The crime of embezzlement was created to fill a loophole in the theft/larceny statutes of English law. In old English law theft/larceny required a trespass, but there is no trespass with embezzlement. The person who embezzles is in lawful possession of the money or property, they just don't give it back to the owner or use it for unauthorized purposes.
Continue reading to learn about embezzlement law and when it applies as well as some examples of high profile embezzlement crimes in history.
Definition of Embezzlement
The crime of embezzlement is where a person:
- has lawful possession of the property of another;
- converts or takes that property for their own use; and
- has no intention of giving it back.
For instance, an office worker may have every right to handle the petty cash for a business, but the moment they use the petty cash to buy themselves new shoes without authorization, they have embezzled.
An important point about conversion, or the taking of the property, is that it has to be done with a serious intent of depriving the owner of their rights. Acts of embezzlement can include the following with respect to the funds/property of another:
- using them up;
- selling them;
- giving them away;
- inflicting serious damage on them; and
- withholding them permanently from the owner.
It's important to note that merely moving property a short distance, or inflicting slight damage, or minimal use of the property may not be enough to constitute embezzlement.
Who Commits Embezzlement?
This type of crime is most common in the employment and corporate fields. Generally, the person who commits embezzlement is a trusted employee who has been given access to someone else’s property or money for the purposes of managing, monitoring, and/or using the assets for the owner’s best interests, but then covertly misappropriates the assets for his/her own personal gain and use. These people are typically an employee, a business partner, or a contract worker. Common examples are bank tellers, store clerks, office managers, accountants, financial managers, or stock brokers.
Embezzlement Can Apply to Any Type of Property
Some embezzlers simply take large amounts of money at once, while others misappropriate small amounts over a long period of time. The methods used to embezzle can vary greatly and are often surprisingly creative. They can include fraudulent billing, payroll checks to fabricated employees, records falsification, “Ponzi” financial schemes, and more.
The crime of embezzlement does not have to be about money. The conversion of company property such as a laptop computers or company vehicles is also considered embezzlement. Sometimes state embezzlement statutes even include the taking of real property in addition to personal property.
Elements of the Crime of Embezzlement
The elements to prove the crime of embezzlement differ in the various state laws, but generally four factors must be present:
- There must be a fiduciary relationship between the two parties; that is, there must be a reliance by one party on the other;
- The defendant must have acquired the property through the relationship (rather than in some other manner);
- The defendant must have taken ownership of the property or transferred the property to someone else; and
- The defendant's actions must have been intentional.
Embezzlement Can Also be a Federal Crime
In addition to the corporate setting, embezzlement can also take place of public funds or property owned by the government. Several federal statutes prohibit embezzling public funds, tools for counterfeiting, records, or anything of value.
Famous Embezzlement Cases
One of the most famous embezzlement cases in modern times is the Bernie Madoff case. Madoff used a Ponzi scheme to bilk his investment clients out of millions of dollars. Clients entrusted him with their life savings that he then used to fund his lavish life style -- a classic case of embezzlement.
Certainly, there are the big splashy embezzlement cases, but there is no shortage of small time players as well. The Girl Scouts regularly report cases of embezzlement of Girl Scout Cookie funds with stolen dollar amounts less than $50,000.
Charged with Embezzlement? Protect Your Interests and Call an Attorney
As you can see, the common elements to prove a charge of embezzlement leave a lot of room open for your defense. The government has the burden to prove all the elements of this crime under the laws of your state. However, it doesn't hurt to have a proactive defense that establishes facts disproving the elements. The key is having a strong and trusted advocate by your side, namely a criminal defense attorney.