When someone is placed in a position of handling or controlling money or property for someone else, they may be tempted at times to use that money. Whether a person is borrowing some money because of personal financial trouble, or skimming some small amount because the company does not appreciate their hard work, the person may find themselves facing charges of larceny by embezzlement.
What is Embezzlement?
Embezzlement falls under the broader umbrella of white collar crimes. Embezzlement is financial fraud that involves withholding money to which one has been entrusted, for the purpose of converting that money for their own use. Under Massachusetts law, embezzlement is a type of larceny, or theft. This could occur when an employee is in charge of handling money, and dishonestly takes some amount for their own benefit.
How is Embezzlement Different From Theft?
Although embezzlement is a type of theft, what makes embezzlement a unique crime is that initially, the person who steals the money has legitimate access to the funds. In other theft crimes, the thief never has legitimate access to the stolen property. The embezzler will have been given possession of the property, in a position of trust. However, it is when they dishonestly put away the funds for an unintended purpose that it becomes embezzled.
As an example, a bank trusts a bank teller to handle the bank's money, but if the teller puts the money in their own pocket, they have converted it for their own use. A bank robber who takes the bank's money was never in a position of trust with the bank, so taking money is not embezzlement.
Types of Embezzlement
Embezzlement can come in various forms, from small amounts of money or property, to millions of dollars in more elaborate schemes. This may include:
- Someone caring for a family member while surreptitiously taking their property.
- Lawyers or financial advisors taking money from clients.
- A cashier pocketing cash and failing to register the sale.
- An employee creating false vendors and false bills.
- Using a Ponzi scheme to defraud investors.
How is Embezzlement Discovered?
Depending on the type of theft, some embezzlement is difficult to detect. More successful embezzlers will take small amounts of money, over an extended period of time. Small amounts are more difficult to detect. With crafty record keeping, an employee may hide the purloined funds from their employer who does not notice any major change in profits or income. However, a financial audit should be able to detect most methods of embezzlement.
Federal Embezzlement Crime
Embezzlement may be a federal crime if it involves any property of the United States, federal government contracts, theft across state lines, or securities. Federal crimes are prosecuted in federal court, and jail time is served in a federal penitentiary.
See 18 U.S. Code Chapter 31 - Embezzlement and Theft.
Who Investigates Embezzlement Cases?
Investigation and prosecution will depend on the type of theft. Smaller embezzlement cases will likely be handled by state agencies, including State Police Troopers, and the Attorney General of Massachusetts. Federal financial crimes may involve the Department of Justice, Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS). If an employer suspects embezzlement or other financial crimes, they may begin with an internal investigation, or use outside private investigators.
What are the Penalties for Embezzlement?
Under Massachusetts law, the penalties for embezzlement will depend on the value of the stolen property, criminal history of the defendant, and position of the victim. For smaller amounts, up to $250, the penalty is prison of up to two and a half (2 ½) years, and a fine of up to $600. For $250 or more, the penalties increase greatly with a possible fine of up to $25,000 and up to five (5) years in prison.
Penalties can be enhanced if property or money is taken from a person 60 years old or greater, or from someone with a physical or mental disability. Additional penalties apply to Massachusetts state treasury, or city officials.
Additionally, embezzlement can be pursued in civil court, with the aggrieved party seeking restitution and penalties. There are also tax consequences to being caught for embezzling money. The IRS will come after the convicted embezzler for taxes and penalties unpaid on the ill gotten gains.
Target of a Financial Investigation
Whether as the target of an investigation by an employer or upon receiving a subpoena, you may not know what to do next. You may feel like you are being unfairly targeted. As soon as you become aware of an investigation, a criminal defense lawyer can help you decide how to proceed. Consider this before cooperating with the government which could expose you to criminal and civil liability.
The laws and defenses involving embezzlement and financial fraud can be very complicated and specialized. An experienced defense attorney with experience in these practice areas will be able to clarify the issues facing a client investigated by a state or federal agency for embezzlement. A skilled and dedicated lawyer will identify the elements required to prosecute the case, and defend their client on all charges.
At Dhar Law, LLP, our committed criminal defense attorneys have years of experience representing clients facing investigations or criminal embezzlement charges. If you become aware of an embezzlement investigation, learn of criminal charges, or have any questions about embezzlement or financial fraud, please contact our offices for a consultation.