The Ins And Outs Of Embezzlement: What It Is And Why It’s A Crime

Embezzlement is a white-collar crime in which someone misappropriates funds that were entrusted to them, typically for personal gain. It is a serious offense with severe penalties, and the legal definition of embezzlement can vary significantly from one jurisdiction to another.

This blog post will discuss the ins and outs of embezzlement: what it is, why it’s a crime, and the potential consequences that come with it. It is important to understand the legal implications of this type of crime to stay on the right side of the law.

Definition of Embezzlement

Embezzlement is the illegal use of funds or assets that have been entrusted to one’s care. It is a type of financial fraud involving the misappropriation of money or property entrusted to the perpetrator by another person.

The perpetrator must have a fiduciary relationship with the other person, meaning they have a legal duty to manage and protect the property. Examples of those in a fiduciary relationship include an employer and employee, bank and customer, trustee and beneficiary, and lawyer and client.

Embezzlement differs from theft in that it does not involve taking something from someone else without their knowledge or consent. Instead, the perpetrator has access to the victim’s assets and uses them for their benefit. The perpetrator may take cash, use a credit card for personal expenses, write checks, or use funds for their investments.

The main motivation for embezzlement is typically financial gain. It is often committed by people in positions of trust who believe they can get away with it or because they are in desperate financial straits. It is also a way for some people to exact revenge against employers or others they perceive as having wronged them.

Types of Embezzlement

Embezzlement can take many forms, depending on the case’s particular circumstances. Generally speaking, embezzlement involves a breach of trust where someone entrusts property or money to another person, and that person then steals it for their benefit. Below are some common types of embezzlement:

  • Misappropriation of funds: This is when an individual uses the money for a purpose other than what it was intended for. For example, if an employee uses company funds for personal expenses, this would be considered misappropriation of funds.
  • Diversion of funds: This is when an individual takes money from one account and transfers it to another without authorization.
  • Larceny: Larceny occurs when someone steals money or property outright. This is different from embezzlement in that the thief has no connection to the owner of the money or property.
  • Breach of fiduciary duty: This happens when someone in a position of power or trust fails to act in the best interest of their client or employer.
  • Kickbacks: This is when someone gives something of value in exchange for favors or services they are not entitled to receive.
  • Payroll embezzlement is one of the most common types of embezzlement and often occurs through “ghost employee fraud.” This involves an employee who adds false employees to a company’s payroll, then pockets the wages for those employees.
  • Siphoning is another type of embezzlement typically committed by someone with financial handling duties. It involves taking a portion of the funds they are responsible for managing or transferring funds to their accounts without authorization.
  • Falsifying overtime records is yet another form of embezzlement that can occur in businesses. Employees who work overtime but don’t get paid for it, or are paid less than they should be, can result in employers losing large sums of money over time.
  • Charity embezzlement is when an employee or volunteer of a charity organization handles the charity’s funds improperly for their gain. This may involve diverting funds away from their intended purpose, such as providing services for a particular cause.
  • Cheque kiting is another embezzlement type involving making deposits and withdrawals between multiple banks to create false balances in an account. This allows the perpetrator to draw funds against what appear to be higher balances than exist in the accounts.
  • Lapping is a form of embezzlement where an employee alters accounts to conceal stolen cash. The employee “laps” the stolen money by moving it from one customer’s account to another or shifting it from one account within the same institution.

No matter which type of embezzlement is committed, it is still a crime with serious consequences. If you have been accused of embezzlement, it is important to consult with a criminal defense attorney who can review your case and advise you of your rights and legal options.

embezzlement

 

Why is Embezzlement a Crime?

Embezzlement is a serious offense because it involves the theft of money or property from an employer, business partner, or any other trusted entity. When someone steals from a company or organization entrusted with finances, it is considered a breach of trust. This breach of trust creates a lack of confidence and trust in the organization and can lead to a loss of reputation for the company.

In addition, embezzlement is also a crime because it is considered a form of fraud. By stealing or misusing funds or resources, embezzlers are deceiving their employer or organization. Depending on the jurisdiction and the amount of money taken, embezzlement can be charged as a misdemeanor or a felony. A felony conviction carries a greater penalty, including jail time and hefty fines.

Because embezzlement can have devastating consequences on organizations and their stakeholders, various laws are in place to protect employers and employees. These laws help to deter people from committing this crime and to hold perpetrators accountable for their actions.

Ultimately, embezzlement is a crime because it violates trust and law. Not only does it cause financial harm to an organization, but it can also destroy the trust that organizations have in their employees. It is important to be aware of the potential risks associated with embezzlement so that you can take steps to protect yourself and your organization.

Penalties for Embezzlement

Embezzlement is a serious crime that carries significant penalties. Depending on the amount of money or property embezzled, the penalty can range from a small fine to life imprisonment. Generally speaking, the larger the amount of money or property involved, the more severe the punishment.

For example, someone convicted of embezzling $500 or less may be fined up to $1,000 and/or face up to one year in prison. Conversely, someone convicted of embezzling more than $1 million could receive up to 20 years in prison and/or a hefty fine. In addition, restitution may also be required for victims to receive compensation for their losses.

In some states, embezzlement may also be treated as a felony or a misdemeanor depending on the amount taken and other factors, such as prior criminal record. As a result, someone with a felony embezzlement conviction may have difficulty finding employment and housing in the future.

It is important to understand that not all embezzlement cases involve large sums of money or property. Even relatively small amounts can lead to serious criminal charges. Therefore, it is essential to seek legal advice as soon as possible if you face accusations of embezzlement.