Embezzlement

Embezzlement is the illegal transfer of money or property for personal use. The difference between embezzlement and theft is that embezzlement involves some form of breach of trust between the embezzler and the owner of the property, often their employer. Thus, embezzlement involves no physical violence and is often a white-collar crime. Embezzlement charges may be filed for almost any amount: high-profile embezzlement cases may involve the misappropriation of millions of dollars, but an accusation of embezzlement may involve only a very small amount of money.

The punishment for embezzlement usually takes into account the amount taken. However, charges of embezzlement can carry serious consequences regardless of the amount involved and of the guilt or innocence of the defendant; accusations of embezzlement are embarrassing, and can carry a lasting social stigma. This is because embezzlement involves a breach of trust, violating a previously established harmonious, social relationship. Elimination of this crime, therefore, depends not so much on legal provisions or the work of law enforcement, but more on the attitude of human beings towards other human beings with whom there exists a trust relationship.

Definition

Embezzlement is a crime defined by the illegal appropriation of another’s property that has been entrusted to an individual’s care. Such property may include monies, assets, and other things valuable. A cashier can embezzle money from his employer by illegally obtaining funds from a cash register; a public officer may embezzle funds from the state treasury. Thus, embezzlement charges are often made in conjunction with an internal investigation, since embezzlement normally takes place at a place of employment.

Embezzlement differs from larceny in that the perpetrator of embezzlement comes into possession of the property legally, but fraudulently assumes rights to it. Charges of embezzlement can even be levied if the embezzler intended to return the property later.

Four points must be proven to present a case for embezzlement:

1. The relationship between the accused party and the aggrieved party was a fiduciary one, such that the accused person occupied a position of confidence with regard to the other's property, requiring them to act in the interest of that party.
2. The property came into the defendant’s possession through that relationship,
3. The defendant fraudulently assumed ownership of the property, or transferred it into the ownership of another.
4. The defendant’s misappropriation of the property was intentional.

Embezzlement is often associated with, but is distinct from, crimes of theft, larceny, and fraud. Such offenses are detailed below.

Theft

Main article: Theft

Crimes of theft involve no prior consent of a damaged party to entrust its properties to an individual. Theft is often used as a blanket term consisting of all crimes against property, including the crimes of burglary, larceny, and robbery.

Larceny

The act of larceny is defined as the appropriation without force of properties belonging to another, with the intent to permanently deprive the owner of such properties. In circumstances involving larceny, an individual has no prior entrustment to the said properties of another. The crime of larceny is divided into two categories by the value of the property illegally seized: petit larceny, a misdemeanor, and grand larceny, a felony. Crimes of larceny are not measured by the gain to the thief, but by the loss to the owner.

Fraud

Main article: Fraud

The crime of fraud involves an individual’s obtainment of another’s properties by deceitful means. Fraud is also defined by the intentional deception of another for a personal gain. Like larceny, crimes of fraud are also categorized. Financial fraud, the most common, involves the taking of another’s financial assets by misleading the individual to believe they will be secure.

Methods of embezzlement

There are a number of ways individuals may embezzle properties from various trusting sources. Individuals engaging in embezzlement have been convicted of creating false vendor accounts, acquiring the income of fabricated employees, and supplying counterfeit bills to employers to unlawfully maintain company payroll accounts. Many individuals falsify official records to conceal their actions.

Banking embezzlement includes the misappropriation of properties by banking affiliates. Payroll fraud involves the issuance of checks to fictitious employees or organizations, to be collected later by the check issuer. Misappropriations can also come in the form of false expense reimbursements, when employees issue receipts for un-traveled mileage, personal telephone calls, and expenses unrelated to work.

One of the most common methods of embezzlement is the under-reporting of income. In 2005, several managers of a service provider were found to be under-reporting profits from a string of vending machines located throughout the eastern United States. While the amount stolen from each machine was relatively small, the total amount accumulated over the time period from all the machines proved significant.

Successful embezzlers have been shown to steal undetectably small amounts over a long period, though some individuals choose to seize one large sum at once. Some embezzlement schemes have continued for many years, due to the skill of the embezzler in concealing the nature of their transactions.

Detection and Prevention

The crime of embezzlement was statutorily created to account for loopholes in the laws of larceny. In instances of unlawful property use, individuals could not be convicted of larceny if the property possessed was originally entrusted to the individual. With the official establishment of embezzlement as a crime against property, actions taken to detect and prevent the offense soon followed.

Audits, or the formal examinations of an individual’s or a corporation’s financial accounts, are designed to detect activities of embezzlement. The creation of counterfeit money and phantom employees are often routinely uncovered by general audits. In some circumstances, auditors must perform extremely in-depth examinations to account for inconsistencies within highly detailed but faulty paperwork. Identifying instances of embezzlement becomes increasingly difficult when examining cash transactions, though the invention of the cash register has aided vulnerable employers.

Statutes of Embezzlement

Embezzlement is not a common law crime but depends on statutory enactment. The definition of embezzlement and any associated punishment varies according to the statute of that jurisdiction. Punishments may also differ according to the status of the perpetrator, as defined by the positions of employee, clerk, government agent, corporate officer, etc. Yet, despite its wide variance in definition, stature, and punishment, accusations and convictions of embezzlement are dealt with swiftly throughout most jurisdictions.

Portions of the embezzlement statutes for the states of Massachusetts, California, and Texas illustrate some of the differences.

Massachusetts

In Massachusetts, any state treasury employee convicted of embezzling funds is met with a punishment of a $1,000 fine and a prison term to be determined. A city, town, or county official, if convicted of embezzlement charges, can face a ten-year prison term, or a fine of $1,000 with two years imprisonment. Those convicted of banking embezzlement face a term of fifteen years, or the payment of a $2,000 fine and no more than two and a half years imprisonment.

California

According to California penal codes, the crime of embezzlement is met with the punishable manner of that prescribed for thefts of property. Subsequent fines differ according to the value of the misappropriated property. If the act of embezzlement was waged against a federal body, government, or agency, the crime of embezzlement is then classified as a felony and a term of imprisonment is issued.

Texas

Texas criminal law can employ punishments of imprisonment and/or fining for convictions of embezzlement. Federal sentencing guidelines calculate any fines to be paid for crimes of embezzlement according to estimated property value. In some circumstances, businesses found guilty of financial misappropriation incur fines equal to their total assets.

Other

Whether an individual can be convicted of spousal embezzlement, or the embezzlement of funds by one spouse from another, differs according to jurisdiction. In many circumstances, a person is prevented from testifying against a spouse and therefore cannot be prosecuted on charges of embezzlement.

A co-owner of the property cannot be convicted of embezzlement if the property in question is still under their ownership. In some states, a financial partner can be held liable if intentionally undermining the property rights of his or her partner.

Embezzlement Cases

Those convicted of embezzlement have held positions ranging from school teachers, church officials, public officers, and financial investors. Properties misappropriated have ranged from the theft of inexpensively valued retail items to the embezzlement of millions of dollars. In all circumstances, individuals convicted of embezzlement have breached a fiduciary agreement based on trust. Five cases of embezzlement appear below, ranging from banking embezzlement to school funds misappropriation.

Banking Embezzlement

A Chicago bank employee admitted to the embezzlement of more than $3 million, stealing from customer accounts, and then concealing her actions by creating false records. This employee faced more than thirty years in prison in addition to millions of dollars in fines. Her actions were discovered after numerous customer complaints of disappearing funds. At trial, the woman admitted to gambling most of the misappropriated funds away, and also donating a portion of the funds to needy families and the of purchase school supplies for children in Mexico.

Girl Scouts of America

In Virginia, a local girl scout troop leader pled guilty to the embezzlement of cookie funds after the launch of the annual Girl Scout cookie sale. The woman was convicted of misappropriating more than $6,000 of cookie proceeds for personal use and the stealing of packaged cookies. She was sentenced to 18 months in jail and two years of probation.

Non-Profit Embezzlement

A financial manager working for a non-profit agency in Iowa was arrested and convicted of embezzling more than $600,000 from company accounts. The woman was sentenced to three years in prison for the payment of fabricated employees and corporations, and issuing company checks to cover personal bills.

Presbyterian Proceeds

A finance accounting director working at the U.S. headquarters of the Presbyterian Church was convicted of embezzling more than $100,000 from the church’s general operating fund. The director was investigated after the uncovering of several financial documents that could not be accounted for.

School Funds Misappropriation

A Minnesota elementary school principal resigned after allegations that she and her husband misappropriated school funding for personal use. The pair was charged with the transfer of school funding from a school checking account into an unauthorized “Principal’s Fund” and then into their personal savings account.

Embezzlement: A white-collar crime

The crime of embezzlement is often labeled a white-collar crime. This term refers to the nature of the criminal, a person of respectable status, and the environment in which the crime occurs, a professional setting. White-collar crimes are typically non-violent and are intended for personal financial gain. The crime of embezzlement classifies as a white-collar crime, incurring all levels of financial loss.

Embezzlement affects thousands of businesses daily. Although it is not a violent crime, nonetheless it may cause serious suffering to those involved. The damage done is not just financial, due to loss of property, but also personal, in that there is a violation of trust between the embezzler and their employer or agent. While the physical or financial aspect of the punishment for this crime is matched to the value of the property misappropriated, it is more difficult to make amends for the social damage involved in breaking trust. Nevertheless, in order to eliminate instances of this crime, it is this aspect that must be addressed.

References

ISBN links support NWE through referral fees

• Gray, Kenneth, et al. Corporate Scandals: The Many Faces of Greed. St. Paul, MN: Paragon House, 2005. ISBN 1557788383

External Links

All links retrieved September 8, 2017.

• Embezzlement – FindLaw for the Public
• Embezzlement Defense – Online Lawyer Source