What Is Embezzlement?

Embezzlement is a crime where someone unlawfully takes or misdirects money that belongs to someone else. Embezzlement law is different from common theft because the person is usually entrusted with access to the money or property. A simple example would be a bank teller taking money from the bank and altering the paperwork to cover up the theft.

Embezzlement cases can result in serious criminal charges. Embezzlement can be a felony, which includes jail time, fines, and restitution. If you are facing an embezzlement investigation, talk to a criminal defense attorney for legal advice.

What Is Embezzlement?

Embezzlement is a type of fraud or theft by someone in a position of trust. Embezzlement involves someone entrusted with money or property, who then takes the money or property for their own use. Embezzlement is more common in businesses or professional positions. These jobs may require workers to handle valuable property or money.

Even temporary misappropriation is embezzlement. It does not matter if you actually keep the money, transfer the money to someone else, or plan to give it back. The act of stealing another person’s funds is embezzlement.

What Is a White-Collar Crime?

Embezzlement is a type of white-collar crime. White-collar crimes usually involve non-violent and financially motivated crimes committed by business people and other professionals. Other white-collar crimes can include:

• Corporate fraud
• Health care fraud

• Securities and commodities fraud
• Insurance fraud
• Money laundering
• Bank fraud

What’s the Difference Between Theft and Embezzlement?

There are several differences between the crime of embezzlement and common theft or larceny. For embezzlement, the individual committing the act has been legally entrusted with the money or property. Examples could include a bank employee, financial services professional, cashier, or accountant.

For example, a financial advisor who alters the client’s account records to remove some of the funds for personal gain could be charged with embezzlement. However, a computer hacker who broke into someone’s bank account records and removed funds could be charged with theft.

Ponzi Schemes and Embezzlement

A Ponzi scheme can be a type of embezzlement. Ponzi schemes are named after Charles Ponzi. The term describes an investment fraud where clients are promised higher returns with low risk. The higher returns come from money invested by new investors. However, as soon as new investors stop coming, there is no more money to pay off the original investors. The scheme usually falls apart after a time, and the remaining investors lose all their money.

A famous Ponzi scheme example of embezzlement is the Bernie Madoff scandal. Over a period spanning decades, Madoff operated a complex scheme, including fabricated ledgers and falsified profits and earnings statements. Investors were paid smaller withdrawals requested by some creditors in order to maintain an image of a legitimate operation.

Investors lost tens of billions of dollars in the scheme. Madoff was found guilty of 11 federal crimes and sentenced to 150 years in prison.

How Is Embezzlement Discovered?

Embezzlement can be difficult to identify. Skilled professionals may be able to cover up theft for years by altering records. Many embezzlement crimes involve taking small amounts of money over a long period of time, making it more difficult to notice the loss. It may take years before a company finds out an employee was taking money or property for their own use.

Embezzlement is usually identified by accounting and audits. If a company finds missing funds, it may begin an internal investigation. The business could contact law enforcement to help investigate the fraud and prosecute the suspected embezzler for criminal offenses.

What Is the Punishment for Embezzlement?

Penalties for embezzlement vary depending on the crime and state law. The penalties for embezzlement crimes can depend on the amount of money or value of the property involved. Large amounts of property taken can be a felony. The criminal penalties for felony embezzlement can include a prison sentence of over one year, fines, and victim restitution.

Small theft of money for personal gain may be a misdemeanor. Penalties for misdemeanor embezzlement can include up to a year in prison, fines, and paying back any stolen money.

Other aggravating factors can increase the penalties. For example, stealing from an elderly or disabled person may result in more jail time or higher fines. If the defendant works for a bank, insurance company, or government agency, they may also face higher penalties.

What To Do If You Are Facing Embezzlement Charges

Embezzlement is often a complex crime. If you’re facing financial fraud charges of this nature you should consult an experienced criminal defense attorney. Your communications with your criminal defense lawyer are generally protected under the lawyer-client privilege. Be sure to ask your legal counsel about your confidentiality protections.

A criminal defense lawyer can help you understand the legal issues and potential criminal penalties. Your attorney can represent you in any employee theft investigations and law enforcement interviews. For more information about your legal rights, talk to a criminal defense lawyer.