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What is Embezzlement?

Updated on January 28, 2010

Embezzlement is a special kind of theft in which the thief is, at the time of his act, in rightful possession of the money or goods. As with the special crimes of larceny by trick or false pretenses, the crime of embezzlement was created by statute to meet some of the inadequacies of the law covering the crime of larceny, which occurred in England only when a person took personal property from the possession of another.

For example, it was larceny for a servant to take his master's property of which he was in charge. However, it was held in King v. Bazeley (1799) that no crime was committed in the case of a bank teller who kept a bank note handed to him for deposit, because the employee, not the bank, had acquired full possession of the note. To remedy this situation, Parliament responded by making an employee's misappropriation of his employer's goods the crime of embezzlement. Later statutes, both in England and America, extended the crime successively to other persons who at the time were rightfully in possession, such as merchants, factors, brokers, bailees, attorneys, and trustees. Laws also extended the circumstances under which the offender might have acquired possession. Thus, prohibitions that originally covered only persons who had been entrusted with possession by the owner were widened to include persons who came into possession by other means, such as finding the money or goods.

This piecemeal broadening of the law's attack on theft has created not only a group of theft crimes but a wide variety of state embezzlement statutes in the United States. Unfortunately, such sporadic growth has left serious gaps and discrepancies in the law and has increased the hazard of letting off an otherwise guilty person simply because the wrong crime was charged in the indictment. On the other hand, modern statutes and court decisions are becoming less strict. One approach has been to allow different theft crimes to be charged in separate counts of the same indictment, and thus the prosecutor who misses with one count may hit the target with another. Another permits a blanket indictment under a single charge of theft. Some states, including New York, have by statute consolidated the several theft crimes into a single one.

Most crimes require evidence of criminal intent. The intent for embezzlement is the same as that for larceny: permanently to deprive the owner of his property. A separate, though related, crime is embezzlement by a public officer. This resembles ordinary embezzlement except that the offender need not intend to keep the property permanently. Temporary misuse, such as keeping public money in an improper place or diverting it to a temporary personal use, is enough.

Although embezzlement imposes an enormous social and financial burden, its relatively low visibility permits only a few cases to attract broad public attention. Offenders include well-educated, intelligent people in high positions, such as a former president of the New York Stock Exchange, who was sent to prison in 1938 on the charge of misusing securities entrusted to his care. A crime hard to detect and with penalties often softened by restitution, embezzlement results in a small percentage of prosecutions and few convictions.


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