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Embezzlement The fraudulent conversion of another's property by a person who is in a position of trust, such as an agent or employee.

Embezzlement is distinguished from swindling in that swindling involves wrongfully obtaining property by a false pretense, such as a lie or trick, at the time the property is transferred, which induces the victim to transfer to the wrongdoer title to the property.Nature

There was no crime of embezzlement under the Common Law. It is a statutory crime that evolved from Larceny. Whereas larceny requires a felonious trespassory taking of property at the outset, embezzlement is a wrongful appropriation subsequent to an originally lawful taking. Embezzlement is, therefore, a modification of larceny designed to cover certain fraudulent acts that do not come within its scope. Although they are mutually exclusive crimes, larceny and embezzlement do overlap slightly under statutes in some states.

Embezzlement was created by the English legislature, which designated specific persons who might be liable for the offense. These were essentially persons entrusted with another's property, such as agents, attorneys, bankers, and corporate officers.

The English definition of the offense is followed in the United States. Statutes do not usually list the persons who might be liable but, instead, generally describe the offender as a person entrusted with, or in possession of, another's property.Property

The type of property that must be converted is governed by statute. Generally, property is defined as including money, goods, chattels, or anything of value. Intangible Personal Property; Commercial Paper, such as checks, promissory notes, bonds, or stocks; and written documents, such as deeds or contracts, may also be the subject of embezzlement.

Under some statutes, property consists of anything that can be the subject of larceny. In other states, however, the property requirement for embezzlement is broader. For example, the statute might punish the conversion of both real and personal property.

In some states, the embezzlement of public property or public funds is a separate offense. The offense is characterized by the manner in which the money is received. A court clerk who receives bail money is a recipient of public money and the person can be liable if such money is wrongfully converted by him or her.

The property subject to embezzlement must have some value, even though value is not an element of the offense. Although a check without a required endorsement does not have value, the fact that the endorsement can be forged gives it sufficient value to make it a subject of embezzlement.Elements

Statutes governing the offense vary widely throughout the states. To determine exactly what elements comprise the offense, it is necessary to examine the particular statute applicable.

Elements common to embezzlement are as follows: (1) the property must belong to a person other than the accused, such as an employer or principal; (2) the property must be converted subsequent to the defendant's original and lawful possession of it; (3) the defendant must be in a position of trust, so that the property is held by him or her pursuant to some fiduciary duty; and (4) the defendant must have an intent to defraud the owner at the time of the conversion.

Ownership The principal or employer must be the owner of the property embezzled by an agent or employee at the time the offense is committed. Under many statutes, the ownership requirement is expressed as the property of another. It is sufficient if any person, other than the defendant, owns the property and it does not matter who has title to it or that it is owned by more than one person.

Jurisdictions differ on the question of whether a person can embezzle funds belonging to a spouse. In states that retain the spousal privilege, a person can be prevented from testifying to a crime against a spouse; therefore, spousal embezzlement will not be prosecuted.

Unless a statute provides otherwise, coowners of property, such as joint tenants or tenants in common, cannot be guilty of the offense with respect to the property that is jointly owned. A co-owner who wrongfully transfers jointly owned property converts his or her own property as opposed to that of another; therefore, there is no conversion. If a person has any interest in property held jointly with another, the person cannot be convicted of the offense relating to that property. For example, a coowner of an automobile cannot be guilty of embezzling it if both owners have an equal right to possession. A number of states, however, have statutes punishing embezzlement by co-owners, such as partners who wrongfully convey partnership assets.

In most states, an agent authorized to collect money for his or her principal and to keep a certain amount as commission is guilty of embezzlement if he or she wrongfully transfers the entire sum collected.

Possession or Custody of Property Possession is the essential element for distinguishing between embezzlement and larceny. While larceny requires that the thief take the property out of the victim's possession, the person must lawfully possess the property at the time that it is converted for embezzlement.

It is not necessary for the defendant to have physical or exclusive possession. It is sufficient if the person has constructive possession, a form of possession that is not actual but that gives the holder power to exercise control over the property either directly or through another person. Alternatively, mere custody is insufficient for embezzlement. If a master puts a servant in charge of property for purposes of guarding or caring for it, the master is considered to have constructive possession of such property while the servant has mere custody. A servant who wrongfully converts property over which he or she has custody may be guilty of larceny, but not embezzlement.

The fact that an accused person lawfully receives property at different times will not negate an embezzlement charge provided all other elements of the offense are met.

Trust Relationship Since the offense is aimed at punishing persons who convert property for their own use when possession is lawfully acquired, prosecution is limited to instances where the parties are in a fiduciary, or trust, relationship.

Generally, a debtor and a creditor, or an agent and a Broker, do not have a fiduciary relationship sufficient for the offense. There must be some further indication that one person has a duty to care for and exert some control over the other's property. The most common type of trust relationships are those existing among corporate officers, partners, and employers and their employees.Conversion of Property

Conversion is an act that interferes with an owner's right of possession to his or her property. For purposes of embezzlement, conversion involves an unauthorized assumption of the right of ownership over another's property. It may, for example, occur when a person is entrusted with property for one purpose and uses it for another purpose without the consent of the owner. Generally, any type of conversion that occurs after a person obtains lawful possession of property is sufficient.

Although a failure to return property is evidence of conversion, it does not necessarily constitute embezzlement—absent proof of criminal intent. However, if a statute imposes an absolute duty to return property, the failure to do so is embezzlement, provided all other elements are met.

In certain circumstances, a demand is required before a person can claim that his or her property has been converted. Usually, no demand is required if it would be futile, such as when an accused has fled the jurisdiction with the property. If, however, there is no definite time specified for the return of the property, a demand might be necessary. The demand is merely a request that the wrongdoer return the property. The request does not have to be formal, and there is no requirement that the word demand be used.

When an agent is given authority to sell property and thereafter converts the proceeds of the sale, he or she is guilty of embezzlement of the proceeds, as distinguished from the property sold. A person with authority to cash a check but who converts the cash is, likewise, guilty of embezzlement of the cash and not of the check. The person, might, however, be guilty of embezzling the check if at the time of cashing it, the person has a fraudulent intent to convert it.

Intent In a majority of jurisdictions, a fraudulent intent to deprive the owner of his or her property is necessary for embezzlement. It is characterized as intent to willfully and corruptly use or misapply another's property for purposes other than those for which the property is held. The defendant's motive is not relevant to the intent element.

Although it is not essential that the intent exist at the time possession is first taken, it must be formed at the time the property is converted. The offense is not committed if there is an intent to return the specific property taken within a reasonable period of time. If, however, there is a fraudulent intent at the time the property is converted, a subsequently formed intent to return the property will not excuse the crime. An offer to restore the property will not bar a prosecution for embezzlement. Some courts have held, however, that an offer of restoration can be considered on the question of intent.

A person who believes that the property to be transferred is his or hers is considered to act pursuant to a claim of right. The possibility that the belief is mistaken, or unreasonable, is not important. If one has a Good Faith belief that one has a right to withhold property or devote it to one's own use, the conversion cannot be fraudulent, and there is no embezzlement.

The validity of a claim of right is a Question of Fact determined from Circumstantial Evidence. It is not sufficient if the person merely states he or she acted honestly. If circumstances evince that there was a willful and knowingly wrongful taking, a claim of right defense will not succeed.Persons Liable

One or more persons may be guilty of embezzlement. If there is a conspiracy to embezzle, parties to the agreement are liable as principals. A person who aids and abets in the conversion can also be guilty of the offense.Punishment

Since the offense is defined differently in several jurisdictions, the punishment for embezzlement can vary. Generally, the penalty is a fine, imprisonment, or both.

Some states distinguish between grand embezzlement and petit embezzlement on the basis of the value of the property stolen. The former involves property of a greater value and is punishable as a felony, while the latter involves property of a lesser value and is punishable as a misdemeanor.Further readings

Frazer, Douglas H. 2002. "To Catch a Thief: Civil Strategies for Handling Embezzlement Cases." The Wisconsin Lawyer 75 (February): 6

Johnson, J. A., Jr. 2000. Thief: The Bizarre Story of Fugitive Financier Martin Frankel. New York: Lebhar-Friedman.

Kahl, Leah A., and Peter C. Ismay. 1998. "Exceptions to Discharge for Fiduciary Fraud, Larceny, and Embezzlement." Journal of Bankruptcy Law and Practice 7 (January-February): 119–60.

McClintick, David. 1982. Indecent Exposure: A True Story of Hollywood and Wall Street. New York: William Morrow.Cross-references

Fiduciary; Fraud; Joint Tenancy; Larceny; Tenancy in Common.West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

embezzlement n. the crime of stealing the funds or property of an employer, company, or government or misappropriating money or assets held in trust. (See: embezzler, theft)Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.embezzlement noun appropriation, breach of trust, cheating, defalcation, fraud, fraudulent appropriation, fraudulent appropriation of money, fraudulent conversion, larceny, malversation, misappropriation, peculation, stealing, swindle, theft, theft of money ennrusted to one's care, theft of money entrusted to one's management, thievery, wrongful appropriation
Associated concepts: conversion, corporate embezzlement, embezzlement of public funds, larceny, misappropriation, theft by means of embezzlement See also: conversion, larceny, misappropriation, theft

Burton's Legal Thesaurus, 4E. Copyright © 2007 by William C. Burton. Used with permission of The McGraw-Hill Companies, Inc.

EMBEZZLEMENT, 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.



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