instances of embezzlement. If you suspect an employee of embezzlement, you can take steps such as:
- Monitor the employee's actions more closely
- Interview the employee to obtain more specific information
- Obtain witness testimony from other employees
- Examine documents and records for evidence of embezzlement
However, as an employer, you need to make sure that you do not violate employee privacy rights and that the investigation follows company guidelines and handbook procedures. Failure to follow proper investigation procedures can result in further legal complications such as a lawsuit from the employee.
Embezzlement vs. Theft
Embezzlement is different from theft. A necessary element of embezzlement is the defendant had permission to possess the money or property but used it unlawfully. They had legal access to the property.
The crime of theft involves unlawfully taking money or property from the owner that the defendant never had a legal right to have in their possession.
Protecting Yourself from Embezzlement
It is important for employers to learn how to recognize embezzlement in the first place. Some of the more common signs of employee embezzlement include:
- Delayed bank transactions, such as deposits;
- Altered checks or questionable signatures;
- Unnecessary or duplicate expenses; and
- Changes in the employee's schedules, habits, or standard of living.
When entrusting a person with a fiduciary relationship, such as an accountant or a bookkeeper, it is important to continue overseeing their work to ensure that the money does not go missing. Another way to protect yourself from embezzlement is to maintain meticulous financial records relating to bank accounts, issued checks, and cash deposits.
Common Defenses to Embezzlement Charges
Available defenses to embezzlement charges will, again, depend on the specifics of each case. The most common defense is that the embezzler did not actually intend to steal the other party's money, and may be used when the defendant:
- Intended to return the money;
- Was unaware that they took any money in the first place; and/or
- Never intended to take the money for their own personal gain.
Under this defense, the defendant could argue that they:
- Removed the money from the account accidentally;
- Were following the directions of the owner; and/or
- Did so as requested by the other party.
As a fiduciary relationship must exist in order for the crime to be considered embezzlement, the defendant may also argue that no such relationship existed. There are several other more general defenses that they may utilize, including but not limited to:
- Insufficient evidence;
- Duress;
- Entrapment; and
- Incapacity.
Can Embezzlement Charges be Dropped?
Embezzlement charges may be dropped altogether if there is insufficient evidence to prove that the defendant did in fact commit the crime of embezzlement. Insufficient evidence may be used as a successful defense in instances of embezzlement lacking a paper trail.
Although over forty percent of federal embezzlement charges are dropped because of insufficient evidence, it is imperative to note that a jury must find the defendant innocent beyond a reasonable doubt. Additionally, charges may only be dropped due to insufficient evidence if the investigators failed to present a clear case against the defendant.
How Can An Attorney Help Me With Embezzlement Issues?
If you feel that you have been a victim of embezzlement, or if you are being charged with embezzlement, you should consult with a skilled and knowledgeable criminal lawyer. An experienced criminal attorney can represent your interests either way, and inform you of any defenses available to your case if you are the defendant. Additionally, a lawyer will protect your rights and represent you in court as needed.
