Embezzlement Laws and Penalties

Embezzlement is a form of theft and can be charged as either petty theft or grand theft dependent on the amount or value embezzled. If the value exceeds $950, you may be facing charges of grand theft embezzlement. Otherwise, you would likely be facing charges of petty theft. In order to be convicted of embezzlement, all of the elements of the crime need to be proven by the prosecution beyond a reasonable doubt. The elements of embezzlement are as follows:

1. The owner of the funds or property entrusted you with their property.
2. The owner of the funds or property trusted you because they had an established relationship with you in some capacity.
3. Your usage of the funds or property was illegal and benefitted yourself.
4. In using the property or funds, your intention was to take a portion of the use of the item away from the owner.

Some of the elements of embezzlement may not be immediately clear without further exposition and we will examine these in detail.

An established relationship does not necessarily mean a relationship established over a certain time period. All that this means is that the relationship has been previously defined as a relationship of trust. The established relationship can be formal, such as an employee to employer relationship, or it could also be informal such as a friend. The established relationship can even be temporary as part of a service (for example, say a mechanic or valet), because you are temporarily entrusting this service with your property.

A relationship of trust is one of the defining factors that sets apart embezzlement from other forms of theft. Embezzlement is often mistaken for stealing money, but the act of stealing money is only defined as a form of theft. Stealing cash or other physical assets would be considered larceny and not embezzlement. The defining factor is that the stolen assets were at some point entrusted to the defendant. If a cashier steals money from the register, that may be considered embezzlement because their job requires them to be entrusted with access to the register. If a stockroom employee steals money from the register, it would most likely instead be considered larceny.

Another of the key elements of embezzlement is the usage or taking of property or funds for personal gain. In addition to having an established relationship of trust, the assets must be appropriated specifically for personal gain. The concept of personal gain also ties in very closely with the idea of “intent to deprive the owner”, which we will discuss in a moment. In many relationships of trust, assets, either physical or cash, are entrusted to an individual to use as they see fit, for the purpose of benefiting the owner.  Many company employees are given company property in the form of technology (phones, tablets, laptops) to benefit productivity for the company. Misappropriation of these assets can be considered to be embezzlement. Additionally, many companies may issue a travel allowance, professional development funding, or per diem that is expensed to the company. Misuse or misrepresenting your use of these funds can also be considered to be embezzlement. The key here is that you are using entrusted assets for personal gain, which does not necessarily mean that you “stole” in the traditional sense of the word, from the company.

Another key element of embezzlement is the intent to deprive the owner of use, even if only for a short period of time. For this reason, you can still be found guilty of embezzlement if you intended to return the property or pay it back. Intent is an important factor in determining whether or not you are guilty of embezzlement.

As mentioned previously, intent to deprive the owner is very closely related with the idea of personal benefit. The idea of intent to deprive the owner can be complicated in practical affairs because it may not be obvious that using an entrusted asset for personal gain is very often also using that asset with the intent of depriving the owner of that asset. When it comes to company property such as a laptop or tablet, when you are using technology for personal gain (e.g. mining Bitcoin on a company laptop) you are using the technology in a way that was not intended by the company, technically causing unnecessary wear on the item. You may not have specifically intended to deprive the company of use of the technology, but in using it for personal gain, you have deprived the company of future use of that technology for a different employee. In most cases, intent is not clear cut and it can be a particularly tricky element to define and prove under the law during a court case. Therefore, it is best to consult with an experienced attorney regarding these matters.

Embezzlement carries many different possible penalties depending on the value of the embezzled funds or property and the type of property or funding embezzled. The most important distinction is between petty theft embezzlement and grand theft embezzlement. The value threshold for grand theft embezzlement is $950. If the amount embezzled is valued at more than the threshold, you may be charged with grand theft. If it is less, you will likely instead be charged with petty theft. An additional stipulation is that if you embezzle values of less than $950, but do so several times, then if the value of the combined amount over a period of twelve months exceeds the threshold you may be charged with grand theft.

Petty theft is treated as a misdemeanor in the state of California. If you are charged and convicted with petty theft embezzlement, you can face up to six months of county jail time, a fine of up to $1000, or a combination of the two. However, If you are charged with grand theft embezzlement you may be charged with either a misdemeanor or felony account based on how the prosecution chooses to approach the case. In California, these types of charges are called wobblers. The prosecution will likely take into account your criminal history, the amount or value embezzled, and other specific circumstances of your case.

A misdemeanor embezzlement case may result in up to a year of county jail time or a fine of up to a $1000 or a combination of the two. A felony embezzlement case may result in county jail time of no less than 16 months, but no more than three years, a fine of up to $10,000 or any combination fine and jail time. For particularly high values of embezzlement, there are additional sentencing options.

• For values in excess of $65,000, an additional year of jail time may be added;
• For values in excess of $200,000, an additional two years of jail time may be added;
• For values in excess of $1,300,000, an additional three years may be added;
• For values in excess of $3,200,000, an additional four years may be added.

There are additional factors that can potentially have an effect on your case during sentencing. If the victim of your crime is an elderly person or a dependent (someone who is mentally or physically incapable of fully taking care of themselves), then you may face a harsher sentence. Additionally, if you surrendered the embezzled funds or items prior to being charged with the crime, you may face a lighter sentencing.

We will discuss some of the common defenses that are utilized during embezzlement cases. However, it is important to note that knowing a generalized defense will never be a good replacement for contacting and hiring a professional attorney. Each case is different and an experienced attorney will know how to best approach your case and tailor the defense to the case, the jury, and even the specific judge and court you will be tried in.

One of the stronger and more common defenses to embezzlement is that you believed that you had rightful ownership of the property, that is, that you the property entrusted to you was yours to own and not to use. The one case in which this does not apply is if you took funds or property as repayment to a debt owed to you. Although the owner may owe you payment, it is still illegal to keep property or funds entrusted to you for a different purpose.

As an example, Chris works at a gas station owned by Bob. A few months ago, Bob borrowed Chris’ bicycle and it was stolen while in his possession. He promised to pay Chris back but he still hasn’t gotten around to it. While at work, Bob asks Chris to take some cash from the register to the bank. Because Chris is frustrated, he takes the money that Bob owes him out of the envelope and keeps it for himself. Chris is surprised when Bob hits him with embezzlement charges because the money was owed to him. However, while Chris might have had a good reason to believe that he should be allowed to keep the money, he may still be found guilty of embezzlement because the money was entrusted to him in a different capacity.

Another common defense to embezzlement is lacking criminal intent. The prosecution must be able to prove that you intended of depriving the owner of their property. If you are facing embezzlement, a valid defense would be to say that you took the property or funds by mistake or by accident. It is very common for misunderstandings or miscommunications to happen in the workplace, especially in fast paced environments. Unless the prosecution can prove via legally obtained specific evidence (e.g. emails, text messages, recorded phone calls, etc.) that you intended to embezzle, there may not be enough evidence or only circumstantial evidence, which is not enough to convict you of theft in a court of law.

Another possible defense is that the owner of the property never made a demand for the return of the property. Robert works for a company which provides him with a laptop to do his work. When Robert leaves the company, he keeps on using the laptop as his own personal device. After 6 months, the company brings embezzlement charges against him. While technically Robert has committed embezzlement in failing to return the laptop, he may be able to make the argument that the company never asked for the laptop back and so he did not know that they were expecting him to return the laptop.

Again, all of these are common and valid defenses, but it takes an experienced attorney to know when and how to apply these arguments to your case.

There are specific offenses related to embezzlement that you may find yourself charged with. We will briefly discuss possible complications and interactions for cases in which you may find yourself with multiple charges.

Penal Code 470 deals with forgery. The legal definition of forgery is to knowingly make changes to, fabricate, or use a document, with the intention of committing fraud. Forgery might be as simple as writing a check in another person’s name and attempting to get cash for it or it may be as complicated as fabricating a deed to a house that you do not own. Either of these could be charged as both forgery and embezzlement and both of these charges would involve complicated legal cases. PC 470 Forgery is another wobbler and the misdemeanor penalty is up to one year served in a county facility, while a felony may be up to three years in a county facility.

Burglary is defined as unlawfully entering any building or enclosure with the intent to commit theft or felony. If you are breaking and entering into a building you should not be in at a time that you should not be there (e.g. your office during unapproved hours), you could be charged with both burglary and embezzlement simultaneously. Burglary is also a wobbler if the structure you enter is uninhabited (as in not a current place of residence for another person like an office or commercial space), but it is a felony if the place you break into is someone’s current place of residence.

Fraud has many different forms under the California Penal Code, but the general definition of fraud is committing an act where the purpose is to receive unfair or undeserved benefit to yourself or unfair or underserved harm to another individual. Most types of fraud could also be filed as embezzlement and generally, it is up to the prosecution to choose how they would like to proceed. Some of the various forms of fraud in include mail fraud, check fraud, and insurance fraud. Most types of fraud also carry their own type of charge within the legal code so it is especially important to seek legal counsel when dealing with cases of fraud.

Misappropriation of Public Funds under Penal Code 424 is essentially the same as embezzlement. However, the key difference is that the property or funds embezzled belong to the state or federal government. Additionally, misappropriation of public funds also typically only applies to larger amounts of money.

Misappropriation of Public Funds is always a felony and has a minimum sentence of two years and a maximum of four, to be served in a state facility. Federal funding will also typically have its own charges and sentencing on top of state sentencing.