What is Embezzlement?
Embezzlement is the act of dishonestly appropriating or secreting assets, usually financial in nature, by one or more individuals to whom such assets have been entrusted.
Embezzlement is a kind of financial fraud. For instance, a clerk or cashier handling large sums of money can embezzle cash from his or her employer, a lawyer can embezzle funds from clients’ trust accounts, a financial adviser can embezzle funds from investors, or a spouse can embezzle funds from his or her partner.
The crime may range from the very minor in nature, involving only small amounts, to the immense, involving large sums and sophisticated schemes.
Embezzlement is often performed in a manner that is premeditated, systematic and methodical, with the explicit intent to conceal the activities from other individuals, usually because it is being done without their knowledge or consent. Often it involves the trusted person embezzling only a small proportion or fraction of the funds received, in an attempt to minimize the risk of detection.
If successful, a crime of this nature can continue for years without detection. It is often only when the funds are needed, or called upon for use, that the victims realize the funds or savings are missing and that they have been duped by the embezzler.
Embezzlement is a statutory offense so the definition of the crime varies from statute to statute. Typical elements of the crime of embezzlement include the fraudulent conversion of the property of another by a person who has lawful possession of the property.
Embezzlement is a crime against ownership; that is, the owner’s right to control the disposition and use of the property. The conversion element of embezzling requires a substantial interference with the true owner’s property rights (unlike larceny, where the slightest movement of the property when accompanied by the intent to deprive one of the possession of the property permanently is sufficient).
The requirement that the conversion be fraudulent means simply that the defendant willfully and without claim of right or mistake converted the property to his or her own use. The type of property that is the subject of embezzlement varies among jurisdictions. Most 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 in action. Real property is not typically included.
The critical element is that the defendant must have been in lawful possession of the property at the time of the fraudulent conversion and not have mere custody of the property. If the defendant had lawful possession the crime is embezzlement. If the defendant merely had custody, the crime is larceny. Determining whether a particular person had lawful possession of the money or items or mere custody is sometimes difficult.
For more legal definitions, visit our Glossary of Legal and Investigation Terms.