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 Charged With Embezzlement 

Michael Santos

Michael Santos

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CHARGED WITH EMBEZZLEMENT, NOW WHAT?

Embezzlement is taking another’s money or property for personal gain, in violation of fiduciary duties, and breaching trust.

INTRODUCTION

News headlines about embezzlement and employee theft cases are constant. Due to the pandemic crisis and other factors, embezzlement is on the rise. Simply put, embezzlement is stealing money from a business, usually an employer, from a position of trust. An example of embezzlement is cashing a forged check. Another example of embezzlement is overbilling a customer.

Embezzlement is a felony subject to harsh penalties under federal law. Embezzlement means jail or prison time in many cases, and people go to jail for misappropriation of funds every day.

The news media reports daily on embezzlement cases because people want to know why others steal money from businesses and employers. Regardless of the reasons, our goal is to help people face their situation. When facing embezzlement charges, people can take steps to ameliorate the situation and obtain a better outcome.

Why do people steal from an employer? Generally speaking, experts say that most people steal because they think that money will help them fix their problems. Many good, honest people, facing life’s pressures, mishandle an opportunity in the workplace and rationalize it to justify the crime. Pressure, opportunity, and rationalization. The 3 elements of the fraud triangle.

Regardless of the theft amounts, people want to know when someone in a position of trust misappropriates money or property. These cases are challenging for the person charged because the documentary evidence against them can be sufficient to convict. To add insult to injury, people assume the person is guilty, and everyone forgets that they are “innocent until proven guilty in a court of law.” 

For the person accused of embezzlement or employee theft, there are 5 Tips to help face the charges and achieve a better outcome overall. Embezzlement is a serious charge that can be personally and professionally devastating. Those involved in an embezzlement or employee theft case must be proactive to mitigate the negative personal and professional consequences. 

Embezzlement is stealing money from a business or employer abusing a position of trust. Who usually commits embezzlement? An insider, like a bookkeeper, accountant, manager, is usually in a position to commit embezzlement.

An example of embezzlement is cashing forged checks. Overbilling a customer is another example of embezzlement or employee theft.

Embezzlement is considered taking another’s money or property for the person’s own personal gain. The critical issue in embezzlement is that the person was granted access to the money or property and had a fiduciary duty to safeguard it.

Is embezzlement worse than theft? Yes, some people consider that embezzlement is worse than theft because of the breach of trust involved.

IS EMBEZZLEMENT CRIMINAL OR CIVIL?

The answer is both: embezzlement is civil and criminal

Employers and victims can pursue civil embezzlement actions, leading to a judgment for damages instead of jail time or a criminal record. However, such civil actions for embezzlement would not prevent prosecutors from bringing criminal charges. 

Embezzlement is a crime under both state and federal laws, and embezzlement can be charged as a felony or misdemeanor. As a felony crime, embezzlement is subject to harsh penalties, including prison time. People go to jail for misappropriation of funds every day.

Under federal law, a person convicted for embezzlement can receive up to 20 years in federal prison and $50,000 in fines. Embezzlement is also subject to penalties under various state laws.

Not only can a person charged with embezzlement have civil and criminal consequences, but for those wondering how long does embezzlement stay on your record, embezzlement stays on your record indefinitely. Unless expunged, embezzlement stays on a person’s record and will show up on a background check until and unless expunged. Even after ten years, embezzlement can show up on a background check (depending on the type of background check). The Fair Credit Reporting Act (FCRA) allows felony arrests to be reported on background checks for seven years after release from prison. Still, felony convictions can be reported as far back as the employer chooses to go. Many employers check a period of five to ten years of history when hiring applicants.

CRIMINAL EMBEZZLEMENT CHARGES

To prove embezzlement, a prosecutor must demonstrate the following four elements:

  1. There was a fiduciary relationship between the defendant and the victim;
  2. The defendant received access to the money or property because of an employment or business relationship;
  3. The defendant misappropriated the money or property for their own personal use; and
  4. The defendant intended to deprive the victim of its rightful money or property.

How hard is it to prove embezzlement? Whether embezzlement is hard to prove depends on the evidence available to the prosecution and the specific facts of the case. (See discussion below on Defenses to Embezzlement Charges).

MOST COMMON FORM OF EMBEZZLEMENT

Cash skimming is the most common form of embezzlement. In a simple cash skimming scheme, the person who handles the cash directly, such as cashiers, servers, bartenders, or delivery drivers, embezzle funds by destroying or falsifying transaction records and pocketing the cash. 


Another common form of embezzlement is overbilling customers.

EMBEZZLEMENT AND TRUST

Embezzlement or employee theft is not possible unless the employee or corporate officer has financial access or financial authority at their place of business. 

Embezzlement is a crime that occurs from a position of trust. Companies usually give trusted employees access to bank accounts, vendor relationships, corporate credit cards, and other financial information. These employees and executives may face personal challenges or pressures in their personal lives that can affect their behavior and cloud their judgment. Many people who do not view themselves as “criminals” still find themselves accused of white-collar crimes, including embezzlement or employee theft. 

As noted, embezzlement occurs when someone steals money from an employer or business partner. 

Embezzlement vs. theft: Embezzlement is different from other types of theft or fraud. In embezzlement, the person has company permission to handle the company’s property but does not have permission to take it for personal use. The person abuses the position of trust granted by the company to take the property. For this reason, some people consider that embezzlement is worse than theft.

In other theft or fraud cases, the employee never had permission to handle the property at all. The employee was never given special trust.

WHAT IS THE RELATIONSHIP BETWEEN EMBEZZLEMENT AND CORRUPTION? 

As far as the relationship between embezzlement and corruption, they are both subject to various criminal penalties and share certain common characteristics.

Wikipedia defines corruption as a form of dishonesty, or a criminal offense undertaken by a person or an organization entrusted with a position of authority to acquire illicit benefits or abuse power for one’s personal gain. Corruption involves many types of activities, including bribery and embezzlement. Under this definition, embezzlement is a form of corruption. 

As such, 

  • embezzlement and corruption are both crimes of dishonesty;
  • embezzlement and corruption are both situations in which the accused abuses a position of trust;
  • embezzlement and corruption both involve fraudulent conduct and surreptitious means;

An example of embezzlement and corruption intersecting is when employees misdirection company funds into fake companies, with the intent to pocket the money and benefit themselves and other corrupt employees and allies.

DEFENSES TO EMBEZZLEMENT CHARGES

When charged with embezzlement, one of the first things people wonder is, “are there any defenses to embezzlement?” Or, they google questions like “how to get out of an embezzlement charge?” or “how do I beat embezzlement charges?” In this section, we discuss ways in which embezzlement charges get dropped or dismissed, as well as legal defenses available in court against embezzlement charges.

Embezzlement or employee theft cases are not always a slam dunk for federal prosecutors. Dismissals and dropped charges do happen, especially when the documentation or other evidence is not sufficient. 

For example, in a reported case out of Pennsylvania, prosecutors charged a high-end Philadelphia restaurant manager with embezzlement under state law after ownership discovered money missing from the business. The manager could not account for the missing funds. 
Ultimately, the case hinged on the prosecutor’s burden of proof. In every criminal case, prosecutors have to prove guilt beyond a reasonable doubt. Prosecutors have to come forward with sufficient evidence that someone committed a crime and that someone is the defendant before the court.

So when people ask, “how do you beat an embezzlement charge?” the answer is this: To beat an embezzlement charge, the defendant has to show the prosecutor’s failure to bring forward sufficient evidence to document the case. 

In the Philadelphia embezzlement case, the defendant exposed the prosecution’s failure to pinpoint when the money went missing exactly. Defense counsel argued that if the prosecution could not prove the precise time the funds went missing, it was fundamentally impossible to convict his client of the crime beyond a reasonable doubt. The judge agreed, and the restaurant manager was found not guilty of all charges. 

The restaurant manager used an insufficient evidence defense, which applies when the prosecutor is missing critical information like the timetable of events or the paper trail. Indeed, press reports suggest that insufficient evidence is grounds for dismissal in approximately 40% of federal embezzlement cases.

*Pro-Tip: Anyone involved in a criminal investigation or court case must discuss all available legal defenses with experienced criminal defense counsel. 

Here is a list of embezzlement defenses, those typically raised against embezzlement or employee theft charges:

  1. Insufficient Evidence:
    • As shown in the discussion above.
  2. Duress:
    • This may apply when defendants can show that either they embezzled or faced a significant risk of loss, such as a job loss.
  3. Entrapment:
    • This may apply when the government coerces someone into embezzling funds they would not have taken otherwise.
  4. Lack of Criminal Intent:
    • This may apply when defendants believed the property was legitimately theirs.
  5. Incapacity:
    • This may apply, for example, when defendants are under heavy medication at the time of the theft.
  6. Repayment:
    • While not technically a defense, those who can pay back the theft may use this to mitigate exposure.

What about returning the stolen money or property? Is that a defense against embezzlement? 

Some people think it is not embezzlement if the money is returned, which is not the case. It is still embezzlement if the money is returned. A person can still be guilty of embezzlement even if the money is returned. If the person intended to use the money for their own personal purposes, they might have committed the criminal act of embezzlement. However, the fact that they gave the money back could reduce a person’s prison sentence and the amount of any penalties, fines, or restitution.

It’s important to note that the facts and circumstances related to any of the defenses mentioned above could also help a person for sentencing mitigation purposes. Returning stolen property, lack of criminal intent, duress, and other defenses involve circumstances that, when explained to the sentencing judge, may help achieve a lower sentence. 

To beat an embezzlement charge, the defendant has to win in court with one of the defenses mentioned in the list above, or the prosecutor must drop the charges. Can embezzlement charges be dropped? Statistics show that over 40 percent of federal embezzlement charges get dropped due to insufficient evidence. Sometimes there is a lack of adequate paper records, and investigators cannot cobble together a clear case.

5 Tips After An Embezzlement Charge

Anyone dealing with embezzlement or employee theft criminal charges should keep in mind the following 5 tips:

Tip #1: Be proactive and get informed. Learning about all the stages of the criminal process — from investigation to sentencing, including sentence reductions and post-conviction strategies (such as early release) — can make a significant difference in the overall results.

Watch this video before hiring a lawyer: First Question To Ask A Lawyer.

Tip #2: Discuss all available defenses for embezzlement with competent legal counsel and sentencing mitigation consultants. Sometimes a legal defense does not get embezzlement charges dismissed but can still serve a useful purpose in the case, like helping to educate prosecutors or the judge. This can make a difference at the time of the sentencing hearing and in post-sentencing matters. For example, the judge may consider at sentencing that a defendant was under the influence of alcohol, drugs, or medications at the time of the illegal activity. The judge may also recommend that the defendant complete a residential drug abuse program while incarcerated (RDAP). RDAP reduces a prison term for up to 12 months. 

Click here for a video on the federal Residential Drug Abuse Program (RDAP): RDAP VIDEO.

Tip #3: Add experienced sentencing mitigation consultants to the team before the presentence investigation and sentencing hearing. The options for probation or a reduced prison sentence become much more limited once the sentencing hearing is over. There are significant steps people can take to assist the sentencing judge in seeing their humanity and being worthy of leniency. We recommend working with experienced mitigation experts on strategies for the sentencing hearing, including the presentence investigation report, as early as possible.

Click here for one of our many videos on sentencing mitigation: 

Personal Narrative Helped Our Client  Get Probation Instead Of Federal Prison

Tip #4: Work with sentencing mitigation experts on a post-sentencing strategy. Even after the sentencing hearing, strategies are available to lower the time spent away from home in federal prison. Our team is familiar with all the Federal Bureau of Prisons jobs and programs to help inmates gain skills while incarcerated, earn programming credits, and return home sooner.

Tip #5: Prepare for life after the case. When people are in the throes of a criminal investigation or prosecution, it can be hard to remember that there is a future after the criminal case ends. While a criminal case is very disruptive to a person’s life, people who make a personal plan for success can emerge from the federal criminal justice journey and rebuild their lives. We work with clients to help them define success, set their priorities, and create a self-driven plan for life after a criminal case.

CONCLUSION 

People dealing with embezzlement or employee theft should proactively try to mitigate the negative impact of the charges. As always, risks and consequences vary case by case. There are defenses available to embezzlement charges that counsel must raise to obtain a better outcome for the client. Some of the defenses can also be used as part of a powerful sentencing mitigation effort.

Prison Professors, an Earning Freedom company, works alongside (not in place of) civil and criminal defense counsel to help clients proactively navigate through investigations and prosecutions. Our team also helps clients prepare mitigation and compliance strategies.

If you have any questions or are uncertain about any of the issues discussed in this post, schedule a call with our risk mitigation team to receive additional guidance.

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