Author: Niall Hearty
9 November 2023
5 min read
Embezzlement is a white-collar crime that can be described as a form of financial fraud where the accused is in a position of trust. It is when a person uses money or assets that were obtained lawfully for a purpose that was not originally intended - for their own gain.
Embezzlement involves a person who is entrusted with the assets then doing something with them without telling anybody. For example, a company may entrust a member of staff with some funds but that person may then use them in an attempt to make more money (or other assets) without telling the company.
Embezzlement may often arise when a person manages the finances of a company or acts as a financial guardian for another.
For an activity to be classed as embezzlement, three factors must be present:
The offence can be committed when someone takes the money for themselves, diverts it to another person or fails to account for the money when an explanation is required.
Embezzlement occurs in various ways as there are many different types of it. Certain types of embezzlement are more common in certain business sectors or in particular circumstances.
Here we outline some of the most common forms of embezzlement.
Embezzlement is a type of asset misappropriation fraud or property theft. In the UK, it usually involves an offence under the Theft Act 1968 or the Fraud Act 2006, which can result in serious penalties.
While it is a form of theft, embezzlement differs from most theft as it involves the stealing of assets from someone who had entrusted them to the person who then commits the crime. For it to be embezzlement, there has to be a relationship and sense of trust between the two parties.
Embezzlement involves a person who is entrusted with assets then doing something with them for their own benefit, without telling anybody.
As an example, a waiter at a restaurant may take payment from a customer in cash and keep that money for themselves without registering the sale and putting it in the cash register. Or, if the customer pays for a meal using their credit card, the waiter may then keep those credit card details and use them later to buy items for himself.
Money laundering, however, is the way that the proceeds of crime are disguised so that they cannot be recognised as having been obtained through criminal activity. This “cleaning’’ - or laundering - of the money can be done by someone with their own proceeds of crime or by someone who is doing it with somebody else’s criminal proceeds.
Different countries have different penalties for embezzlement, depending on the laws that they have in effect. But courts will often treat embezzlement as a more serious offence than theft because the accused has been entrusted with money or assets and has then abused that trust for their personal gain. This can be reflected in the embezzlement sentence that is then imposed.
In the UK, embezzlement is a common law offence. This means that it is a crime under English criminal law that has been developed by the law courts over the years without any specific Act being passed to make it an offence. If a person is charged with embezzlement, the maximum prison sentence which can be imposed is 12 months. A fine of up to £10,000 can be imposed, as can community-based sentences.
But as embezzlement can involve an individual (or a number of people) committing one or more offences under the Theft Act 1968 or the Fraud Act 2006, the penalties can be severe.
When imposing a sentence, the court will take into account factors such as the amount of money or property stolen by the embezzler and the effect this had on those whose assets were taken.
The person found guilty of embezzlement may be ordered to pay back the embezzled funds (or pay the value of any embezzled assets) as well as fines that can be much higher than the value of the money or assets that were taken.
Proving embezzlement requires a number of factors to be established:
A person facing one or more embezzlement charges can rely on a number of defences.
Any accusation of embezzlement has to be responded to swiftly and in the most appropriate way. This involves seeking immediate legal advice from those with the relevant expertise.
As an award-winning law firm in the field of financial crime, Rahman Ravelli has the in-depth knowledge and experience to manage embezzlement cases, no matter how large or complex. We assess each and every aspect of an allegation to determine the strategy that will secure the best possible outcome.
Niall has a wealth of corporate crime expertise and an ability to coordinate global bribery and corruption cases. His achievements in such investigations have made him a logical choice for corporate clients.