Embezzlement
Embezzlement is a very serious accusation with serious consequences. In legal terms, it is usually defined as the fraudulently taking of personal property by someone to whom it was entrusted. In common English (as opposed to legal jargon), embezzlement usually means when someone steals the money they were safeguarding. It’s not just a case of money being stolen from an employer, as is commonly thought – embezzlement occurs in churches, clubs, charitable organizations, and anywhere else where money is available to be misappropriated.
Embezzlement is also about betrayal. Someone was trusted to guard the henhouse, and made off with the hens. Someone was responsible for balancing the books, but instead took funds and then doctored the books. But embezzlement is also something that can happen to an innocent person. Someone played fast and loose with finances, and is looking for a scapegoat to blame. Undocumented workers were paid in cash and the company is looking for a way to hide this from the feds. A company does not know who stole its money, but needs to find someone to blame in order to protect its reputation with investors and clients. When that happens, an innocent person’s name and reputation can be mutilated.
Embezzlement Warning Signs
If you are concerned about embezzlement, these are a few of the warning signs. They do not necessarily mean that embezzlement is occurring, but simply that it is worth checking into.
- Bookkeeping records are behind or missing
- Increase in cash and cashier’s checks being withdrawn from bank accounts
- Petty cash disappears
- Missing bank deposits
- Unusual drop in profits
- Collections calls when expenses should have been paid
- Abnormally large checks being written out by and to the check recipient
- Customers complain about being double billed
- Duplicate payments of expenses
- An employee starts living larger than his/her salary
- Cash payments to employees
- Criticism of others in order to divert suspicion
Criminal Embezzlement
On the criminal side, if someone is found guilty of embezzling $200,000 or more, it means 5-99 years in prison and a fine of up to $10,000.(1) For embezzling $100,000 to less than $200,000, it is 2-20 years in prison and a fine of up to $10,000. For embezzling $20,000 to less than $100,000, it is 1-10 years in prison and a fine of up to $10,000.
Civil Embezzlement
As a civil matter, individuals or business entities often sue someone accused of embezzlement under the Texas Theft Liability Act.(2) It states that the accused, if convicted, could be liable for the amount stolen and “a sum not to exceed $1,000.”(3) In addition, the loser in the suit pays court costs and attorney fees.(4)
Embezzlement and Taxes
Embezzled funds are still considered income to the embezzler by the IRS. Whether money is legally or illegally had, the IRS wants its share. If the amount of money at issue is high enough, the IRS will prosecute an individual for felony tax evasion if taxes are not paid on the money embezzled.
Consulting an Attorney
If you are concerned about being accused of embezzlement, or if you are concerned that funds may have been embezzled from you or your organization, then it is important to get legal advice from an attorney. Evidence disappears when embezzlers are given time to hide their actions. Deadlines pass to file charges against embezzlers, or to respond to those accusing one of embezzlement. As is the case with any other type of civil or criminal legal action, acting sooner is better. The further away from the henhouse the hens get, the less chance you have of putting them back in it.
(1) See Texas Stat. & Codes § 31.03.
(2) Tex. Civ. Practice & Remedies Code, Chapter 134.
(3) Id. at § 134.005(a)(1).
(4) Id. at §134.005(b).