Embezzlement is a white-collar crime whose conviction carries severe penalties, including hefty fines, lengthy incarceration, and collateral consequences. So, if you face the charge or have questions regarding the crime, you should speak to an experienced white-collar crimes attorney to understand the offense and how to navigate the court case.
At CCLG: Los Angeles Criminal Attorney, we understand California embezzlement laws and court processes and have a record of successfully defending defendants charged with offenses like yours. Here, we have discussed the legal definition of embezzlement, the elements of the crime, the legal penalties, valid defenses, and related offenses to answer any questions you have about your charges.
Legal Definition of Embezzlement
As per California PEN 503, embezzlement is both a theft crime and a white-collar crime that involves fraudulent appropriation of property entrusted to you by someone else and utilizing it for your benefit with the plan to deny the rightful owner its enjoyment or benefits. Embezzlement is classified as both a white-collar crime and a theft offense, which is why it is also referred to as employee theft.
While many individuals associate embezzlement with public officials handling large sums of money, the crime can also be committed by those entrusted with small property or funds.
Embezzlement is wrongfully taking and keeping another party’s property. You do not have to keep or use the property permanently to face the charges. Even if you “borrowed” the property temporarily and intended to return it after some time, your actions will still qualify as embezzlement.
Examples of embezzlement cases include:
- A cashier entrusted to deposit a company’s daily earnings in the bank steals small portions of the money for gambling with the intent of refunding the money in the future when they win big.
- An employee with access to the company’s bank account draws money for a personal vacation and entertainment.
- An investor using money obtained from clients to pay for personal expenses
Embezzlement Elements
CALCRIM 1806 outlines the embezzlement elements the prosecutor must prove under PEN 503 beyond a reasonable doubt to secure a conviction. These elements include:
- You, the defendant, were directly or indirectly entrusted with the property by the owner
- A fiduciary or trust relationship existed between you and the owner
- You fraudulently appropriated or used the property for personal gains
- The fraudulent conversion or use of property for selfish gains was intended to deny the owner of its possession, use, enjoyment, or benefits.
Even though embezzlement charges are easy to face, it is challenging for the prosecutor to secure a guilty verdict because they must prove all the elements of the crime and meet the high evidentiary standard in criminal cases. This creates an opportunity for your defense attorney to contest the charges and make the jury or the judge question the truth of the allegations.
Let us further discuss these elements.
Fiduciary or Trust Relationship
For you, the defendant, to be guilty of a PEN 503 violation, the prosecutor must show that there existed a relationship between you and the property owner that was founded on trust. Such a relationship exists if you are an employee of the victim, if you owner consented to temporary possession of the property, or you are a trustee or property manager.
Proving the existence of a fiduciary relationship is challenging for the prosecutor because they must show with concrete evidence that the property owner placed hard-earned confidence or trust in you. Being a mere employee is not sufficient proof of a relationship founded on trust. For instance, in a hotel, a fiduciary relationship might not exist between the hotel owner and the person waiting tables. However, there is a relationship of trust between the owner and the accountant who deposits the hotel’s daily earnings into a bank account.
Fraudulently Appropriate or Convert
The prosecutor should demonstrate that you fraudulently used or converted the owner’s property by unjustified advantage of the victim or caused financial losses to the owner by breaking their trust or confidence in you. The law does not require the prosecutor to prove the victim suffered losses. Instead, the focus is on demonstrating that you accrued undue benefits or gains.
For instance, a company employee is on a business trip paid for by the employer. He is given a credit card to pay for accommodation, meals, and entertainment. However, the boss tells him to spend the money reasonably. Instead, the money goes on a spending spree, with thousands of dollars spent on entertainment and nightclubs. Even though the employer is unhappy with the employee’s actions and might terminate him, the employee is not guilty of embezzlement because he can legitimately argue that the employer approved the use of the credit card for entertainment expenses. However, if the worker spent the card to buy personal items or pay home bills while on the trip, he would be guilty of embezzlement.
Intent to Deny or Deprive the Owner of Benefits or Enjoyment
The benefit you derive from the use or possession of the owner’s property cannot be incidental. The prosecutor must demonstrate that your actions were intentional and aimed at depriving the owner of the use or gains of the property.
When proving this element, the prosecutor focuses on showing the manner in which you used the property. For instance, if you divert a portion of the money an employer entrusts you to deposit in a bank and use it for gambling, you are guilty of embezzlement even if you only took the money temporarily and intended to return it the following day with the proceeds of gambling. If you are arrested and charged, you cannot argue that you temporarily took the funds and intended to return them. The only time the defense can work is if you returned the money before the employer noticed.
Nevertheless, when you use a portion of the funds you are supposed to deposit to repair a company car that was scheduled for repairs, but the company forgot to allocate money, you are not guilty of embezzlement. The reason is that you have used the money for the benefit of the employer, unlike in the first scenario, where you used the funds for your gambling problem.
Common Forms of Property Embezzlement
The government, large businesses, and small businesses are all at risk of embezzlement. Public officials, company employees, property managers, trustees, or family members can all face PEN 503 violation charges. Many employers are unsuspecting and assume their workers cannot steal from them. Unfortunately, workers in positions of trust have various ways of stealing or using property entrusted to them for personal gains and with the intent to deprive the owners of its enjoyment. These ways include:
- Payroll Fraud
An employee entrusted with managing a company’s payroll or hiring new workers commits payroll fraud when they introduce ghost workers into the payroll, primarily close family members and friends. The employee regularly sends paychecks to non-existent workers and receives a share of the money.
- Undercharging Items
Another way workers commit embezzlement is by charging lower-than-normal prices to family and friends who buy products from their company. The type of embezzlement is prevalent in organizations that do not closely monitor their records, such as retail stores. Undercharging constitutes embezzlement because it deprives the employer of its rightful profits.
- Check Kiting
Check kiting is committed by account holders who draw a check on an account with insufficient funds, deposit it into a different account, and then draw those funds from it. However, for the scheme to succeed, the receiving bank must trust the account holder enough to allow them to draw funds against a check even before the check money arrives. The victims of the embezzlement are usually retailers who issue cash advances or banks that allow account holders to draw funds against a check before it matures. Even if you deposit the funds into the drawing account during the check float period to hide your crime, you are still guilty of embezzlement.
- Paying Ghost Suppliers
Workers can create non-existent suppliers and prepare fake paperwork to prove a transaction. In this case, you pocket the money intended for the ghost business, making your actions embezzlement.
- Receiving Kickbacks
Receiving gifts, undue benefits, or payments for allowing a supplier to continue doing business with your employer also amounts to embezzlement, especially if the products or services provided negatively impact your employer’s business. Here, you are using a position entrusted to you by the employer to obtain undue benefits at their expense.
- Siphining
Siphoning occurs when you fail to record a transaction and keep the proceeds for yourself. Unsuspecting employers hardly notice this form of embezzlement, especially if the perpetrator maintains balanced financial records and the cash in the drawer matches the records.
- Lapping
Lapping occurs when an employee, such as an accountant or bookkeeper, pockets money from one transaction and uses it to cover the first and third transactions, and uses the second transaction to cover the third. The trend continues until they declare it a bad debt because the client has refused to pay. However, lapping is discovered when the employee involved leaves the company.
Legal Penalties for Property Embezzlement
The penalties for a PEN 503 violation depend on whether the offense is classified as petty theft or grand theft. The penalties are as follows:
Grand Theft
When the value of the embezzled property is at least $950, or the property is an automobile or firearm, the violation is classified as grand theft. The offense will still qualify as grand theft if you embezzle small sums totaling $950 or more over a period of 12 months.
Depending on your criminal record and the nature of the case, the prosecutor can file grand theft as a felony or a misdemeanor. The penalties you will face for a felony conviction include:
- Sixteen, twenty-four, or thirty-six months of jail confinement
- Formal or felony probation
- Court fines no more than $10,000
- State prison incarceration in place of jail incarceration if a firearm is involved
Additionally, a felony conviction can result in a sentence enhancement on top of the initial sentence if the victim incurs at least $50,000 in financial losses. The sentence enhancement is as follows:
- An additional and subsequent twelve months of confinement if the victim suffers a property loss valued at $50,000 to $200,000.
- An additional twenty-four months of incarceration if the prosecutor values the property loss above $200,000 but not exceeding $1,000,000.
- An additional and subsequent 36 months of confinement if the property loss exceeds $1,000,000 but not more than $3,000,000.
- An extra 48 months of confinement for property losses exceeding $3,000,000, as well as twelve months for every property loss of $3,000,000.
If the property loss is no more than $950, grand theft is a misdemeanor. If found guilty of the charge, you will face at most 12 months of jail confinement, no more than $1,000 in court-imposed fines, or summary probation in place of jail confinement.
Petty Theft
Embezzlement can also be classified as petty theft if the property loss is $950 or less, or there have been multiple incidents of embezzlement over twelve months totaling at most $950. Petty theft or grand theft that is not directly charged as a felony is a misdemeanor offense. However, the misdemeanor penalties for petty theft are more lenient than those for misdemeanor grand theft.
Petty theft penalties include:
- At most six months of jail confinement
- Misdemeanor probation
- A court fine not exceeding $1,000
The penalties you face depend on whether there are circumstances in aggravation or mitigation present in your case. Aggravating factors include:
- The use of a weapon to accomplish the crime
- Prior criminal record of embezzlement
- The property owner or victim is a senior citizen
- Your crime had multiple victims
- You committed the crime to further gang activities
If the prosecutor demonstrates that any of these aggravating circumstances exist in your case, you risk penalty enhancement.
Conversely, if your attorney proves there are mitigating circumstances in your case during sentencing, they can convince the court to reduce your sentence. Mitigating circumstances include:
- You are a first-time offender
- You had a small role in perpetrating the crime
- You acted out of coercion
- You reimbursed the victims for the property loss
- You turned yourself in to the authorities after committing the crime
When a conviction is imminent, your attorney can use these circumstances to compel the judge to impose a lighter sentence.
Immigration Consequences
If you are an alien, a guilty verdict for embezzlement will negatively affect your immigration status. Any alien convicted of an aggravated felony offense risks removal or inadmissibility. If you are convicted of a felony embezzlement offense and aggravating factors are present in the case, you risk deportation or being denied reentry into the country if you are a non-citizen. So, if you are an alien, you should hire a criminal attorney with knowledge of immigration laws so that they can mitigate the aggravating factors and prevent immigration consequences.
Civil Remedies
On top of the criminal case, the victims of embezzlement can initiate a civil lawsuit if you breached an existing contract, fraudulently converted their property, or unjustly enriched yourself with property entrusted to you, denying the rightful owner benefits.
In civil cases, the victim is the plaintiff and bears the burden of proving the claim. Before filing a lawsuit, the plaintiffs try negotiations, but if an acceptable settlement is not reached, the case proceeds to trial.
However, filing a civil lawsuit might not be necessary if the criminal court finds the defendant guilty and imposes restitution to the victim as part of the penalties.
Expunging an Embezzlement Conviction
The consequences of a conviction will haunt you even after you have served your sentence. The collateral consequences of a conviction include problems finding employment or an apartment lease. You can avoid these consequences by filing for an expungement under PEN 1203.4.
Before filing for an expunction, consult your attorney to determine your candidacy and guide you through the application process. You can expunge your embezzlement conviction if you have successfully served probation or completed your jail sentence, whichever applies in your case.
If your petition is successful, the court will release you from all the disabilities of a conviction. The court dismisses the conviction, enabling you to say you have never been convicted of an offense if the question comes up during a job interview. Additionally, your criminal record will indicate a dismissal when interested parties run background checks, increasing your chances of finding meaningful employment, getting a promotion, or securing an apartment lease.
Legal Defenses for Embezzlement
A guilty verdict for embezzlement can have life-altering consequences. Therefore, you must take the charges seriously and retain the services of a competent criminal defense attorney. The attorney will evaluate your case, gather independent evidence, and compare it with that of the prosecutor to find weaknesses that they can use to develop effective defenses. The common defense strategies the attorney can mount, depending on your case’s facts, for a fair verdict include:
- You Believed in Good Faith that you had a Claim of Right on the Property
You are not guilty of embezzlement if you reasonably believed in good faith that you had a right to the property you are alleged to have embezzled. For instance, if you believed a close family member bequeathed you the property and you did not try to conceal your actions when you converted or appropriated it, you can use a claim of right as a defense. However, your attorney must convince the judge that your belief was warranted based on the circumstances. If you prove you believed in good faith that you had a right to the property, the court will dismiss the charges even if the belief was mistaken.
A good-faith belief defense will not work if you tried to conceal taking or keeping the property or what you were doing with it from the police, family members, or the rightful owner. Also, if you took the property as payment for a debt owed by the owner, the defense will not apply.
- You Lacked Intent to Deny the Owner its Benefits or Enjoyment
Unless the prosecutor proves you intended to permanently or temporarily deprive the property owner of its use, you are not criminally liable for embezzlement. The prosecutor must prove beyond a reasonable doubt that you intended to deprive the property owner of its use or benefit. However, they find it difficult to prove this element as they rely on circumstantial evidence to show your state of mind during the offense.
You can use this opportunity to cast doubt regarding your intent by asserting that the embezzlement was an accident and that your actions were not intentional. You can argue that someone planted the property on you, or that you made an unfortunate mistake.
Also, you can claim that you were coerced into committing the crime or acting under duress. You can argue that someone threatened to use force if you do not commit the crime. However, claiming that financial problems pressured you into embezzling property.
- You did not Fraudulently Appropriate or Convert the Property
Embezzlement occurs when property is fraudulently appropriated. So, if you did not take an unjustified advantage over someone else or cause property loss to a property owner in contravention of a fiduciary relationship, you are not guilty of a PEN 503 violation.
The prosecutor must prove fraudulent use beyond a reasonable doubt. If they cannot achieve this evidentiary standard, you can argue that you did not violate trust or duty leading to property loss. That way, the court will drop your charges.
Other defense strategies include:
- Asserting that you are falsely accused
- Arguing entrapment
- Insufficient evidence
The defense strategy your attorney will use depends on the case’s facts. Hire an attorney early in the case to evaluate the circumstances and find suitable defenses that will result in a charge reduction or dismissal.
Related Offenses
Several crimes can be charged alongside or in addition to embezzlement. These crimes include:
- Extortion
- Misappropriation by a public official
- Public funds misappropriation
- Burglary
- Forgery
- Receiving stolen property
- Bribery of an executive officer
Find a Competent White Collar Crimes Defense Attorney Near Me
If you are under investigation for or face embezzlement charges, you should know that your job, freedom, and reputation are at risk. A conviction for the offense attracts severe, life-changing penalties. So, you need a criminal defense attorney to contest the charges for a reduced charge, case dismissal, or lenient penalties.
At CCLG: Los Angeles Criminal Attorney, we can mount a solid defense, poke holes in the prosecutor’s evidence, or negotiate for a fair verdict. Contact us today at 323-922-3418 to arrange a free consultation.
