Embezzlement

Definition

Embezzlement is a crime defined by the illegal misuse or appropriation of another’s property that has been entrusted to an individual’s care. These properties, including monies, assets and other things valuable, are often illegally misused for the personal gain of the individual to whom the property was entrusted. A cashier can embezzle money from his employer if illegally obtaining funds taken from a cash register; a public officer may embezzle funds from the state treasury.

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

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 embezzlement, fraud and larceny.

Larceny

The act of larceny is defined as the forceless obtainment 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

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 property by misleading the individual to believe their properties will be secure.

Methods of Embezzlement

There are a number of ways individuals choose to embezzle properties from various trusted 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.

One of the most common methods of embezzlement is the underreporting of income. In 2005, several managers of the service provider Aramark were found to be underreporting 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 a length of time from each machine proved great.

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 to conceal the nature of their transactions. Many individuals have taken to the falsifying of official records to conceal their actions.

Detection and Prevention

The crime of embezzlement was statutorily created to account for loopholes in the conviction 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.

Punishment

Throughout the United States, the definition and punishment for acts of embezzlement vary according to state. Penalties can include fines, imprisonment, or both. Like larceny, acts of embezzlement can be classified as petit embezzlement, a misdemeanor, or grand embezzlement, a felony.

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

Embezzlement Cases

A financial manager working for a non-profit agency out of Salon, 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 credit bills.

In Virginia, a local girl-scout troop leader plead 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.

A Minnesota elementary school principle 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 “Principle’s Fund” and then into a personal savings account.

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