What is Embezzlement?

Legal Definition
Embezzlement is the act of withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud, e.g. a lawyer might embezzle funds from the trust accounts of his or her clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.

Embezzlement usually is a premeditated crime performed methodically, with the embezzler taking precautions to conceal his or her activities of the criminal conversion of the property of another person, because the embezzlement is occurring without the knowledge or the consent of the affected person. Often it involves the trusted individual embezzling only a small proportion or fraction of the total of the funds or resources he/she receives or controls; in an attempt to minimize the risk of the detection of the misallocation of the funds or resources. When successful, embezzlements continue for years (or even decades) without detection. It is often only when a relatively large proportion of the funds are needed at one time; or they are called upon for another use; or, when a major institutional reorganization (the closing or moving of a plant or business office, or a merger/acquisition of a firm) requires the complete and independent accounting of all real and liquid assets; prior to, or concurrent with, the reorganization, that the victims realize the funds, savings, assets or other resources, are missing and that they have been duped by the embezzler.

In the U.S., embezzlement is a statutory offense that, depending on the circumstances, may be a crime under state law, federal law, or both; therefore, the definition of the crime of embezzlement varies according to the given statute. Typically, the criminal elements of embezzlement are: (i) the fraudulent (ii) conversion (iii) of the property (iv) of another person (v) by the person who has lawful possession of the property.

(i) Fraudulence: The requirement that the conversion be fraudulent requires that the embezzler wilfully, and without claim of right or mistake, converted the entrusted property to his or her own use.

(ii) Criminal conversion: Embezzlement is a crime against ownership; i.e. voiding the right of the owner to control the disposition and use of the property entrusted to the embezzler. The element of criminal conversion requires substantial interference with the property rights of the owner. (This is unlike larceny, wherein the slightest movement of the property, when accompanied by the intent to permanently deprive the owner of possession of the property is sufficient cause.)

(iii) Property: Embezzlement statutes do not limit the scope of the crime to conversions of personal property. Statutes generally include conversion of tangible personal property, intangible personal property and choses in action. Real property is not typically included.

(iv) of another: A person cannot embezzle his or her own property.

(v) Lawful possession: The critical element is that the embezzler must have been in lawful possession of the property at the time of the fraudulent conversion, and not merely have custody of the property. If the thief had lawful possession of the property, the crime is embezzlement. If the thief merely had custody, the crime is larceny.
-- Wikipedia
Legal Definition
Fraudulent taking of personal property by someone to whom it was entrusted. Most often associated with the misappropriation of money. Embezzlement can occur regardless of whether the defendant keeps the personal property or transfers it to a third party.
Historically, embezzlement became a crime because thefts were occurring in which the elements of larceny could not be met because the thief had the right to possess the funds; thus, the prosecution could not prove the element of a “trespassory taking.” Meanwhile, proving embezzlement only requires showing either that the employee had possession of the goods or funds because of the employee’s position or that the employee had the authority to exercise substantial control over the goods or funds. Courts determine the question of substantial control by considering the employee’s job title, job description, and the practices of that particular company. Some states also have fraudulent conversion statutes, which provide for the criminalization of actions that border between larceny and embezzlement. The government can also charge individuals with attempted embezzlement.

Methods of embezzlement differ. Some embezzlers “skim off the top” so that they continually acquire a small amount over a particular time interval. This method reduces the likelihood of being caught. On the other hand, some embezzlers steal a very large amount of the goods or funds on a single instance and then disappear. Sometimes company managers under-report income to their supervisors and keep the difference.

The Internal Revenue Service requires that embezzlers include embezzled funds in their yearly income taxes. Upon returning the funds or paying restitution, the embezzler becomes eligible for a tax deduction. Failure to report embezzled funds as gross income can result in the bringing of tax evasion charges.

Companies have created safeguards to protect against embezzlement. For example, they invented cash registers to ensure that gross sales equal the deposit at the end of a given day. Companies also divide duties between levels of employees as a form of oversight. Embezzlement in the face of split duties adds the difficult requirement of forming a collusive arrangement and likely requires split proceeds, lowering the payoff for each member of the arrangement.

See White-collar crime.
Legal Definition
Crim. law. The fraudulently removing and secreting of personal property, with which the party has been entrusted, for the purpose of applying it to his own use.

2. The Act of April 30, 1790, s. 16, 1 Story, L. U. S. 86, provides, that if any person, within any of the laces under the sole and exclusive jurisdiction of the United States, or upon the high seas, shall take and carry away, with an intent to steal or purloin, the personal goods of another; or if any person or persons, having, at any time hereafter, the charge or custody of any arms, ordnance, munition, shot, powder, or habiliments of war, belonging to the. United States, or of any victuals provided for the victualling of any soldiers, gunners, marines, or pioneers, shall, for any lucre or gain, or wittingly, advisedly, and of purpose to hinder or impede the service of the United States, embezzle, purloin, or convey away, any of the said arms, ordnance, munition, shot or powder, habiliments of war, or victuals, that then, and in every of the cases aforesaid, the persons so offending, their counsellors, aiders and abettors, (knowing of, and privy to the offences aforesaid,) shall, on conviction, be fined, not exceeding the fourfold value of the property so stolen, embezzled or purloined the one moiety to be paid to the owner of the goods, or the United States, as the case may be, and the other moiety to the informer and prosecutor, and be publicly whipped, not exceeding thirty-nine stripes.

3. The Act of April 20, 1818, 3 Story, 1715, directs that wines and distilled spirits shall, in certain cases, be deposited in the public warehouses of the United States, and then it is enacted, s. 5, that if any wines, or other spirits, deposited under the provisions of this act, shall be embezzled, or fraudulently hid or removed, from any store or place wherein they shall have been deposited, they shall be forfeited, and the person or persons so embezzling, hiding, or removing the same, or aiding or assisting therein, shall be liable to the same pains and penalties as if such wines or spirits had been fraudulently unshipped or landed without payment of duty.

4. By the 21st section of the act to reduce into one the several acts establishing and regulating the post-office, passed March 3, 1825, 3 Story, 1991, the offence of embezzling letters is punished with fine and imprisonment. Vide Letter.

5. The act more effectually to provide for the punishment of certain crimes against the United States, and for other purposes, passed March 3, 1825, s. 24, 3 Story, 2006, enacts, that if any of the gold or silver coins which shall be struck or coined at the mint of the United States, shall be debased, or made worse, as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be, pursuant to the several acts relative thereto, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise, with a fraudulent intent and if any of the said officers or persons shall embezzle any of the metals which shall, at any time, be committed to their charge for the purpose of being coined; or any of the coins which shall be struck or coined, at the said mint; every such officer, or person who shall commit any, or either, of the said offences, shall be deemed guilty of felony, and shall be sentenced to imprisonment and hard labor for a term not less than one year, nor more than ten years, and shall be fined in a sum not exceeding ten thousand dollars.

6. When an embezzlement of a part of the cargo takes place on board of a ship, either from the fault, fraud, connivance or negligence of any of the crow, they are bound to contribute to the reparation of the loss, in proportion to their wages. When the embezzlement is fixed on any individual, he is solely responsible; when it is made by the crew, or some of the crew, but the particular offender is unknown, and from the circumstances of the case, strong presumptions of guilt apply to the whole crew, all must contribute. The presumption of innocence is always in favor of the crew, and the guilt of the parties must be established, beyond all reasonable doubt, before they can be required to contribute. 1 Mason's R. 104; 4 B. & P. 347; 3 Johns. Rep. 17; 1 Marsh. Ins. 241; Dane's Ab. Index, h. t.; Wesk. Ins. 194; 3 Kent, Com., 151; Hardin, 529.
-- Bouviers Law Dictionary
Legal Definition
The fraudulent appropriation to his own use or benefit of property or money entrusted to him by another, by a clerk, agent, trustee, public officer or other person acting in a fiduciary character. See 4 Bl. Comm. 230, 231; 3 Kent, Comm. 194; 4 Steph. Comm. 168, 169, 219; Fagnan v. Knox, 40 N. Y. Super. Ct. 49; State v. Sullivan, 49 La. Ann. 197, 21 South. 688, 62 Am. St. Rep. 644; State v. Trolson, 21 Nev. 419, 32 Pac. 930; Moore v. U. S., 160 U. S. 268, 16 Sup. Ct 294, 40 L. Ed. 422; Fulton v. Hammond (C. C.) 11 Fed. 293; People v. Gordon, 133 Cal. 328, 65 Pan. 746, 85 Am. St Rep. 174

Embezzlement is the fraudulent appropriation of property by a person to whom it has been entrusted. Pen. Code Cal. § 503; Pen. Code Dak. § 596.

Embezzlement is a species of larceny, and the term is applicable to cases of furtive and fraudulent appropriation by clerks, servants, or carriers of property coming into their possession by virtue of their employment. It is distinguished from "larceny," properly so called, as being committed in respect of property which is not at the time in the actual or legal possession of the owner. People v. Burr, 41 How. Prae. (N. Y.) 294 ; 4 Steph. Comm. 168.

Embezzlement is not an offence at common law, but was created by statute. "Embezzle" includes in its meaning appropriation to one's own use, and therefore the use of the single void "embezzle," in the indictment or information, contains within itself the charge that the defendant appropriated the money or property to his own use. State v. Wolff, 34 Ln. Ann. 1153.
-- Black's Law Dictionary
Legal Definition
The felonious appropriation by an agent or servant of personal property entrusted to his possession by or for his principal. See 98 Am. Dec. 131, note.
-- Ballentine's Law Dictionary