DEFINITION of 'Embezzlement'
Embezzlement is a form of white-collar crime where a person misappropriates the assets entrusted to him or her. In this type of fraud the assets are attained lawfully and the embezzler has the right to possess them, but the assets are then used for unintended purposes. Embezzlement is a breach of the fiduciary responsibilities placed upon a person
BREAKING DOWN 'Embezzlement'
The nature of embezzlement can be both small and large. Embezzling funds can be as minor as a store clerk pocketing a few bucks from a cash register; however, on a grander scale, embezzlement also occurs when the executives of large companies falsely expense millions of dollars, transferring the funds into personal accounts. Depending on the scale of the crime, embezzlement may be punishable by large fines and time in jail.
How Embezzlement Occurs
Individuals who are entrusted with access to an organization’s funds are expected to safeguard those assets for their intended use. It is illegal to intentionally access that money and convert it to personal use. Such activities can include diverting funds to accounts that appear to be authorized to receive payments or transfers. However the account is a front that allows the individual, or a third-party they are collaborating with, to take the funding. For instance, an embezzler might create bills and receipts for business activities that never took place or services that were never rendered to disguise the transfer of funds as a legitimate transactions.
An embezzler might collaborate with a partner who is listed as a consultant or contractor who issues invoices, receives payment yet never actually performs the duties they are charging for.
Some types of embezzlement might be combined with other forms of fraud such as Ponzi schemes. In such cases, the embezzler scams investors to entrust them with their assets to invest on their behalf, but instead uses the money for personal gain and enrichment. Maintaining the fraud often includes seeking out new investors to bring in more money to appease prior investors. Other assets aside from money might also be transferred by an embezzler. Real estate, company vehicles, smartphones, and other hardware such as laptops that belong to an organization might be claimed by an embezzler for personal use.
Embezzlement might take place in the government sector as well if employees seize local, state, or national funding for themselves. Such instances may occur when funding is disbursed to fulfill contracts or to support projects, and a member of the staff skims some of the money that was earmarked.
.
-
Corporate Kleptocracy
Buzzword that describes the greed of corporate executives who ... -
Defalcation
1. Combining two or more debts to create one total debt. Defalcation ... -
White-Collar Crime
A white-collar crime is a non-violent crime that is committed ... -
Blanket Honesty Bond
A kind of fidelity bond that covers an employer for all of the ... -
Deferred Availability
Deferred availability is a delay in the availability of funds ... -
Transfer
A change in ownership of an asset, or a movement of funds and/or ...
-
Small Business
Identifying and managing business risks
Running a business comes with a lot of associated risks, but there are an equal number of ways to prepare for and manage them to lessen their impact. -
Insights
Samsung Heir and Senior Executives Indicted for Bribery
Samsung's heir and four other executives face charges of bribery and embezzlement. -
Insights
4 History-Making Wall Street Crooks
Find out how these Wall Street high-rollers landed themselves in hot water. -
Personal Finance
8 Low-Cost Ways To Transfer Money
If cost is your primary concern, there are several cheap(er) ways to move funds. -
Investing
5 Money Transfer Tips For Foreign Workers
If you are working in the U.S. as a foreign worker, here are some tips for sending money back home. -
Investing
Best Ways to Send Large Sums of Money Abroad
Understand why it may be difficult to send large sums of money internationally. Learn about the top five ways to send large sums of money abroad. -
Insights
4 Massive Frauds You've Probably Never Heard Of
Here are four historically significant, obscure, large-scale frauds from the previous two centuries. -
Investing
How To Avoid Becoming A Fraud Victim
Be aware of your rights as a consumer, and know how scammers work so you can protect your money. -
Investing
Should Investors Worry about Marine Le Pen?
The far-right candidate’s growing chance of victory at this year’s French presidential election could spur some interesting investment scenarios.
-
Does it make sense for me to have a money market account if I don't want to buy any ...
Saving funds within a money market account or mutual fund does not have to be limited to those wanting to buy or sell securities ... Read Answer >>