Embezzlement

Embezzlement typically occurs in governmental and corporate settings where assets (money or property) are entrusted to employees or institutions. Also, wrongful use of another person’s property for one’s own benefit may be considered embezzlement if the property has been legally entrusted by the owner to the person who is misusing it. Congress has also classified as embezzlement the stealing of letters and other mail by postmasters, clerks, and letter carriers.

Embezzlement takes many forms. About 80% of embezzlement cases involve the misappropriation of assets, including cash, inventory, and supplies. People who are accused of embezzlement are usually being investigated because cash is missing. Embezzlement charges may be levied against almost anyone who has access to these business cash accounts or cash on hand, such as petty cash.

Title 18, Chapter 31 of the U.S. Code contains sections that deal with the various forms of embezzlement and their penalties. For example, Section 656 covers theft, embezzlement, or misapplication by a bank officer or employee. Embezzlement of public money, property, or records is covered in Section 641.

State and local authorities can investigate and convict many forms of embezzlement. The Department of Justice (along with various sections of the U.S. code), however, provides for specific jurisdiction. The U.S. Secret Service has authority over theft, embezzlement or misapplication by any employee of the FDIC. The Federal Bureau of Investigation handles such crimes by bank officers and employees, embezzlement of union funds, and embezzlement from pension and welfare funds.

Embezzlement is a serious charge. In most states it is considered a felony offense. The potential punishments for an embezzlement conviction include prison time and significant fines. For example, in cases of misuse of public funds greater than $1,000, the penalty is generally a fine equal to the amount embezzled or imprisonment for up to ten years, or both. Prison time and fines for misappropriation of bank funds by employees can be up to 30 years and up to one million dollars. Anyone accused of committing the crime of embezzlement should seek help from an experienced criminal defense attorney right away.

Case Studies – Types, Consequences, and Legal Considerations

Case Study 1: Corporate Embezzlement

John, a trusted employee at a large corporation, manages the company’s finances and has access to significant funds. Over time, he begins embezzling money by manipulating financial records and diverting company funds into his personal accounts. The embezzlement scheme goes unnoticed for several years until an internal audit reveals discrepancies.

The corporation files a claim with its fidelity insurance policy, which provides coverage for employee dishonesty. The insurance company investigates the claim and, upon confirming the embezzlement, reimburses the corporation for the stolen funds, mitigating their financial losses.

Case Study 2: Public Funds Embezzlement

In a case involving a public official, Lisa, an elected treasurer, is entrusted with managing the town’s finances. However, she begins siphoning funds from various municipal accounts for personal use. A routine audit uncovers the embezzlement, and Lisa is charged with the misappropriation of public funds. The town files a claim with its public official liability insurance, seeking coverage for the stolen funds and legal expenses associated with the case.

The insurance company investigates the claim and provides legal representation to defend the town’s interests in court. If found guilty, Lisa may face severe penalties, including fines and imprisonment, while the insurance policy helps alleviate the financial burden on the town.

Case Study 3: Bank Employee Embezzlement

Jane, a bank employee responsible for handling customer deposits, devises a scheme to embezzle funds. She manipulates the bank’s records, creating fictitious accounts and diverting customer deposits into her own account. As the embezzlement continues, discrepancies emerge during routine audits.

The bank, upon discovering the embezzlement, files a claim with its financial institution bond insurance, which covers losses due to employee dishonesty. The insurance company investigates the claim and provides reimbursement for the stolen funds, ensuring that the bank can restore its customers’ accounts and maintain their trust.