Embezzlement

Legal Description of Embezzlement

Embezzlement happens when you fraudulently use property that has been entrusted to you. This offense involves abusing your legitimate access to another person’s property for personal benefit, usually due to a relationship or position you hold. The betrayal of trust is the fundamental component of embezzlement.

You betray another’s trust when you misuse the responsibility or access granted to you for personal gain or to harm the person who trusted you. This betrayal can also refer to a breach of fiduciary duty, like when a financial advisor mismanages a client’s assets or when an employee takes advantage of their position to gain finances or influence that benefits him/her at the expense of or uses the victim’s property.

Embezzlement differs from other theft offenses in that other theft crimes involve stealing property without permission, without any prior trust, or without having permission to access the item. For example:

• Larceny can be defined as the act of physically removing someone’s property to deprive them of it permanently
• Robbery is the use of force or intimidation to take property directly from a person
• Burglary happens when someone breaks into a building to steal something or commit another crime.

Here are a few illustrative examples of embezzlement:

• A worker who handles money or bank accounts takes money and puts it into their account or uses company credit cards for non-business purposes.
• A cashier or store manager tampers with sales records or refunds and takes money from the inventory or cash register.
• A company’s director falsifies financial documentation to siphon off funds or assets for their benefit.
• A financial advisor or lawyer exploits clients’ money for personal investments or expenses rather than carrying out their clients’ directions.
• Someone in charge of charitable donations embezzles money meant for the organization and uses it for their costs or purchases.
• A public employee with access to funds or resources may use them for personal projects or perks other than their original purpose.

Elements of Embezzlement

The prosecution must establish several crucial components in an embezzlement case:

• A trust relationship — The prosecution must demonstrate that you were in a position of trust or accountability for the property or funds. They must prove you had legitimate access or control because of your involvement or relationship with the victim.
• Fraudulent conversion of assets or property — The prosecutor must prove that your actions were fraudulent. They must prove that you intentionally took the property for your benefit or use instead of its intended use. The prosecution must demonstrate that you took or used the item against the conditions of your authorization or trust. This entails providing evidence that you used the property for an unlawful purpose or your personal gain.
• An intent to deprive — Prosecutors must demonstrate that you acted specifically to appropriate assets or property for your use, depriving the rightful owner of its benefits.

A Trust Relationship

A trust-based relationship arises when one party trusts the other to safeguard or manage assets or money. Various situations, including employer-employee, fiduciary-client, and corporate partnerships, give rise to this relationship. In these relationships, the individual in charge of the property (commonly called a trustee or fiduciary) has moral and legal obligations to operate in the principal’s or beneficiary’s best interests.

Legal obligations arise from a trust relationship. Usually, these duties consist of:

• Duty of care — The trustee must exercise extreme caution, expertise, and diligence when managing the entrusted property.
• Duty of loyalty — The trustee must act in the principal’s best interest, abstaining from self-dealing and conflicts of interest.
• Accountability — The trustee is required to furnish accurate documentation and statements detailing the administration of the assets or money.

Fraudulent Use of the Property or Assets

Fraudulent use of property or assets in embezzlement involves the intentional and unauthorized appropriation of property entrusted to you. By misusing the property, you deliberately deceive the rightful owner. This deception aims to defraud and secure personal gain at the owner’s expense.

When you use the property in unauthorized ways, you breach the terms of the trust placed in you. Misuse can take many forms, like using property for personal gain, shifting assets to your accounts, or spending money on personal purposes. Every action blatantly violates the obligations and liabilities associated with your position.

Your dishonest use of the assets highlights a profound betrayal of confidence and trust. The owner counted on you to honor your fiduciary obligations and act with integrity. Misusing the property undermines this trust and confidence, which is essential to any fiduciary relationship.

Personal gain is central to understanding fraudulent use in embezzlement cases. When you take something or money for personal gain, you cause the owner to suffer financial loss.

An Intent to Deprive

Prosecutors must show that your conduct was deliberate and not the consequence of carelessness or accident. They must demonstrate that you intentionally and deliberately stole the property, knowing that doing so will hurt the owner. They must demonstrate, for instance, that you transferred corporate cash to your personal account to keep the money for yourself rather than repay it or use it as planned.

Having the intention of returning the items later does not protect you against embezzlement charges. What defines the crime is not your intention to return the item but the act of misappropriation and deceptive motive. Returning the property to its rightful owner before filing charges or starting legal procedures could impact the case. By doing so, you demonstrate a sincere attempt to correct your error, which could affect the outcome of your case or lower the costs.

Prosecutors could present evidence including manipulated bank records, personal use of embezzled funds, and efforts to conceal the theft. They must demonstrate that you meant to deprive the property owner to establish the fraudulent intent necessary for an embezzlement conviction.

Embezzlement By a Public Official

Embezzlement of public funds under Penal Code 504 is similar to Penal Code 503 but with a crucial distinction: PC 504 specifically targets public officials.

Penal Code 504 specifically addresses circumstances in which you, as a public official or employee, misappropriate, take, or utilize public monies for your gain or the benefit of another individual. There is a need for increased responsibility for anyone working in public service.

The elements of the crime are similar to those addressed above.

However, misuse of public funds under Penal Code 424 is not the same as misappropriation by a public official. While they both deal with the improper use of public funds, they cover distinct topics.

Penal Code 424 broadly covers financial malfeasance involving public funds. This consists of making unapproved loans, using money for personal benefit, or failing to account for public funds. It applies to everyone, not just public officials involved in mishandling or misappropriating public funds.

The main elements that prosecutors have to prove in a misappropriation of public funds case under Penal Code 424 include:

• You must have served as an officer in a state or municipal government or as an individual responsible for managing public funds. This indicates that you had a job where you were in charge of handling, protecting, or transferring public funds.
• You used public funds without the proper authorization, either for your gain or the benefit of another person. This is accepting or using the money in ways prohibited by law or your official duties.
• Either you were aware that what you were doing was against the law, or you were criminally negligent in failing to verify that you had the right to spend the money. This indicates that you were either careless in not understanding the legal constraints or acted knowing they existed.

Any person who holds a position of power or responsibility in a public institution, like the government, is a public official. The title “public official” covers a range of roles, whether appointed or elected.

Mayors, governors, members of the parliament, congress, senate, and presidents are elected officials. They make decisions that have a substantial social impact on their supporters and the entire society. Administrative executives, including members of the regulatory boards, commissioners, and department heads, are appointed. They are responsible for some tasks and departments and have the authority to issue orders and make significant decisions. Others are officials in government parastatals and agencies, holders of civil service jobs like teaching, police, and other security services, and managers in educational institutions. They directly oversee and deal with public affairs, enforce the law, and deliver necessary services to the community.

Punishment for Embezzlement

Embezzlement charges under PC 503 are anchored on the type and value of the misappropriated property. This type of crime has two categories:

• Grand theft and
• Petty theft

However, if the property embezzled is valued at more than $950, for example, a car or firearms, you will be charged under Penal Code 487 for grand theft. However, if the property does not fall under the above-mentioned criteria, you will be charged under Penal Code 488 as petty theft.

Grand theft is a wobbler offense. You can face misdemeanor or felony penalties. Prosecutors decide which charge to pursue depending on the unique features of your case and your prior criminal record.

If convicted of grand theft as a misdemeanor, you could face:

• A fine not exceeding $1,000 or
• Imprisonment in county jail for up to one year or both.

Depending on the circumstances, a felony conviction could result in:

• A prison term ranging from 16 months to 3 years or
• Misdemeanor or informal probation with 0 to 1 year in county jail
• Paying a maximum of $10,000 as a fine

If you are convicted of grand theft involving a firearm, you could face the following penalties:

• 16 months, 2 years, or 3 years in jail
• A strike on your record — Under the California Three Strikes Law, a grand theft conviction results in a strike on your criminal record. This strike will result in harsher penalties for any strikeable offense in the future and longer sentencing.

Given the sum of money or property you are accused of misappropriating, the court could issue further sentences. The court will increase your sentence by:

• Two years if the case relates to property or assets worth $65,000 or more
• Two years if the case involves property or any other asset valued at less than $200,000.
• Three years if the case entails property or an asset worth $1,300,000
• Four years if the case involves the property or an asset worth amounting to or in the sum of $3,200,000.

A conviction for petty theft, a misdemeanor, carries several consequences, namely:

• Imprisonment not exceeding six months
• A fine not exceeding $1,000.
• Probation instead of serving time in jail — This would mean observing directives stated by the judge for a specific period.

If you are convicted as a public official of embezzlement of public funds, you will face similar penalties as those for a Penal Code 503 violation.

If convicted of misappropriating funds under Penal Code 424, you could face:

• Imprisonment for the term of two, three, or four years and/or
• A maximum fine of $10,000

Legal Defenses You Could Use in an Embezzlement Case

Embezzlement charges are complex, so it is best to seek the services of a criminal defense attorney. An experienced lawyer will oversee your case, provide legal advice, and represent you at trial. Here are a few defenses he/she could use in your case:

1. You Did Not Use the Property or Funds Fraudulently

Your defense attorney could argue that you did not fraudulently use the assets or money to refute an embezzlement allegation. He/she will contest the allegation of fraudulent intent, attempting to demonstrate that you had no intention of misleading or misusing the property for your benefit.

Your defense could also highlight your proper authorization to use the property or funds. To establish the legality of using the funds, your lawyer can demonstrate that your activities were within the scope of your job or obligations and that you had consent from the appropriate persons.

Furthermore, your lawyer could contend that any purported misappropriation resulted from a miscommunication or oversight rather than deliberate misconduct. They can show that confusion or oversight caused what appeared to be misappropriation.

2. You Were Coerced

Your lawyer may raise this defense if you committed embezzlement under stress or coercion. Rather than demonstrating fraudulent intent, this approach focuses on showing that you acted unlawfully due to external pressures or threats.

The first thing your lawyer will do is demonstrate that you were in immediate danger. The threat must be serious enough to overcome your will and cause you to act against your better judgment. One way to show that you acted under intense pressure is if you received threats of bodily harm or dire repercussions.

Next, you need to prove in your defense that you could not reasonably escape the threat or choose an alternate legal choice. The defense could be less effective if there were other ways for you to stop the criminal act. Given the circumstances, your lawyer must demonstrate that you were under duress and could not have done otherwise.

Additionally, your attorney must prove a direct connection between the coercion and the embezzlement. He/she will argue that you participated in the unlawful action as a direct result of the threats or intimidation. The intent is to demonstrate that the embezzlement was not the product of a deliberate plan but rather a direct response to external pressure.

Last but not least, your lawyer will prove that you had no intention of embezzling before coming under stress or pressure. Your attorney could argue that, rather than being part of a deliberate scheme, your actions were in response to extraordinary circumstances. Your lawyer will attempt to demonstrate that you acted with no fraudulent intent and that the intense external pressures you experienced motivated you to take the actions you did.

3. You Were Falsely Accused

People can fabricate allegations of embezzlement in high-stress situations where feelings like rage and bitterness are prevalent. These accusations are frequently the result of interpersonal disputes, miscommunications, or an effort to discredit an opponent.

Your attorney will begin by gathering evidence that refutes these charges. They will review correspondence, records, and witness accounts to paint a complete and accurate picture of your behavior. This will strengthen your defense and cast doubt on the veracity of the allegations.

Your lawyer will also investigate any potential reasons for the unfounded charges. Your lawyer can strengthen your case and undermine the accused’s credibility by pointing out any personal or professional conflicts that could have caused someone to unjustly accuse you.

In addition, your attorney will carefully review the prosecution’s evidence to look for flaws or contradictions. They will contest the veracity of the allegations by arguing that the evidence does not support the embezzlement charges.

Additionally, your lawyer will craft a counternarrative that emphasizes your innocence. They will contend that you have done nothing wrong and that the charges are the product of competitive pressures and emotional reactions.

4. You Acted on Good Faith

Your lawyer could assert that you had a good faith conviction in your property ownership to defend you against accusations of embezzlement. This defense focuses on showing that you honestly believed you were entitled to the property or funds, even if your belief was mistaken. Your attorney will provide evidence demonstrating your understanding, including conversations, records, or testimony.

This evidence is essential, for example, if you felt you had the right to the property because of certain conditions or received written or verbal permission from a superior. Even if your belief was incorrect, your lawyer will emphasize that it was genuine and unintentionally false.

Your attorney will highlight your sincere belief that you lacked the deceptive purpose necessary for embezzlement by showing your honest belief that you were permitted to use the property rather than through a deliberate scheme. They will contend that any errors or miscommunications resulted from a genuine belief that you were allowed to use the property rather than from a planned plot.

Your attorney will gather witness testimonies, emails, or other pertinent information to support your belief and bolster this argument. They could also point to previous rulings in which the courts recognized good faith belief as a legitimate defense.