Defenses to Embezzlement

Embezzlement refers to a specific type of financial fraud. It is considered to be a white collar crime, which is a subset of criminal law in which the crimes are committed by individuals in business and in government. An example of embezzlement would be theft or misappropriation of funds that belong to an employer, but were the responsibility of an employee.

The crime of embezzlement differs from larceny or theft in that the embezzler originally had permission from the owner of the property, to handle that property as instructed by the owner. However, the embezzler never had the owner’s permission to take the property from the company or organization.

Some other examples of embezzlement include:

• Employees moving money from the account of a customer into their own account;
• Altering account books and records to hide financial losses or stolen assets; or
• Using the Social Security check that belongs to the embezzler’s child or a relative.

As a crime, embezzlement can result in financial fines, imprisonment, or both. An embezzler could receive a lesser sentence if they repay or return what was embezzled. However, this largely depends on the following:

• The extent of their embezzlement;
• How much harm the act of embezzlement caused; and
• The manner in which they repaid what they embezzled. 

It is important to note that repaying or returning what they embezzled will not absolve or clear the embezzler of the crime completely.

Whether embezzlement is considered a misdemeanor or a felony will depend on the amount of money that was embezzled. Additionally, states may differ in regards to what constitutes a felony or misdemeanor embezzlement. Embezzlement may also be considered criminal conversion. 

Can Embezzlement Charges be Dropped?

As was just discussed, embezzlement charges may result in a lesser sentence based on different factors, as well as whether the crime is being considered a misdemeanor or a felony. Embezzlement charges may be dropped altogether if there is insufficient evidence to prove that the defendant did in fact commit the crime of embezzlement. Insufficient evidence may be used as a successful defense in instances of embezzlement lacking a paper trail.

Although over forty percent of federal embezzlement charges are dropped because of insufficient evidence, it is imperative to note that a jury must find the defendant innocent beyond a reasonable doubt. Additionally, charges may only be dropped due to insufficient evidence if the investigators failed to present a clear case against the defendant.

What Are Some Common Defenses to Embezzlement? 

In order for embezzlement to exist, and to be charged, there are four conditions that must be met:

1. The defendant must have a fiduciary relationship with the party who owns the property or asset, the plaintiff;
2. The defendant acquired or gained possession of the property through the fiduciary relationship;
3. The defendant acquired ownership through the fiduciary relationship with intent to permanently deprive its owner; and
4. The defendant’s actions were intentional.

As such, an effective defense to embezzlement would be one that disproves any of the aforementioned elements. In addition to the defense of insufficient evidence, someone accused of embezzlement may consider the following defenses:

5. Duress: In legal terms, as a defense, duress is defined as “constraint illegally exercised to force someone to perform an act.” As such, duress as a defense occurs when someone seriously believes that they will be in some danger or harm if they do not commit a crime. Some of the most common duress defenses that will not work in embezzlement cases include embezzlement to satisfy an addiction, or to prevent family hardship. A successful duress claim could be that you would lose your job if you did not participate in the embezzlement scheme;
6. Entrapment: Entrapment differs from duress in that entrapment occurs when the government compels an innocent person to commit a crime they otherwise would not have committed. Alternatively, duress implies threat. The prosecution will typically state that you were inclined to commit the offense regardless of influence;
7. Absence of Intent to Commit a Crime: Whether or not the defendant intended to embezzle is a crucial determination. Embezzlement requires that you intended to take the money or property from the people who entrusted you with the money or property. Thus, lack of intent may constitute a reasonable defense. A common absence of intent to commit a crime defense is when a person thought that they were the true owner of the money or the property that they are accused of embezzling; and/or
• Incapacity: If you can show that at the time of embezzlement, you were mentally incapacitated and that was the cause of your act, you could have a defense against the embezzlement charge. An example of incapacity would be if you are under the influence of heavy medication, which causes you to fail to realize that you deposited company money into your own account. However, voluntary intoxication is not a reasonable defense to any crime, including embezzlement. In a similar vein, claiming insanity is unlikely to be successful.

Unfortunately, ignorance of the law is not ever a defense. However, if you embezzled funds because you reasonably thought you were entitled to them, you may have a defense. This was previously mentioned as absence of intent to commit a crime. An honest mistake will need to be thoroughly proven by an attorney, as it is a fine line between ignorance and intent.

How Long Do You Go To Jail For Embezzlement?

Sentencing ranges and criminal consequences for embezzlement charges will vary based on whether the crime was considered a felony, or a misdemeanor. Additionally, each state may have its own set of elements for making that determination. 

Generally speaking, in most states, the penalties will increase or are more severe based on the value of what was embezzled. An example of this would be how in New York, the penalties for embezzlement are as follows:

8. Petty Larceny: Theft or embezzlement of property with a value of less than $1,000. A misdemeanor punishable by up to one year in prison, and a fine of up to $1,000;
9. Fourth Degree Larceny: Theft or embezzlement of property valued at more than $1,000. The penalty for fourth degree larceny is up to four years to be served in state prison;
10. Third Degree Larceny: Theft or embezzlement of property with a value of more than $3,000. Third degree larceny carries a penalty of up to seven years in prison;
11. Second Degree Larceny: Theft or embezzlement of property valued at more than $50,000. The penalty for second degree larceny is up to fifteen years in state prison;and
12. First Degree Larceny: Theft or embezzlement of property with a value of more than $1 million. A convicted defendant may face up to 25 years in prison.

First, second, third, and fourth degree larceny are all felonies in New York. In addition to a prison sentence, defendants convicted of felony embezzlement could pay a fine of up to twice the value of the embezzled property. As you can see, jail sentences and other consequences for embezzlement are different for first-time embezzlement charges as opposed to repeat offenses.

How Much Evidence is Needed to Prosecute Embezzlement?

Generally speaking, the following evidence could be used to prove embezzlement:

• Financial records;
• Incriminating statements from other employees;
• An actual confession of guilt from the suspect; and/or
• A pattern of taking money and/or property for personal use, as this is evidence of intent.

If it can be shown that the suspect employed a specific method or scheme in order to embezzle, it may be enough to prove the required element of intent. Employers or business owners should incorporate various different security protocols in order to ensure the safety of their company’s assets. 

In the current age of technology, numerous amounts of embezzlement crimes occur through the use of a company computer. As such, it is important for a company to implement a plan for computer security. Examples of this could include asset and inventory tracking software, computer information monitors, and various other computer security protections. Then, if an employee embezzles company assets, the employer has hard evidence to demonstrate that embezzlement occurred.

Do I Need to Hire a Lawyer for Help with an Embezzlement Case?

If you are being accused of embezzlement, you should consult with a skilled and knowledgeable criminal defense attorney. An experienced criminal defense attorney can help determine what defenses may be available to you based on the specifics of your case. Finally, an experienced local criminal defense attorney will be aware of your local court system, and can competently represent you in court as needed.