Embezzlement occurs when someone steals or misappropriates money or property from an employer, business partner, or another person who trusted the embezzler with the asset.

Embezzlement is different from fraud or larceny (theft). The embezzler has permission to handle the property in a certain way (but not to take it). Instead, the wrongdoer uses the position of trust granted by the owner to convert the property to the embezzler’s possession and control (to take it).

Examples of Embezzlement

The act of embezzlement can occur in many familiar circumstances. Below you’ll find a couple of typical examples.

How Employees Embezzle on the Job

An employee who takes money or property from an employer (or sometimes a customer) and uses it for personal benefit commits embezzlement. Here are a few ways this act can be committed:

• charging more than the cost of the product and pocketing the difference
• “borrowing” money from the cash register
• depositing vendor checks into a personal account
• padding an expense account
• taking inventory or office supplies for personal use
• changing the account books to hide losses or stolen amounts
• moving money from a customer’s account into a personal account
• adding a fake employee to the company payroll
• taking bribes or kickbacks, and
• tampering with employee time records.

Embezzlement of Property Held in Trust

Embezzlement can occur whenever someone mishandles property that someone else entrusts with them. For instance, embezzlement can happen as a result of:

• borrowing money from a sports league or civic organization’s bank account
• adjusting the books to hide a misappropriation of funds
• using a client’s lawsuit award to pay operating expenses
• selling property and pocketing the proceeds without accounting for it to heirs
• using a child or relative’s Social Security check
• setting up a check or credit card kiting scheme, and
• stealing money through a Ponzi scheme.

Embezzlement: Both a Criminal Act and a Civil Wrong

As a criminal offense, most embezzlement gets prosecuted under state law; however, the federal government also prosecutes those who embezzle from the federal government (or someone paid by the federal government, like a contractor working on a government building). If convicted, the penalties include incarceration, fines, and victim restitution (money to pay for a loss).

Suffering through a criminal proceeding might not be the end of the embezzler’s worries. A victim (whoever lost the property) can also sue in civil court. A winning plaintiff (called a “judgment creditor”) might be able to use the civil judgment to garnish wages (take money from your paycheck), levy on a bank account (withdraw funds from your account), place a lien on property, or even seize and sell property to satisfy the judgment. It will depend on the avenues (remedies) provided to you under state law.

(Find out more in Bankruptcy and Embezzlement.)

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