Embezzlement: What is It? Why Might You Be Charged? What Are Your Defenses?
Embezzlement is a white collar crime that occurs when you take or misappropriate money belonging to someone who entrusted you with its management and safe-keeping. It makes no difference whether you steal the money outright or fraudulently put it to your own use.
Embezzlement can be both a criminal act and a civil wrong. You will face prosecution for embezzlement. You can also face a civil lawsuit filed against you by the person from whom you stole or misappropriated the funds. Furthermore, you can face either state or federal criminal charges depending on what you embezzled, how, and from whom.
What Are the Elements of Embezzlement?
In order to convict you of embezzlement, the prosecutor will need to prove the following beyond a reasonable doubt:
- The money or property belonged to someone other than you.
- You converted it to your own use after its owner gave you lawful possession and/or control of it.
- You were a fiduciary; i.e., you were in a position of trust where the owner believed you would manage the money or property for his or her benefit rather than yours.
- Intent to defraud the owner of their money or property at the time you converted it to your own use.
Embezzlement Charges as an Employee
If you are an employee, you could face embezzlement charges if you do one of the following:
- Take money from your employer’s cash register
- Pad your expense account
- Charge a customer more for a product than its actual cost and keeping the excess money for yourself
- Add one or more fake employees to your company’s payroll
- Move money from the account of a customer or client into your personal account
- Deposit vendor checks into your personal account
- Take office supplies or other inventory for your own personal use
- “Cook” your employer’s books to hide the losses your embezzlement produced
Other Instances of Embezzlement Charges
You need not be an employee to face embezzlement charges. You could be a partner in a firm, an independently-contracted bookkeeper or accountant, a stockbroker or financial advisor. These are a small list among any number of other positions. The only thing required is that you somehow converted the funds or property someone else entrusted to you to your own purposes. Examples include the following:
- Adjusting someone’s accounting books to hide your misuse of his or her funds
- Stealing money from others through a Ponzi scheme
- Committing a violation of the Racketeer Influenced and Corrupt Organizations Act; i.e., a RICO violation
- Setting up a check or credit card kiting scheme
- Borrowing money from an organization’s bank account
- Using a client’s lawsuit money to pay for your own operating fees
- Selling the property of an estate or trust and keeping the profits instead of distributing it to the heirs or beneficiaries
- Using a relative’s social security check to purchase things for yourself
What Are Your Defenses?
In general, the following represent your best defenses against allegations of embezzlement:
Given that duress is defined as “constraint illegally exercised to force someone to perform an act,” you can offer this as your defense if you truly believed that you would be in some kind of danger if you failed to perform the acts that led to your embezzlement charges. However, you cannot claim duress if you did what you did in order to prevent or alleviate a family hardship. Nor can you claim duress if you used the money to satisfy a personal addiction, such as to alcohol or drugs. Instead, you need something as compelling as the fact that you believed you would lose your job if you refused to participate in an embezzlement scheme.
This means that a law enforcement officer or other state agent induced you to commit embezzlement when you otherwise would have been unwilling and therefore unlikely to do so.
Lack of intent
Keep in mind that intent to defraud is one of the elements of embezzlement. If you can prove that you had no such intent, the case against you fails. For instance, can you prove you honestly thought the alleged embezzled property belonged to you instead of someone else?
Lack of capacity
It goes without saying that you must possess adequate mental capacity to commit embezzlement. If you can prove that you were somehow mentally incapacitated at the time your alleged embezzlement occurred, again the case against you fails. This defense likely will be more successful if you can prove that you were under the influence of legal medications prescribed by your physician and made a simple mistake rather than committed an act of deliberate embezzlement. Conversely, it will not be successful if you were voluntarily inebriated or under the influence of illegal drugs at the time of your alleged crime.
Surprisingly, judges dismiss upward of 40% of federal embezzlement cases due to insufficient evidence. Remember, the prosecutor must have sufficient evidence against you to meet his or her four-prong burden of proof and convince a jury beyond a reasonable doubt that an embezzlement occurred and that you committed it.
Do You Need an Attorney?
Whether you face criminal embezzlement charges, a civil embezzlement lawsuit, or both, you definitely need the advice, counsel and representation of an experienced criminal defense attorney and/or an experienced civil litigator.
If you lose the civil lawsuit, the judge or jury will require you, at the very least, to pay restitution to your victim. (S)he or they may also require you to pay your victim interest from the date of the embezzlement. If (s)he or they believe that your actions were particularly egregious, they could well make you pay punitive damages in addition to actual damages.
If a judge or jury convicts you of criminal embezzlement, you face serving a long prison sentence. You also risk having to pay a large fine and probably restitution as well.
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