Embezzlement
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 treasury in a similar way.
Larceny, Fraud and Theft
Embezzlement is often associated with, but is distinct from, crimes of larceny, fraud and theft. Such offenses are detailed below.
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.
Embezzlement is the fraudulent appropriation by a person to his own use of property or money entrusted to that person's care but owned by someone else. For instance, a clerk or cashier can embezzle money from his employer; a public officer can embezzle funds from the treasury.
Embezzlement differs from larceny in two ways. First, in embezzlement, an actual conversion must occur; second, the original taking must not be trespassory. That is, the embezzler must have had the right to possess the item, and used that position of trust to convert the property. Embezzlement may range from the very minor, involving a few dollars to immense, involving millions of dollars and very sophisticated schemes.
Conversion requires that the theft seriously interfere with the property, rather than just relocate it. As in larceny, the measure is not by the gain to the thief, but the loss to the true owner. Embezzlement was statutorily created to deal with situations where theft could occur while the thief himself was innocent of larceny — typically because of the "lawful possession" element. That is, embezzlement fills in the blanks where larceny cannot.
Embezzlement sometimes involves falsification of records in order to conceal the theft. Embezzlers commonly steal relatively small amounts repeatedly over a long period, although some embezzlers steal one large sum at once. Some very successful embezzlement schemes have continued for many years before being detected due to the skill of the embezzler in concealing the nature of the transactions.
One of the most common methods of embezzlement is to under-report income, and pocket the difference. For example, in 2005, several managers of the service provider Aramark were found to be underreporting profits from a string of vending machine locations in the eastern United States. While the amount stolen from each machine was relatively small, the total amount taken from many machines over a length of time was very large.
Another method is to create a false vendor account, and to supply false bills to the company being embezzled so that the checks that are cut appear completely legitimate. Yet another method is to create phantom employees, who are then paid with payroll checks.
The latter two methods should be uncovered by routine audits, but often aren't if the audit is not sufficiently in-depth, because the paperwork appears to be in order. The first method is easier to detect if all transactions are by check or other instrument, but if many transactions are in cash, it is much more difficult to identify. Employers have developed a number of strategies to deal with this problem. In fact, cash registers were invented for just this reason.
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