Embezzlement: Definition, Types, Reasons & How To Tackle It

embezzlement

The crime of embezzlement is a serious one. And it isn’t always more serious than other criminal offenses. The seriousness of the offense, the circumstances, and the amount of money involved all influence the punishment.

Here’s a deeper look at what is the meaning of embezzlement, and what is considered embezzlement.

What Is Embezzlement?

Before knowing the embezzlement examples, we should know what is embezzlement. Embezzlement is a type of property robbery. It occurs when someone who has been entrusted with overseeing or screening another person’s money or property steals all or part of that money or property for the taker’s gain.

The essential is that the litigant has legal access to another person’s money or property, but no legal obligation for it. Taking money or property for the respondent’s benefit is theft; when combined with the fact that this theft was also a breach of a specific position of trust, you have the special crime of embezzlement.

Officers and employees of companies, as well as relatives looking over a relative, specialists such as attorneys or board members who manage client or speculator money, or anybody in a position of trust with another person’s money or property, are all capable of stealing.

This was embezzlement legal definition. Now let us see how embezzlement is contrasting with fraud.

What Is Embezzlement And Fraud?

misappropriation of property

A. Definition Of Fraud

Fraud can also be classified as theft. When someone obtains anything of monetary worth by deceit, they have committed fraud. Fraud is when you persuade others to pay you money under pretenses, such as the “Nigerian Prince” email hoax. To receive a home loan, you must lie about your income or employment. Falsifying tax returns to receive a larger refund is considered fraud. It is fraud to write faulty checks or use a stolen credit card. When Bernie Madoff’s multibillion-dollar pyramid scam collapsed, he committed huge financial fraud, losing some clients their entire life savings.

The technique of deceit, such as mail fraud or wire fraud, is sometimes used to charge fraud. Money laundering and other criminal accusations are sometimes brought as a result of the cover-up.

B. Embezzlement Definition

Another type of stealing is embezzlement. Embezzlement typically refers to stealing from a boss or misusing finances entrusted to one’s care. Extensive accounting methods or electronic transfers are sometimes involved. However, skimming invoices from a cash-based business or charity might be as easy as that.

Embezzlement charges might be leveled against an employee, bookkeeper, treasurer, or manager. Embezzlement can be a significant criminal accusation depending on the scope of the crime — the amount of money involved and the financial impact on the business or organization. It was important to check what is embezzlement definition for contrasting it from fraud.

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Reasons Of Embezzlement

embezzlement examples

 

When someone steals or misappropriates something they were entrusted to manage or preserve, it is called embezzlement. Embezzlement does not need that the property or asset be of significant worth. Although similar to fraud, embezzlement differs in that the embezzler has permission to use or manage the property or finances.

Embezzlement can be coupled with other types of fraud, such as Ponzi schemes, in some cases. In such situations, the embezzler deceives investors into entrusting them with their assets so that they might invest on their behalf, but the money is instead used for personal gain and profit.

Maintaining the scam sometimes entails finding new investors to bring in more money to please previous investors. Aside from money, an embezzler may transfer other assets. An embezzler may claim the real estate, corporate vehicles, smartphones, and other company-owned electronics, such as computers, for personal use.

Employees in the government sector may commit embezzlement by taking local, state, or national funds for themselves. When money is given to complete contracts or support initiatives, and a member of the staff skims part of the money that was designated, this might happen.

People who embezzle money might be prosecuted with a felony and/or held civilly liable for their actions. Punishment might include anything from monetary damages and restitution to jail. White-collar crimes do not exclude criminals from receiving lengthy jail terms, which are often reserved for dangerous offenders.

Types Of Embezzlement

embezzlement

One can do money embezzlement or misappropriation of property using one of these methods:

1. Siphoning

This is achieved by the folks we see working in businesses or restaurants on the front lines. They figure out a technique to steal money from the register without causing inconsistencies between what the computer and the drawer display. They do not input the item into the register’s computer system, but they must keep track of how much money they get at the end of their shift.

2. Check Kiting

The offender conducts a series of deposits and withdrawals from several banks in this method. The checks progressively gain in value, allowing them to draw and withdraw money from other institutions using fictitious money. This takes advantage of “float,” or the time it takes for deposited cheques to clear their respective banks.

This offense might be committed by someone who manages a company’s bill-paying function. He might start the fraud using the corporate checkbook and keep it going until the banks figure out what’s going on.

3. Lapping

In the portion of the firm that receives incoming payments from consumers or vendors, this kind is present. For example, a person operating in this position for a church may utilize bank deposits for many firms and modify the allocation of the monies to cover up their receipt of specific cash payments from particular clients.

Money laundering would be defined as the accumulation of monies received while in a trusted position of fiduciary responsibility.

4. Payroll

Another kind of embezzlement is using the corporate payroll to fraudulently steal money. A major firm may frequently have a manager and even an entire department dedicated only to the computation and execution of payroll obligations.

If the manager wanted to steal money from the firm, he would add some of his family members who aren’t employees, such as his wife and/or children, and have them take revenue from the company. He’d be able to pay each of the cheques himself at home, bringing his total income up.

5. Kickbacks

Through kickbacks, anyone participating in purchasing operations in any organization might be a potential embezzler. A vendor from whom the company acquires materials in the course of business offers to provide the employee money if they continue to purchase a certain product from that vendor. Because the vendor representative is likely seeking to earn a personal profit, these scenarios frequently include exaggerated costs.

6. Overtime

Falsification of overtime records is another technique for persons to conduct embezzlement. This may be done by an hourly-paid manager at the bank’s local branch office. If he punched in his card at the start of his shift and then departed without punching it out after his normal shift, say eight hours later.

Assume he returns two hours later, claiming to have misplaced his wallet and surreptitiously punching his card out. If the manager keeps doing this, he is committing embezzlement by misrepresenting his overtime records.

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What Type Of Crime Is Embezzlement?

Under the law, embezzlement is a white-collar property offense. The offense is keeping property that was entrusted to the defendant without permission. By necessitating a fiduciary connection between the offender and the victim, state law separates embezzlement from larceny or theft.

The party entrusted with money or property has certain obligations and responsibilities in a fiduciary relationship. Trustees, agents, corporate officers, and public officers, as well as workers and professionals, have fiduciary responsibilities. Embezzlement is the betrayal of a defendant’s responsibilities. Now let us see what is the punishment for embezzlement as we have checked what kind of crime is embezzlement.

What Is Embezzlement Charge?

what is embezzlement

Cases like this can be prosecuted at both the federal and state levels. Unless the offense happened in a federal agency or corporation that is financed by the federal government, most embezzlement cases are tried in state courts. Embezzlement can lead to civil action as well as criminal charges.

In the first scenario, the victim initiates a lawsuit against the accused perpetrator to recover the stolen funds. The defendant’s income may be garnished and their possessions confiscated to seek reparation. If the case is tried in criminal court, possible punishments include imprisonment for up to 30 years, heavy fines, and victim compensation, depending on the type of property embezzled, and its amount.

Except for embezzlement and grand theft in the first degree, all offenses are subject to probation or conditional discharge. Keep in mind that these punishments apply to non-predicate offenders as well. Some aggravating elements, such as the fact that the defendant is a repeat offender, may result in a heavier sentence.

Embezzlement penalties are primarily determined by the amount stolen. A fine and restitution are usually needed, but a prison term may be part of the penalty as well. Embezzlement can be pursued in both civil and criminal court by plaintiffs. In this section, we clear what is the punishment for embezzlement.

Now let us see how hard is it to prove embezzlement.

How Hard Is It To Prove Embezzlement Definition In Different Cases?

The majority of embezzlement cases are complicated. It might be difficult to establish a clear boundary between what an employee can and cannot do in a fiduciary relationship in some situations. A variety of activities are done without formal authority, which might result in the employee being prosecuted with embezzlement and misuse of money.

Also, while some financial losses in an organization can be traced back to honest mistakes by bookkeepers, attorneys, or accountants, and while it is human to make mistakes, that does not mean that such a blunder should be recorded on a person’s criminal record, affecting their employment opportunities and livelihood.

As a result, it is critical to engage an experienced financial crimes attorney who will protect the defendant’s rights throughout the prosecution and litigation phases and secure the best possible outcome of the case. Larceny is a type of stealing. Larceny is the stealing of someone else’s property with the purpose to permanently deprive the owner of it.

The property is taken without the permission of the owner. Embezzlement is the seizure of property entrusted to a person to deprive the owner of the goods permanently. The property is stolen from them without their permission. Embezzlement is included in the larceny legislation in New York.

How To Prevent Embezzlement?

what is embezzlement

2 Employers, on the other hand, can devise ways of stealing money from a company. Embezzlement begins with a breach of confidence by a person who has been entrusted with the responsibility of looking after another’s property or money.

One of the most reasonable initial actions a company can do is to thoroughly evaluate potential workers. In addition to completing extensive background checks, personality tests may be used to analyze character traits and identify unwanted habits. Internal controls that monitor behaviors and allow anonymous reporting of questionable actions, as well as periodic audits that reveal misappropriations, can be set up by these risk managers.

Employers should make it apparent that they have a zero-tolerance policy for unlawful activities like embezzlement and that the repercussions of such violations are communicated.

Save Yourself From Criminal Act & Civil Wrong Of Embezzlement

Most embezzlement cases are tried under state law, however, individuals who embezzle from the federal government are also punished by the federal government (or someone paid by the federal government, like a contractor working on a government building). If convicted, you might face prison time, fines, and victim compensation (money to pay for a loss).

The embezzler’s problems may not be over if he or she is charged with a crime. A victim may also file a civil lawsuit. To fulfill the judgment, a successful plaintiff may be able to garnish earnings, levy on a bank account, establish a lien on the property, or even seize and sell the property. It will be determined by the options available to you under state law. We hope we cleared what is embezzlement, and how to prevent yourself from committing this felony.

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