Fundamentals of Criminal Law by Adam J. McKee

Embezzlement is a type of financial fraud where someone who’s trusted to manage or look after someone else’s money or property, dishonestly takes it for their own use. It’s like if you’re asked to watch a friend’s car, and instead of just watching it, you decide to sell it and keep the money. Embezzlement usually happens in jobs where someone has access to someone else’s funds, like in banking or company finance roles.

The Harm Behind Embezzlement Laws

The harm embezzlement laws aim to prevent is multifaceted. At its core, these laws seek to protect the financial integrity of individuals, businesses, and institutions. When someone embezzles, they’re not just stealing; they’re betraying a trust that has significant emotional and societal implications. The damage from embezzlement can be devastating, leading to the loss of savings, collapse of businesses, and erosion of public trust. These laws are designed to maintain the reliability of financial management roles and safeguard against financial ruin caused by such betrayals.

Classification of Embezzlement

Embezzlement is typically classified as a white-collar crime, a type of crime that’s usually non-violent and financially motivated. Depending on the amount embezzled and the jurisdiction, it can be classified as either a misdemeanor or a felony. Higher amounts generally lead to more severe charges.

Embezzlement in the Criminal Offense Spectrum

Embezzlement is a crime against property. Unlike burglary or theft, where there’s usually a clear physical act of taking, embezzlement involves a breach of trust. It doesn’t fit into crimes against persons or sexual crimes. Instead, it’s closely related to other financial crimes like fraud. What makes embezzlement unique is the violation of a fiduciary duty – the legal obligation to act in another person’s best interest.

The Historical Perspective of Embezzlement

The concept of embezzlement has ancient roots, with early laws addressing theft and property rights. However, the specific notion of embezzlement as a distinct crime emerged much later. Notably, William Blackstone, the famed English jurist, didn’t explicitly mention embezzlement in his seminal work, “Commentaries on the Laws of England,” reflecting its evolution as a distinct offense later on.

During the 18th and 19th centuries, as commerce expanded, the need to specifically address the misuse of funds by those in positions of trust became clear. Early statutes began to define and penalize embezzlement, distinguishing it from common theft due to its breach of trust element.

In the United States, embezzlement laws evolved alongside the growth of financial institutions. The need for clear legal frameworks to protect against the misuse of funds in these institutions led to the development of more detailed laws on embezzlement.

Today, embezzlement laws continue to evolve, addressing challenges posed by digital transactions and complex financial instruments. However, the core elements of trust and betrayal remain central to the definition and prosecution of this offense.

The Model Penal Code

The Model Penal Code (MPC), while not explicitly using the term “embezzlement,” addresses this crime under its provisions related to theft and property offenses. According to the MPC, theft is committed when a person unlawfully takes or exercises unlawful control over movable property of another with the intent to deprive them thereof (MPC § 223.2). Embezzlement fits this definition as it involves taking or misappropriating property that was lawfully possessed due to a position of trust or employment.

Under the MPC, the act of embezzlement can occur in various ways, including instances where a fiduciary, an individual entrusted with the property for the benefit of another, deals with the property as their own (MPC § 223.2(2)). This aspect captures the essence of embezzlement as it highlights the abuse of a trusted position to misappropriate assets.

Defenses to Embezzlement Under the MPC

The MPC acknowledges certain defenses to theft, which can be applicable in embezzlement cases. A key defense is the belief in the right to the property (MPC § 223.1(3)). If the accused had a reasonable belief that they were entitled to the property, it could negate the criminal intent necessary for embezzlement. Additionally, the MPC recognizes a defense if the property was appropriated under an honest claim of right or an attempt to reclaim property believed to be theirs (MPC § 223.1(3)).

Another defense is entrapment, where the defendant argues that they were induced by law enforcement to commit a crime they otherwise would not have committed (MPC § 2.13). While not specific to embezzlement, this defense can be pertinent in cases where the defendant claims they were coerced or entrapped into misappropriating funds.

Elements of Embezzlement

  • Mens Rea (Criminal Intent): The intention to deprive the owner of their property permanently.
  • Actus Reus (Criminal Act): The act of unlawfully taking or exercising control over someone else’s property.
  • Concurrence: The criminal intent and act must coincide.
  • Attendant Circumstances: The defendant must have been in a position of trust or employment that gave them lawful possession or access to the property.

Federal Statutes Addressing Embezzlement

In the labyrinth of the United States legal system, federal statutes provide a comprehensive framework for addressing the crime of embezzlement. These statutes, enshrined within the United States Code (U.S.C.), offer a detailed blueprint for understanding and prosecuting this complex financial crime. Each statute caters to specific instances of embezzlement, spanning from government property to financial institutions and even into specialized sectors such as health care.

18 U.S.C. § 641 – Embezzlement of Government Property: This statute serves as a cornerstone for cases involving government assets. It outlines the illegal acts of embezzling, stealing, or knowingly converting government property. Additionally, it addresses the unauthorized selling or conveyance of such property. This broad statute encapsulates various forms of misappropriation related to government assets, setting a clear boundary for public sector integrity.

18 U.S.C. § 656 – Embezzlement by Bank Officers or Employees: The sanctity of financial institutions and the trust placed in them are guarded by this statute. It specifically targets bank officers or employees who misappropriate funds, delineating a clear red line for those entrusted with the financial well-being of customers and the integrity of banking systems.

18 U.S.C. § 664 – Embezzlement from Employee Benefit Plans: This section throws a protective ring around employee benefit plans. It addresses the embezzlement or theft from such plans, which is especially pertinent in scenarios involving pension funds or other forms of employee benefits. This statute ensures that the financial security promised to employees for their retirement or health is not jeopardized by fraudulent acts.

18 U.S.C. § 669 – Embezzlement in Connection with Health Care: In the ever-evolving and sensitive sector of health care, this statute stands as a bulwark against financial misconduct. It specifically deals with fraud and misappropriation within the health care sector, emphasizing the gravity of financial integrity in an industry that directly impacts human lives.

Each of these federal statutes not only defines the specific contours of embezzlement in its respective context but also outlines the potential penalties. They assert federal jurisdiction over these crimes, ensuring that cases of significant magnitude or those crossing state lines can be adequately addressed at the national level. Together, these statutes form a robust legal framework, fortifying the fight against embezzlement across various sectors in the United States.

Modification History

File Created:  07/17/2018

Last Modified:  10/30/2023

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This work is licensed under an Open Educational Resource-Quality Master Source (OER-QMS) License.

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