EMBEZZLEMENT
The fraudulent conversion of another’s property by a person who is in a position of trust, such as an agent or employee.
Embezzlement is distinguished from swindling in that swindling involves wrongfully obtaining property by a false pretense, such as a lie or trick, at the time the property is transferred, which induces the victim to transfer to the wrongdoer title to the property.
Nature
There was no crime of embezzlement under the COMMON LAW. It is a statutory crime that evolved from LARCENY.Whereas larceny requires a felonious trespassory taking of property at the outset, embezzlement is a wrongful appropria-
tion subsequent to an originally lawful taking.
Embezzlement is, therefore, a modification of
larceny designed to cover certain fraudulent acts
that do not come within its scope.Although they
are mutually exclusive crimes, larceny and
embezzlement do overlap slightly under statutes
in some states.
Embezzlement was created by the English
legislature, which designated specific persons
who might be liable for the offense. These were
essentially persons entrusted with another’s
property, such as agents, attorneys, bankers, and
corporate officers.
The English definition of the offense is fol-
lowed in the United States. Statutes do not usu-
ally list the persons who might be liable but,
instead, generally describe the offender as a per-
son entrusted with, or in possession of, another’s
property.
Property
The type of property that must be converted
is governed by statute. Generally, property is
defined as including money, goods, chattels, or
anything of value. Intangible PERSONAL PROP-
ERTY; COMMERCIAL PAPER, such as checks,
promissory notes, bonds, or stocks; and written
documents, such as deeds or contracts,may also
be the subject of embezzlement.
Under some statutes, property consists of
anything that can be the subject of larceny. In
other states, however, the property requirement
for embezzlement is broader. For example, the
statute might punish the conversion of both real
and personal property.
In some states, the embezzlement of public
property or public funds is a separate offense.
The offense is characterized by the manner in
which the money is received. A court clerk who
receives bail money is a recipient of public
money and the person can be liable if such
money is wrongfully converted by him or her.
The property subject to embezzlement must
have some value, even though value is not an
element of the offense. Although a check with-
out a required endorsement does not have value,
the fact that the endorsement can be forged
gives it sufficient value to make it a subject of
embezzlement.
Elements
Statutes governing the offense vary widely
throughout the states. To determine exactly
what elements comprise the offense, it is neces-
sary to examine the particular statute applicable.
Elements common to embezzlement are as
follows: (1) the property must belong to a per-
son other than the accused, such as an employer
or principal; (2) the property must be converted
subsequent to the defendant’s original and law-
ful possession of it; (3) the defendant must be in
a position of trust, so that the property is held by
him or her pursuant to some fiduciary duty; and
(4) the defendant must have an intent to defraud
the owner at the time of the conversion.
Ownership The principal or employer must
be the owner of the property embezzled by an
agent or employee at the time the offense is
committed. Under many statutes, the ownership
requirement is expressed as the property of
another. It is sufficient if any person, other than
the defendant, owns the property and it does not
matter who has title to it or that it is owned by
more than one person.
Jurisdictions differ on the question of
whether a person can embezzle funds belonging
to a spouse. In states that retain the spousal priv-
ilege, a person can be prevented from testifying
to a crime against a spouse; therefore, spousal
embezzlement will not be prosecuted.
Unless a statute provides otherwise, co-
owners of property, such as joint tenants or ten-
ants in common, cannot be guilty of the offense
with respect to the property that is jointly
owned. A co-owner who wrongfully transfers
jointly owned property converts his or her own
property as opposed to that of another; there-
fore, there is no conversion. If a person has any
interest in property held jointly with another,
the person cannot be convicted of the offense
relating to that property. For example, a co-
owner of an automobile cannot be guilty of
embezzling it if both owners have an equal right
to possession. A number of states, however, have
statutes punishing embezzlement by co-owners,
such as partners who wrongfully convey part-
nership assets.
In most states, an agent authorized to collect
money for his or her principal and to keep a cer-
tain amount as commission is guilty of embez-
zlement if he or she wrongfully transfers the
entire sum collected.
Possession or Custody of Property Posses-
sion is the essential element for distinguishing
between embezzlement and larceny. While lar-
ceny requires that the thief take the property out
of the victim’s possession, the person must law-
fully possess the property at the time that it is
converted for embezzlement.
It is not necessary for the defendant to have
physical or exclusive possession. It is sufficient if
the person has constructive possession, a form
of possession that is not actual but that gives the
holder power to exercise control over the prop-
erty either directly or through another person.
Alternatively, mere custody is insufficient for
embezzlement. If a master puts a servant in
charge of property for purposes of guarding or
caring for it, the master is considered to have
constructive possession of such property while
the servant has mere custody. A servant who
wrongfully converts property over which he or
she has custody may be guilty of larceny, but not
embezzlement.
The fact that an accused person lawfully
receives property at different times will not
negate an embezzlement charge provided all
other elements of the offense are met.
Trust Relationship Since the offense is
aimed at punishing persons who convert prop-
erty for their own use when possession is law-
fully acquired, prosecution is limited to
instances where the parties are in a fiduciary, or
trust, relationship.
Generally, a debtor and a creditor, or an
agent and a BROKER, do not have a fiduciary
relationship sufficient for the offense. There
must be some further indication that one person
has a duty to care for and exert some control
over the other’s property. The most common
type of trust relationships are those existing
among corporate officers, partners, and employ-
ers and their employees.
Conversion of Property
Conversion is an act that interferes with an
owner’s right of possession to his or her prop-
erty. For purposes of embezzlement, conversion
involves an unauthorized assumption of the
right of ownership over another’s property. It
may, for example, occur when a person is
entrusted with property for one purpose and
uses it for another purpose without the consent
of the owner. Generally, any type of conversion
that occurs after a person obtains lawful posses-
sion of property is sufficient.
Although a failure to return property is evi-
dence of conversion, it does not necessarily con-
stitute embezzlement—absent proof of criminal
intent. However, if a statute imposes an absolute
duty to return property, the failure to do so is
embezzlement, provided all other elements are
met.
In certain circumstances, a demand is
required before a person can claim that his or
her property has been converted. Usually, no
demand is required if it would be futile, such as
when an accused has fled the jurisdiction with
the property. If, however, there is no definite
time specified for the return of the property, a
