Misappropriation of Funds Law & Legal Definition


Misappropriation of funds means the intentional, illegal use of the funds of another person for one's own use or other unauthorized purpose. It can be by a public official, a trustee of a trust, an executor or administrator of a dead person's estate or by any person with a responsibility to care for and protect another's assets. It is a punishable offense.

For example, in Connecticut, an attorney who knowingly misappropriates a client's funds or other property held in trust will be disbarred. [Conn. Practice Book § 2-47A]. A claim for misappropriation of funds is subject to statute of limitations. When a claim is brought against the alleged thief of the goods, the statute runs from the time of the theft even if the property owner was unaware of the theft at the time that it occurred. [Ruso v. Morrison, 695 F. Supp. 2d 33 (D.N.Y. 2010)]

The following are examples of case law on misappropriation of funds:

Misappropriation of funds is a serious offense involving moral turpitude. [Morales v. State Bar, 44 Cal. 3d 1037 (Cal. 1988)]

Misappropriation of funds by an attorney is an act infected with deceit and dishonesty and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction.[Atty. Griev. Comm'n v. Weiss, 389 Md. 531 (Md. 2005)]