Embezzlement is the act of withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud. For example, a lawyer might embezzle funds from the trust accounts of their clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.
Embezzlement usually is a premeditated crime, performed methodically, with precautions that conceal the criminal conversion of the property, which occurs without the knowledge or consent of the affected person. Often it involves the trusted individual embezzling only a small proportion of the total of the funds or resources they receive or control, in an attempt to minimize the risk of the detection of the misallocation of the funds or resources. When successful, embezzlements may continue for many years without detection. The victims often realize that the funds, savings, assets, or other resources, are missing and that they have been duped by the embezzler, only when a relatively large proportion of the funds are needed at one time; or the funds are called upon for another use; or when a major institutional reorganization (the closing or moving of a plant or business office, or a merger/acquisition of a firm) requires the complete and independent accounting of all real and liquid assets, prior to or concurrent with the reorganization.
In the United States, embezzlement is a statutory offence that, depending on the circumstances, may be a crime under state law, federal law, or both; therefore, the definition of the crime of embezzlement varies according to the given statute. Typically, the criminal elements of embezzlement are: (i) the fraudulent (ii) conversion (iii) of the property (iv) of another person (v) by the person who has lawful possession of the property.
(i) Fraudulence: The requirement that the conversion be fraudulent requires that the embezzler willfully, and without claim of right or mistake, converted the entrusted property to their own use.
(ii) Criminal conversion: Embezzlement is a crime against ownership, that is, voiding the right of the owner to control the disposition and use of the property entrusted to the embezzler. The element of criminal conversion requires substantial interference with the property rights of the owner (unlike larceny, wherein the slightest movement of the property, when accompanied by the intent to permanently deprive the owner of possession of the property is sufficient cause).
(iii) Property: Embezzlement statutes do not limit the scope of the crime to conversions of personal property. Statutes generally include conversion of tangible personal property, intangible personal property, and choses in action. Real property is not typically included.
(iv) of another: A person cannot embezzle his or her own property.