Tuesday, March 24, 2009

Embezzlement Defined

Leeanna Rossi, a criminal justice instructor at Western New Mexico University in Deming, NM, published an article today on embezzlement. She defines the crime and provides some context. We quote her article in its entirety here:

"The crime of embezzlement is known as a crime of theft.

Its elements are primarily comprised of a fraudulent conversion of the property of another, by one who is already in lawful possession of it. Embezzlement is closely linked with larceny but the primary difference is for larceny to occur, the defendant must be wrongfully in possession of the property. Whereas with embezzlement, the defendant must be legally in possession of the property, but uses it for their own benefit.

For example, elected officials and public funds. Duly elected officials are empowered to use public funds for the good of the people. They are legally in possession of those funds. However, when an elected official uses those funds illegally, such as depositing sums in their personal account or buying a boat for their personal use, then that official has committed the crime of embezzlement.
Embezzlement requires property be converted by the defendant. To convert property, the defendant must deprive the lawful owner of a significant part of its usefulness. If the defendant merely uses it for a short time, or moves it slightly, she is not guilty of embezzlement.

For example, if A is lent a company car for company business and she decides to take the car and sells it, A could be convicted of embezzlement. The car was owned by another (the company) and taken by A to be sold. A has converted the car, deriving the company of its use.

Embezzlement also requires that property must fall within certain classes and must belong to someone other than the embezzler. Property which may be embezzled includes tangible (real estate, etc.) and intangible property (stocks, bonds, checks, promissory notes, etc.) Modern interpretations now also include intangible items such as minerals in the ground and the "taking of services" such as not paying for food or hotel rooms.

Property must also belong to another, rather than to oneself. One who is co-owner of property together with another cannot embezzle the joint property because it is her own. This applies to joint tenants in real estate or partners in a business.

Embezzlement may be limited to certain classes of persons. Such persons include employees, attorneys, guardians, officials, board of directors, etc. One loophole is if a person does not fall within one of the listed class, she cannot be an embezzler, even though she may have misappropriated property lawfully in her possession. To fill this loophole many states have increased the list to include anyone to whom property is "entrusted." For example, an employee (shop clerk) is thought to have only "custody" of store goods. The actual ownership of the goods remains with the owner of the store. Under earlier statutes, if the employee then sells the goods and pockets the proceeds, she would not be charged with embezzlement because she did not "own" the goods taken. Newer statutes now could charge the employee who sells such goods with embezzlement so long as the employee took property "under her care and control."

Finally the embezzler must not only intend to take the property, but her taking must be with the intent to defraud. The focus is on the defendant's state of mind. Her taking must be with the intent to permanently deprive the rightful owner. However, there are two possible defenses: a right to something which is not hers or the intent to return the item taken.

First, should the defendant honestly believe she has a right to take the property, she can use the defense of "mistake" and possibly not be held liable. Or a second defense is if she can show her intent to return the property taken. However, the property to be returned must be the very property taken. This defense does not usually work when money is taken because the actual dollars are not returned but an equivalent sum. Such intent to return the equivalent is no defense."

We could not have defined it better.

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