If you or a friend, relative, or coworker have been accused of embezzlement, you probably want some detail on what that really means. You have probably heard the term on the news about an employee stealing thousands or millions of dollars from a business. Clearly, embezzlement is a type of theft offense. However, whether or not it is treated differently than traditional larceny depends on which state or federal law you or an acquaintance is charged under.
A Common Law Understanding of Embezzlement
Theft is defined as permanently or temporarily taking another person’s property without their consent to deprive the true owner of their property. The thief unlawfully makes the property to their own.
Historically, embezzlement was a specific type of theft; The person accused of stealing must have had access or control over the property due to a position of trust.
“The common law, in all its glory, defined theft-related offenses by how and when the accused took custody of the stolen property,” says criminal defense attorney David Louis Raybin of Raybin & Weissman P.C. “If the later-stolen money were entrusted to the alleged thief by a customer or by the employer, then the appropriation was called embezzlement. Thus, the ostensibly lawful possession of the funds was required before the thief would convert them to his or her own use.”
Embezzlement Charges Today
As of 2019, many states have abolished the distinction between embezzlement and theft. If an employee or someone in a position of trust, such as a financial advisor to a senior citizen, is accused of stealing the business or the senior’s money or personal property, they will be charged with theft.
Some states, like Washington, include the old school definition of embezzlement in its theft statute. In the Revised Code of Washington (RCW) 9A.56.020, theft means to wrongfully obtain or exert unauthorized control over the property or services of another person with the intent to deprive them of such property or services.
Under RCW 9A.56.010, “wrongfully obtain” and “exert unauthorized control” can apply to any property or services in one’s possession, custody, or control by an agreement that has been withheld, appropriated, or is to be secreted for the thefts own use.
Some states still classify embezzlement as a separate crime, like Michigan. Under the Michigan Penal Code Section 750.174, any person who is an agent, servant, employee, trustee, bailee, or custodian of the property of another person, government entity, or business, and who fraudulently dispossesses, converts, takes, or secretes any money or personal property belonging to the other party, which has come into the person’s possession by virtue of their position, is guilty of embezzlement.
Each state has unique theft or embezzlement laws. If you are accused of embezzling from a person, business, or government entity, it is important to speak with a local criminal defense attorney about the relevant law. The state’s specific statutes will influence your potential defenses and the prosecutor’s burden.
Federal Embezzlement Law
Embezzlement is also illegal under federal law. In 1985, the U.S. Supreme Court defined embezzlement as the “fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come,” according to the U.S. Department of Justice.
As of today, embezzlement and theft are charged under 18 U.S. Code Chapter 31. The relevant statute and charge depend on the specific circumstances of the case.
Overall, to establish embezzlement in a federal trial, a prosecutor must prove the defendant:
- Held a position of trust or fiduciary relationship with the alleged victim;
- The property came into the defendant’s possession because of their employment or position;
- The defendant fraudulently converted or appropriated the other party’s property for his or her own use; and
- The defendant intended to deprive the owner of their property.
Not all embezzlement cases can be tried in federal court. “Typically, the federal government will take jurisdiction over a case where there is a significant amount of money involved, such as millions of dollars, or where the victim is a federal agency,” said Mr. Raybin.
Penalties for Embezzlement
Embezzlement can be charged as a misdemeanor or felony, depending on the applicable federal or state law. The degree of the offense usually depends on the value of money or property stolen.
“In Tennessee, for example, theft of $1,000.00 or less is treated as a misdemeanor and theft over that amount is treated as a felony, with the specific punishments being graded by the specific amount taken,” said Mr. Raybin.
Penalties for embezzlement includes fines, incarceration, and restitution to the victim(s). State law and federal will each prescribe a minimum and maximum term of jail time or imprisonment as well as minimum and maximum fines based on the level of the misdemeanor or felony offense.
“Extremely serious embezzlement cases can result in sentences as much as 25 years,” according to Mr. Raybin. “Although the more common punishment is probably in the single digits. The ability to make restitution plays an enormous factor in sentencing determinations.”
If you are facing embezzlement charges, you should speak with an experienced local defense attorney about the possible statutory penalties.