What is Embezzlement?

What is Embezzlement?

By: Daniel Perlman | June 14, 2024 | Embezzlement
Whata is embezzlement

Embezzlement is a type of financial crime where someone misuses or takes assets entrusted to them, typically for personal gain. This crime occurs in various settings, usually within businesses where employees can access company funds.

Unlike simple theft, embezzlement involves a breach of trust, which makes it a unique and serious criminal offense. Familiarity with embezzlement can help individuals recognize and prevent it in their workplaces.

Money laundering accusations are grievous at Perlman Defense Federal Criminal Lawyers. Embezzlement crime is prosecuted vigorously throughout the United States.

Learn more about embezzlement and wire fraud below. Then, contact us to schedule a free case consultation.

Definition of Embezzlement

At its core, embezzlement is the act of withholding assets to convert (theft) such assets by one or more individuals to whom the assets were entrusted. It's a breach of trust and is classified under white-collar crime because it involves deceit and a cover-up rather than direct theft.

Embezzlement can devastate businesses and institutions, leading to significant financial losses and damage to reputations. It is treated very heavily under criminal law.

Embezzlement differs from other types of theft, primarily in its breach of trust. The embezzler has legal access to the money or property and abuses this position. Embezzlement commonly occurs over a long period, allowing the illegal activity to grow in scope and scale. Recognizing embezzlement requires vigilance in monitoring financial transactions and maintaining transparent records. These federal charges are always tough.

Difference Between Embezzlement and Other Theft Crimes

Embezzlement is distinct from other theft crimes because it involves a violation of trust. While general theft involves unlawfully taking someone's property without permission, embezzlement involves legally accessing the property but using it without authorization. This breach of trust legally and morally separates embezzlement from other forms of theft.

Embezzlement occurs in all types of situations. It typically involves a premeditated plan and a financial arrangement that allows the embezzler to hide their activities. This crime is more about manipulating accounting records and less about physically taking money or property.

Compared to straightforward theft, it often requires a more sophisticated investigation. Legal definitions vary, but the core element of breached trust remains constant.

Common Scenarios Involving Embezzlement

  • Misuse of company credit cards. Employees might use company cards for personal expenses, falsely claiming these purchases as business expenses. The embezzled property or stolen property can be key evidence in these cases.
  • Skimming revenues. Cashiers or salespeople could take money directly from sales before it is recorded on the books. Certified fraud examiners know how to examine and uncover skimmed revenue.
  • Payroll fraud. HR personnel or accountants might issue payments to fictitious employees, redirecting those funds to a personal bank account. They then use this money to purchase personal property.
  • Check Kiting. This is the practice of writing checks for an amount greater than what is actually in the account. Then, they cover the difference with funds from another account, earning interest on money they don't have.

Legal Elements of Embezzlement

The legal definition of embezzlement includes several key elements that must be present for a conviction:

  1. There must be a fiduciary relationship between the two parties; the defendant must have been in a position of trust.
  2. The defendant must have acquired the property through their relationship of trust.
  3. They must have owned or transferred the property to someone else.
  4. Their actions must have been intentional, aimed at depriving the owner of the property.

Fraudulent Appropriation

Fraudulent appropriation occurs when someone illegally takes possession of funds or property that isn't theirs, even though they initially had legal access to it. This is a common method of embezzlement, where the perpetrator uses their position to convert assets for personal use.

The act is done secretly and often involves altering records to hide the theft. This is common in other forms of white-collar crime, such as money laundering.

Property of Another

In embezzlement cases, the property must legally belong to another entity, not the embezzler. This could be money, physical assets, or digital assets. The essential aspect is that the embezzler had legal access but not ownership, which they then abused for personal gain.

Relationship of Trust or Fiduciary Duty

A key element of embezzlement is the existence of a trust relationship between the property holder and the embezzler. This relationship could be that of an employee-employer, attorney-client, or any situation where one party relies on the other to manage their assets. This trust is what makes the betrayal in embezzlement particularly egregious.

Intent to Deprive the Owner of the Property

There must be clear evidence of intent for legal action to be taken for embezzlement. The perpetrator must have intentionally taken the property to deprive the owner of its use or benefits. This intent distinguishes embezzlement from accidental mismanagement of funds.

Types of Embezzlement

Types of embezzlement

Embezzlement manifests in various forms, depending on the environment and opportunities available to the embezzler. Each type involves different methods and affects the victims in specific ways.

Employee Embezzlement

Employee embezzlement is one of the most common forms of theft, where workers steal from their employers. This could involve stealing physical goods, but more often, it's about misappropriating funds. Employees might manipulate expense reports or steal cash directly.

Misappropriation of Company Funds

This type involves directly stealing company money, which might be used to cover personal expenses or transferred to personal accounts. It often requires falsifying records to hide the discrepancies. This type of embezzlement can severely burden a company's financial health.

Fraudulent Expense Reports

Employees may claim personal expenses as business expenses on their reports. This steals money from the company and can lead to tax and regulatory issues if not caught. Vigilant auditing processes are a must to catch these frauds.

Corporate Embezzlement

Executives or high-level employees might engage in this form, using their access to large-scale corporate assets. This could include transferring company funds to personal accounts or overbilling clients to siphon off the excess.

Misuse of Corporate Assets

In some cases, the assets involved aren't directly financial. Embezzlers might use company property, such as corporate cars or equipment, for personal benefits. This still counts as embezzlement because it misuses assets meant for business purposes.

Executive Fraud

This high-level embezzlement involves top executives manipulating financial statements to hide the theft of funds. It can be particularly damaging, as it might affect shareholders and the overall market perception of the company.

Public Embezzlement

Government employees or officials might embezzle public funds. This betrayal of public trust can have harsh consequences for community projects and public confidence. This specific form of public embezzlement involves stealing from government budgets. It might involve overcharging for services or claiming funds for non-existent projects.

Fraud by Public Officials

When elected or appointed officials engage in embezzlement, it's often through kickbacks or bribes related to public contracts. This not only involves stealing money but also corrupting the processes of governance.

Penalties for Embezzlement

The penalties for embezzlement can be severe, particularly when federal statutes are involved. Under federal law, the consequences depend on the amount embezzled and the case's specific circumstances.

Penalties can include fines, restitution, and imprisonment. The federal government treats these cases with high severity, especially when they involve large sums of money or betrayal of public trust.

The specific penalties for embezzlement vary depending on the nature of the crime. For example, if you are found guilty under 18 USC 641, you could face up to ten years in prison for a felony where the embezzled property was over $1,000.

If you are found guilty of a misdemeanor, you could face up to a year in prison. In addition, those found guilty may be ordered to pay restitution to the victims, compensating them for their financial losses. This restitution is apart from any civil lawsuits the victims might file to recover stolen funds.

Legal Process for Embezzlement Cases

Legal process for embezzlement cases
  1. Investigation. Authorities begin by gathering evidence of the embezzlement. This often involves detailed financial audits and interviews with involved parties. They may dive deep into the records of financial institutions.
  2. Charges filed. If enough evidence is found, charges are formally filed against the accused, marking the beginning of the legal process.
  3. Arraignment. The accused appears in court, where the charges are read, and they can enter a plea.
  4. Discovery. Both sides exchange evidence that will be used in court. This is a critical phase where defense strategies are often determined.
  5. Plea bargaining. In some cases, the accused might agree to a plea deal, which could reduce their penalties in exchange for a guilty plea.
  6. Trial. If no plea is agreed upon, the case goes to trial, where all evidence is presented before a jury or judge.
  7. Sentencing. The judge will determine the appropriate penalties based on federal guidelines and specific case factors if found guilty.

Common Defenses Against Embezzlement Charges

  • Lack of intent. A valid defense can be proving that the defendant did not intend to steal the property. This might involve showing that there was a misunderstanding or miscommunication about the use of the funds.
  • Duress. If the defendant can show that they were forced to commit the act under threat or coercion, they might be acquitted of the charges.
  • Insufficient evidence. A defense often hinges on creating reasonable doubt about the prosecution's evidence. The charges might be dropped if the defense can show that the evidence does not conclusively point to embezzlement.
  • Entrapment. If the defendant can prove that they were induced by someone else to commit the crime, particularly by law enforcement, they may use entrapment as a defense.
  • Repayment. While not a complete defense, showing that the accused has made efforts to repay the stolen funds might influence the severity of the penalties.

Perlman Defense Federal Criminal Lawyers has Expertise in Embezzlement Cases

We specialize in defending clients against embezzlement charges at Perlman Defense Federal Criminal Lawyers. Our team recognizes the complexities of these cases and the dire ramifications they can have on your life. We use our extensive knowledge of federal criminal law to build strong defenses for our clients.

Our approach involves thorough investigation, aggressive representation, and strategic planning to achieve the best possible outcomes. We believe in a proactive defense strategy that begins when you are accused. We aim to protect your rights and ensure you receive a fair trial.

Frequently Asked Questions

What should I do if I am accused of embezzlement?

Contact a lawyer immediately, and do not discuss the case with anyone else. Your attorney will guide you on the next steps.

Can embezzlement charges be dropped?

Yes, charges can be dropped if the defense shows insufficient evidence or proves no crime was intended.

What is the difference between embezzlement and fraud?

Embezzlement involves misappropriating assets entrusted to you, whereas fraud can involve any deceit used for personal gain.

Call Our Los Angeles Embezzlement Lawyer for a Free Case Consultation

Call our Los Angeles embezzlement lawyer for a free case consultation

If you're facing embezzlement charges, you should seek legal representation. At Perlman Defense Federal Criminal Lawyers, we offer a free case consultation to discuss your situation and how we can help.

Our team is committed to providing the best defense possible and guiding you through every step of the legal process. Contact us today to schedule a free case consultation.

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