Embezzlement is a type of theft. It happens when someone entrusted with managing or monitoring someone else’s money or property steals all or part of it for their self-benefit. In this article, we will try to answer your questions about what embezzlement is and what the consequences are.
What is Embezzlement?
Basically, embezzlement is the purposeful theft, withholding, or misuse of assets or money that may have been entrusted to someone by a company or employer. With embezzlement, the embezzler obtains the assets and money legally, but then uses these assets for inappropriate or unintended purposes.
Embezzlement can range from small, petty cash theft to a boss embezzling millions out of a company. A good example of embezzlement is a payroll manager creating fake or ‘dummy’ employees and then assigning fake payments to them. The payroll manager would be pocketing all the money that should have been going to the supposed employee. This is embezzlement as a business’ assets or cash is illegally diverted to the payroll manager.
An embezzler might create invoices and bills for business services that might have never taken place to disguise the embezzlement. They might even have partners who they list as contractors to the business and create fake invoices for services that never happened. All these are forms of embezzlement.
Potential Reasons or Causes
Embezzlement requires you to be an employee or a trusted part of a business or organization to commit this act. So why would anyone want to throw away their trust from an employer and commit this type of crime? Three main reasons can contribute towards embezzlement.
The first and most common reason is individual pressure. An employee could be severe financial pressure like drug addiction, gambling addiction, or maybe their spouse lost their job recently. These issues are expensive, and people might embezzle to continue their addictions or solve their problems.
The second factor that could cause someone to embezzle is opportunity. For some people, the opportunity of stealing and making some extra money is just too hard to resist. If you are well trusted and left to do your job without too much supervision, you might think about pocketing some cash for yourself the next time you’re closing up the register alone.
The third reason is their ability to rationalize their actions. Some employees might think they deserve more from a company and take what they think they are owed. Some might think they will return the money soon before it is noticed. These justifications could lead to cases of embezzlement.
Consequences of Embezzlement
Embezzlement is a crime under both federal and state law. Whether a person faces federal or state law depends on the circumstances and total value of the stolen assets or money.
All states have varying levels of punishment for such illegal actions. For example, in Texas, the punishment for embezzling amounts worth less than $1,500 is a fine of $4,500 and jail of up to a year, or both. In California, embezzlement of property valued at less than $950 is a misdemeanor punishable by up to six months in jail and a fine of up to $1,000.
Under federal law, the punishment depends on if the value of the property embezzled is worth more than $1,000 or not. For crimes under $1,000, usually, the punishment is up to 1 year in federal prison. For embezzlement worth over $1,000, the sentence could go up to 10 years in federal prison. Courts also usually order the embezzler to pay damages to the person or business they have stolen from.