embezzlement

Embezzlement is the act of misappropriating property or funds entrusted to someone who already has lawful possession of it, typically due to a position of trust or fiduciary duty. It involves converting the property to the embezzler’s own use and intending to deprive the rightful owner of it. Unlike theft, which involves taking property without permission, embezzlement requires initial possession or control of the property.

It most often occurs in employer-employee relationships, government programs, trustees, or professionals handling clients’ money. Common forms include payroll fraud, falsified expense reimbursements, skimming cash, ghost employees, and improper invoicing or diversion of funds.

Elements typically include: property of another; possession or control by the defendant; conversion or appropriation; intention to defraud; and absence of the owner’s consent. Laws vary by jurisdiction, but most systems treat embezzlement as a crime or as civil fraud with potential damages or remedies. The offense is distinguished from simple theft by the existence of prior access or custody.

Penalties range from imprisonment and fines to restitution and disgorgement of gains. Employers may pursue civil actions, and regulatory or professional sanctions can follow, including loss of licenses or contracts. Embezzlement can damage reputations, erode trust, and trigger investigations by auditors or authorities.

Prevention relies on internal controls such as separation of duties, regular audits, reconciliations, independent reviews, and whistleblower mechanisms. Strong governance, clear authorization procedures, and timely detection reduce losses and help maintain financial integrity within organizations.