In December 2022, the federal prosecutors for the Southern District of New York charged Samuel Bankman-Fried, the founder and former CEO of FTX (Futures Exchange), with multiple financial crimes.
The charge alleged that Bankman-Fried was guilty of misappropriating billions of dollars of customer deposits for personal gain.
John Ray III, a lawyer specializing in restructuring failing businesses, commented that FTX’s downfall did not happen overnight and was due to “plain, old-fashioned embezzlement.”
He defined embezzlement as taking money from others and using it for one’s purposes.
The latest report says that Bankman-Fried pleaded not guilty to criminal charges, including money laundering conspiracy and wire fraud.
The former CEO of FTX will go on trial on October 2, 2023. If convicted, he could face up to 115 years in jail.
This case shows that embezzlement is a felony subject to penalties proportionate to the nature and severity of the criminal act.
Suppose you or a loved one got charged with embezzlement. In that case, you likely want to know the legal consequences, including the length of jail terms for different types of embezzlement.
This article discusses embezzlement, focusing on the average jail time for various embezzlement charges.
Learn more about this criminal offense and what to do when charged or convicted.
How Many Years Do You Get for Embezzlement?
Embezzlement can land you in jail or prison for a year, 10 years, or more, depending on the statutes and the amount stolen.
Is Embezzlement a Crime?
Short answer: Yes, embezzlement is a crime. Embezzlement refers to the fraudulent appropriation of property or money by a person acting in a fiduciary capacity, such as a clerk, trustee, agent, or public office.
A fiduciary is an individual who handles property or money for another.
You might wonder why embezzlement sometimes carries severe penalties when it does not involve heinous acts like murder or rape.
But consider this: embezzlement causes financial harm. While the act might not lead to death or injury, it may result in severe consequences, including ruined livelihoods, bankruptcy, and shattered dreams.
Such repercussions could cause significant psychological trauma comparable to life-altering crimes like assault.
Embezzlement also violates the nation’s norm of trust, undermining the integrity of its financial institutions and systems.
For example, embezzlement can be counterproductive to economic development and cooperation. As such, this act can result in programs exacerbating inequality or no longer being cost-effective.
What Is the Definition of Embezzlement?
In Moore v. United States (1895), the Supreme Court defined embezzlement in the following terms:
Embezzlement is the fraudulent conversion of property by someone to whom such property has been entrusted or lawfully transferred.
The act differs from larceny in that the original taking occurred with the owner’s consent. In contrast, larceny involves felonious intent present during the alleged theft.
What Is the Law for Embezzlement in a Sentence?
Each jurisdiction has distinct embezzlement laws, so differences in sentencing guidelines are expected.
That said, the crime of embezzlement generally involves the defendant stealing or converting property entrusted to them by the victim.
Examples may include stockbrokers withdrawing funds from clients’ accounts or contractors stealing construction materials from property owners.
In this context, “convert” refers to handling the property contrary to the agreement between two parties.
This definition suggests that a car dealer who makes personal use of a vehicle that they must sell on consignment may be guilty of embezzlement.
Is Embezzlement Criminal or Civil?
Prosecutors usually go after embezzlement as a criminal offense under state law. However, the federal government also prosecutes those who embezzle from public funds, such as government employees and contractors working on a government project.
At the same time, victims can also sue the defendant in a civil court. If they win the complaint, they can do any of the following:
- Garnish wages (take money from paycheck)
- Seize and sell the perpetrator’s property as part of the restitution
- Levy on a bank account (withdraw capital from an account)
Embezzlement in the U.S.
Title 18 of the United States Code (USC), Section 666 (a)(1)(A) states that one of the following scenarios must be true to prove an embezzlement claim:
- A fiduciary (trust) relationship existed between the defendant and the private entity or local or state government institution.
- The defendant got authorization to manage the property as someone employed to do so.
- The defendant’s dealings involved a fraudulent conversion or appropriation of property for their own use.
- The defendant intentionally denied the owner access to personal property.
Embezzlement: Theft Plus Crime
Simply put, embezzlement is a theft crime within a trust context.
The offender exploits a position of trust and allocates the victim’s money to their possession, generally with a motive for personal gain.
Some states refer to grand theft as “grand larceny,” a criminal offense involving stealing property permanently.
Petty larceny or petty theft refers to thefts where the value of the property taken is relatively low. States often impose a dollar amount cap on minor larceny charges.
What Is the Sentence for Embezzlement?
The penalties for embezzlement depend on the state or federal government’s sentencing guidelines and the nature of the crime.
For instance, federal law prescribes the following penalties for embezzling public funds:
- If the value of the property is $100 or less, the defendant faces one year in prison, a $1,000 fine, or both.
- When the property’s value exceeds $100, the defendant faces a ten-year prison sentence, a fine equal to the stolen property‘s value, or both.
- Falsifying total payment records or disbursing an amount less than the law’s requirement may result in a maximum fine of up to twice the value of the property taken.
Depending on the state’s guidelines, the court can enhance sentences for embezzlement.
For instance, you may face a longer prison sentence for committing specific embezzlement crimes against particular victims.
In California, aggravated white collar crime enhancement can increase imprisonment terms by two, three, or five years.
Suppose the property or money involved exceeds $100,000 but falls below $500,000. In that case, the fine will be $100,000 or twice the embezzled funds, whichever is higher.
Lastly, you could also be subject to a sentence enhancement if you have at least two previous convictions for crimes related to fraud or embezzlement.
What Is the Maximum Sentence for Theft in the U.S.?
Most penal codes in the U.S. classify theft as either grand or petty.
Petty theft is usually a misdemeanor, not a felony or an infraction. The state of California regards this crime as punishable by the following:
- Incarceration in county jail for up to six months
- A maximum fine of $1,000
Suppose the value of the stolen goods exceeds a specific amount defined by the state’s statute. In that case, the crime may escalate to grand theft.
If charged as a misdemeanor, grand theft may be subject to one year in county jail. If accused of a felony, the offender faces any of the following incarceration times:
- 16 months
- Two years
- Three years
Types of Embezzlement Charges
Embezzlement usually involves misusing cash, credit, or cash equivalents, like checks and promissory notes.
Here are various types of embezzlement criminal charges:
- Account management: Alleged offenders may fabricate balance sheets, bank statements, or payment records to disguise funds withdrawn for personal use.
- Cash: This embezzlement usually happens in businesses with employees who handle large sums of cash. Cash embezzlement involves individuals pocketing money intended for the organization and omitting sales records so they can appear to be accurate.
This act can also involve the misappropriation of a company’s petty cash budget.
- Lapping: An alleged fraudster responsible for collecting regular payments from multiple entities may misallocate amounts to hide funds they diverted to their personal use.
- Payroll: Individuals employed as managers or other high-ranking personnel may have someone draw checks on their behalf, even if that person does not work for the company.
- Other company property: Not all instances of embezzlement involve money. Some alleged offenders may steal property like computers, office supplies, or vehicles.
Embezzlement is a serious offense and is chargeable as a misdemeanor or felony, depending on the value of the property or the amount stolen.
In Michigan, felony embezzlement refers to the theft or misappropriation of money amounting to $1,000, $100,000, or more.
Depending on the amount the defendant stole, they will face five to 20 years of prison time and a fine ranging from $10,000 to $50,000 or thrice the property’s value, whichever is greater.
Michigan Penal Code defines embezzlement as a misdemeanor for stolen money or property worth less than $200. This scenario indicates that misdemeanor embezzlement usually involves embezzling low amounts of money.
State legislatures differ regarding the definition and sentencing outcomes for embezzlement charges.
Illinois statutes consider embezzlement as theft and state that an individual commits the crime when the following occurs:
- A theft of personal property not exceeding $500 worth or property theft exceeding $500 but not exceeding $10,000 in value constitutes a Class 3 felony.
- Property theft up to $500 in value, or theft of property over $500 and under $10,000 in value, is a Class 2 felony if the crime was committed in a school, worship facility, or government building.
Embezzlement charges often involve fraud and deception. The prosecution typically presents evidence based on the following:
- Employees directly took money from a cash register or petty cash account.
- The defendant issued counterfeit or unauthorized checks on the employer’s behalf.
- The defendant exaggerated or falsified expenses in the books of accounts.
- The alleged perpetrator diverted funds between accounts or withdrew cash from company accounts for personal use.
- The alleged offender forged documents to transfer assets or property titles.
Special Position of Trust
Embezzlement can happen in various situations, especially those involving fiduciary relationships. Here are examples of people in special positions of trust over someone else’s property or money:
- A bank teller with legal access to client money
- Officers and employees handling company funds
- Family members caring for a relative and who can access the relative’s financial accounts to pay bills
- Professionals, including lawyers or board members, who handle client or investor money
Examples and Court Cases
Below are examples of recent court cases involving embezzlement:
- In 2021, Jessica L. Greenan, a Cape Cod resident, got sentences for two separate criminal cases for embezzling over $1.5 million from two different employers. She received a 70-month prison sentence and a five-year supervised release.
The court found Greenan guilty of filing fake federal tax returns, bank fraud, wire fraud, and aggravated identity theft.
She embezzled funds from her employers by wiring payments to her credit cards, charging unauthorized amounts to the company credit card, and converting company funds to pay auto loans.
Greenan forged signatures to move money and evaded federal taxes. As a result of her conviction, the court ordered her to pay restitution to the fraud victims and the IRS (The Internal Revenue Service) and to forfeit two vehicles.
- In March 2023, Kevin Chiu, a former business relationship manager at a Manhattan-based financial institution, was arrested for bank fraud and embezzlement. He allegedly misappropriated over $2 million from his clients’ accounts, including elderly clients, through a years-long scheme.
The complaint alleged that Chiu used fraudulent transaction forms to transfer funds from his clients’ accounts and asked an elderly client to sign blank forms.
In addition, he moved funds from one client account to another to conceal the fraud. He allegedly used the embezzled money to buy securities, trade in the market, and fund his personal needs.
Chiu, 32, faces charges of money laundering, embezzlement by a bank employee, bank fraud, and aggravated identity theft, carrying possible maximum prison sentences of 20 to 30 years.
Note: The charges are only allegations, and Chiu is presumed innocent unless proven guilty.
Is Embezzlement a Felony or a Misdemeanor?
The answer to this question depends on the state’s monetary range for embezzlement cases. The value of the property or fund taken determines whether embezzlement is charged as a felony or misdemeanor.
What Is a Common Scheme or Plan of Embezzlement?
Many states allow judges to aggregate or add the total worth of the stolen property or money as part of a standard plan or scheme.
Some states allow judges to combine the value over a certain period (for example, 12 months), while others do not require any period, primarily when the embezzlement only affects one person.
Possessing Stolen Property
A person may also be prosecuted for possessing stolen property as a type of embezzlement. Stolen property is money in the context of embezzlement.
Whether the individual has all the money in their bank account or the embezzlement has spanned many years, the court can still aggregate the crime committed.
Falsifying Business Records
Falsifying records can result in an embezzlement charge in many states. This criminal activity occurs when an individual alters or deletes business documents.
Criminal Embezzlement Charges
Prosecutors must verify these factors to prove embezzlement:
- The defendant and the alleged victim had a fiduciary relationship
- An employment or business arrangement allowed the defendant to manage the property or money in question
- The defendant misappropriated the funds or property for their personal use
- The defendant intended to deprive the alleged victim of their rightful ownership of the money or property
Embezzlement Aggravating Factors
An aggravating factor refers to conditions surrounding an offense that can raise the crime’s severity and punishment to its aggravated version.
In California, aggravated factors may include a pattern of related felony conduct and defrauding an elderly individual.
Penalties for Embezzlement
Embezzlement penalties depend on whether the act gets charged as petty theft (misdemeanor) or grand theft (felony). The determination typically depends on the value of the money or property misappropriated.
Degrees of the Charge
Like other crimes, embezzlement is categorized by states based on increasing degrees corresponding to the crime’s nature and extent. Here’s an example:
The amount most often embezzled in New York ranges from $50,000 to $1,000,000. The state’s guidelines classify this as second-degree larceny, punishable by 5 to 15 years in prison.
Suppose the perpetrator stole an amount exceeding $1,000,000. In that case, the prosecuting side will charge them with grand larceny in the first degree, a class B felony, punishable by 8 1/3 to 24 years in prison.
These embezzlement acts are among the most severe type of embezzlement charges in New York City.
Requirements and Penalties for Misdemeanor Embezzlement in the U.S.
As shown above, requirements and penalties for embezzlement charges in the U.S. depend on how the state defines them.
For example, Michigan courts consider people who embezzled amounts of less than $1,000 and repeat offenders who stole less than $200 guilty of misdemeanor embezzlement.
Suppose the stolen property is less than $200 in value. In that case, the standard penalty is 93 days in jail and a fine of thrice the stolen property’s value (or $500, whichever is greater).
Suppose the case involves property worth higher than $200, a defendant with a criminal record, or a victim that is a charity or nonprofit. In that case, the penalty is a maximum of one year in jail and a fine three times the property’s value (or $2,000, whichever is greater).
Requirements and Penalties for Felony Embezzlement in the U.S.
Again, sentencing guidelines for felony embezzlement vary depending on state laws.
In Michigan, you may get 5, 10, or 20 years of prison time and a fine of $10,000, $25,000, $50,000, or more for embezzling funds or properties.
Penalties Based on Property Values
Most states sentence embezzlement convictions based on the value of the stolen property or money.
Typically, a state lists monetary value ranges, showing associated fines and jail or prison sentences for each.
Penalties Based on Property Type
Some states specify types of property that (regardless of value) carry particular fines and prison sentences.
For instance, states may impose harsh penalties for stealing anhydrous ammonia since it is a primary ingredient in methamphetamine.
Other property types often singled out for harsher penalties include livestock, firearms, property taken during an emergency or natural calamity, or public documents.
Penalties When Aggravating Factors Are Involved
States may also impose harsher penalties for embezzlement acts against a specially protected class of victims, like older individuals or people with disabilities.
Defendants may also get more severe sentences if they have a solid fiduciary relationship with the victim. For example, the defendant is a public servant or an employee of a financial institution.
Do Embezzlement Penalties Include Fines?
State laws and individual cases can vary widely regarding penalties. Here’s a list of sentences the state of Rhode Island imposes for embezzlement charges:
- Fines of up to $50,000, or thrice the value of the embezzled money or property, whichever is greater
- A maximum of 20 years in prison
- Both of the previous penalties
If the stolen property’s value exceeds $100, the fine may not exceed $1,000, and imprisonment may last one year.
What Should You Do if You Have Been Charged With Embezzlement?
Contact a reputable law firm or criminal defense attorney for legal assistance if you have been sued or accused of embezzlement or related crimes.
If you do not have the money to get a private lawyer, the state and some local nonprofit organizations provide free consultation and legal advice.
How to Defend Against Embezzlement Charges
Defense attorneys may use the following defenses to get an acquittal or minimal sentence for defendants facing embezzlement charges.
This strategy involves attacking the validity of the claim against the defendant. Usually, people who commit embezzlement retrace their steps or use complex methods to conceal their actions.
Defense lawyers can argue that their client did not have the capacity or resources to engage in the alleged misappropriation of assets.
Money transfers, especially if the amount is huge, are prone to clerical errors. During the trial, the prosecution must demonstrate that the defendant’s actions were deliberate. Financial systems may lack clear-cut rules, making it possible for some people to accidentally take more than their share.
Operating Under Duress
Even though the defendant remains responsible for their actions, the law recognizes the employee-employer power dynamics.
When a court sees the defendant embezzled under duress, it will acknowledge that they committed the act against their will, resulting in the dismissal of the case against them.
Entrapment is provoking or deceiving someone to engage in criminal behavior. Suppose the defendant is a law-abiding citizen working in finance, and someone presents them with an opportunity too good to pass up. In that case, the defense counsel may use this defense to prove a lack of intentionality.
5 Tips After an Embezzlement Charge
Here are five simple tips to consider when facing an embezzlement charge:
- Learn more and be proactive: Read articles regarding sentence reduction and post-conviction strategies.
- Get a competent legal representative: Consult a reputable defense lawyer to determine the best embezzlement defenses.
- Seek help from other experts: You can add experienced sentencing mitigation consultants to your team early in the presentence investigation process.
- Consider post-conviction scenarios: Prepare a post-sentencing strategy with the help of sentencing mitigation experts. These professionals can help cut down the time spent in prison even after the sentencing hearing.
- Get ready for life after the case: While a criminal case can disrupt an individual’s life, defendants who plan for success can recover from their criminal justice experience and rebuild their lives.
Avoid Jail by Paying Back the Money Taken
Suppose the defendant embezzled the money, and the authorities have sufficient evidence to prove the deed. To avoid jail time, they can negotiate with the prosecuting side to allow them to pay a specific amount to compensate for the victim’s loss.
Avoid Jail by Retaining an Experienced Criminal Lawyer
One of the most effective ways to survive embezzlement cases is by working with a seasoned criminal defense attorney. Depending on the situation, these experts know how to fight or mitigate these cases.
What Is the Relationship Between Embezzlement and Corruption?
Corruption and embezzlement are subject to similar criminal penalties and share specific characteristics.
Corruption is a crime that may involve unlawful financial acts, like embezzlement, bribery, money laundering, and extortion.
These activities are criminal offenses in most jurisdictions, although their definitions may differ.
Reasons to Hire an Embezzlement Defense Lawyer
Embezzlement charges are tricky, but a skilled attorney can analyze the case thoroughly, collect relevant evidence, and negotiate with prosecutors to lower the proposed penalties.
Developing a Solution to a Complex Embezzlement Case
A competent defense attorney can come up with a solution, not in a cookie-cutter fashion, to the complex issues of an embezzlement case. These professionals can do so by crafting arguments based on what happened in the defendant’s case and how it will affect sentencing outcomes.
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- Embezzlement Definition and Legal Meaning
- 1005. Embezzlement
- Deterring F Deterring Fraud: Police Inv olice Investigations int estigations into Embezzlement o Embezzlement
- Grand Theft
- Protection of Government Property — Embezzlement of Public Funds
- Cal. Pen. Code § 186.11
- Penal Code § 484(a) PC – Petty Theft – California Law & Penalties
- 750.174 Embezzlement by agent, servant or employee, or trustee, bailee, or custodian
- (720 ILCS 5/16-1) (from Ch. 38, par. 16-1)
- Former Cape Cod Bookkeeper Sentenced for Embezzlement Charges in Two Criminal Cases
- Aggravating Factor
- Types of Embezzlement in New York
- What is Corruption