Embezzlement Law and Legal Definition
Embezzlement is the fraudulent appropriation of money by someone entrusted with it's care on behalf of others, but who uses it for his/her own purposes. Embezzlement typically occurs in the employment and corporate settings. It is a crime that may involve small sums or very large sums of money. Embezzlers commonly steal relatively small amounts repeatedly over a long period of time, although some embezzlers steal one large sum at one time.
Embezzlement is often not detected right away because of the deceptive practices used to aid the embezzlement. Such practices may include fraudulent billing, phantom employees on the payroll, and under-reporting income, among others.
Embezzlement is a crime that can be punished by imprisonment and other remedies, such as an order of restitution. To prevent losses due to embezzlement, some of the methods, among others, used include:
- guidelines and policies that ensure the most effective methods are used to securely handle financial transactions, hire responsible personnel and obtain management approvals
- criminal and credit background checks on any staff member who has the authority or opportunity to control or access money, such as managers or supervisors in areas of finance, payroll and cash receipts
- written guidelines for handling all activities related to banking and cash receipts, including wire transfers
- policies and procedures that divide the duties of handling money received so one person is not responsible for handling the entire process
