top of page

Embezzlement

Updated: Mar 27

Publication date: 23.03.2024.


Embezzlement or larceny? Are they interchangeable terms? Somewhat. Embezzlement is considered a form of fraud involving larceny, but unlike the other two has quite a specific definition.



What Is Embezzlement?


Before beginning to define embezzlement. We need to be familiar with the meanings of fraud and larceny. Fraud involves using deception to access things that aren’t yours. Larceny involves taking personal property from someone else. Embezzlement, on the other hand, is defined less broadly. Embezzlement is a white-collar crime that involves misusing or stealing funds that someone has the right to access.

Embezzlement generally occurs in the workplace, but can also take place in volunteer organisations or between individuals. Embezzlers will typically target small or medium-sized businesses as they’re more vulnerable due to their lack of strong internal controls.


Types Of Embezzlement


Embezzlement is classified into many different groups. We will elaborate on just 6 groups:

  • Theft of assets: The typical form of embezzlement that involves stealing money or other assets.

  • Syphoning: Employees taking all or a portion of the money and pocketing it. This isn’t always physical and generally computers aid in facilitating syphoning by electronically transferring money to the perpetrator’s(employee’s) bank account. Another form of syphoning is overcharging customers and pocketing the excess amount.

  • Payroll and overtime: Overtime embezzlement paying employees for overtime that was never worked. It can occur at more or less any level of the company. It’s generally easier to hide as overtime is worked after work hours and on irregular schedules. Payroll embezzlement on its own can also occur when embezzlers add a fake employee to the company and then transfer this ‘salary’ to the embezzler’s account.

  • Asset misuse: Using company property for personal benefit such as using company computers for outside business or using company cars unauthorised.

  • Kickbacks: Financial enrichment due to companies and or people being given preferential treatment. Examples of kickbacks could be politicians being paid off for voting for a certain party or real estate agents persuading clients to consult with a certain mortgage broker to receive some money in return. Thisis sometimes difficult to prove as embezzlers will cover their tracks as much as possible.

  • Document forgery: Creating fake company documents for payroll scams or personal gain. It is used solely or alongside another type of embezzlement.


Consequences Of Embezzlement


Embezzlement is a typically difficult crime to prove and embezzlement charges could be dropped or the case may be thrown out due to insufficient evidence, duress or entrapment. In the case when perpetrators are found guilty, they face these consequences:

  • Prison time

  • Licence revocation

  • Hefty fines

  • Restitution payments to victims

These consequences still are dependent on other factors like prior felonies, being on parole when committing the crime, the effect the embezzlement had on victims and the amount of cash or assets stolen.



Conclusion


To conclude, embezzlement is a white collar crime that is a form of fraud in which larceny also occurs. Embezzling involves stealing or misusing funds for personal gain. Embezzlers will target small and medium-sized organisations due to their systems being less developed than those of large companies. Embezzlement is a difficult crime to prove but if perpetrators are found guilty, they may face prison time, payment of hefty fines, restitution and having licences revoked. These consequences are still dependent on many other factors.



 

You can also read about:


 

Reference List:

29 views0 comments

Comments


bottom of page