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Embezzling is the criminal act of a person stealing property that he or she was entrusted with. It most commonly happens with money, stocks, and bonds. For an act to legally be considered embezzling, a few different factors have to be present, including stealing the property intentionally and being in a position of trust. Some people successfully steal for years without being caught, but most of the time this isn't the case. The penalties for this crime vary by jurisdiction as well as how much was taken.
Property Types and Required Circumstances
Both tangible and intangible property can be embezzled. The tangible type includes things like paintings, office supplies, pieces of equipment, and jewelry; while the intangible type include financial instruments like stocks, bonds, and money. For a theft to legally be considered embezzling, the person doing the stealing has to be in a position of trust with someone else's things. This means that unlike burglary, trespassing doesn't occur. Besides the trust requirement, the person taking the property must claim ownership of it.
There are many different types of embezzling, both in terms of private and corporate financing. A father may embezzle from his daughter by taking money from a trust set up for her that he oversees, or a charity's financial director might do it by taking donated funds for his or her private use. Employees also steal in this way by not putting money in a cash drawer when they should, or creating an imaginary invoice and then taking the money used to pay it. Likewise, a manager might create an imaginary employee and then take the salary owed to him or her. Another common type of embezzling is slightly under reporting income and keeping the difference.
People and companies can avoid becoming victims of an embezzlement scheme by conducting frequent and regular audits. They can also look for warning signs, like an employee having a sudden jump in his or her standard of living with no extra income to explain it, or seeing an unexplainable drop in company profits. Other signs include financial records becoming disorganized or accounts and documents inexplicably going missing.
In most jurisdictions, embezzling is punishable by a fine and possibly jail time. Depending on the amount of property taken, a convicted offender receives either a misdemeanor or felony on his or her criminal record. In one famous ruling in 2009, Bernie Madoff, a former stockbroker, received a 150 year prison sentence for taking as much as $65 billion USD from investors. Besides the penalties for the theft, embezzlers can also be penalized for not including the stolen items or funds on their tax returns. In the US, the Internal Revenue Service (IRS) allows those who return their funds to take a tax deduction, but if they don't include them on their tax return to begin with, they are liable for tax evasion.