Is Embezzlement a Felony?

Understanding Felony Embezzlement, the Consequences of Embezzlement and What to Do If You Are Accused

There are often news reports about a manager of a well-known person who bilked well-known clients out of large amounts of money. Movie and TV stars and performing artists who lost funds when they invested in Bernie Madoff’s Ponzi scheme were boldly identified in print and on air.

Other newsworthy items are when doctors are convicted for billing Medicare and other insurance entities for services not rendered. In Texas, cattle rustlers are still in business and defraud the true owners of the cows by writing bad checks for their purchases.

These are all types of embezzlement, but what exactly is embezzlement? What if I am wrongfully charged with felony embezzlement? What then?

What Is Embezzlement?

Embezzlement, which can be charged as either a state or federal offense, is the fraudulent taking of property by someone lawfully entrusted with the property. This differs from ordinary theft or larceny in that the original “taking” was with the consent of the owner. The taking may be of property, cash or services.

The following elements must all be proven to convict a person of the crime of embezzlement.

  • There was a fiduciary or trust relationship between the property owner and the defendant. This means the property owner trusted the defendant to take care of the property.
  • The defendant had lawful possession of the money or property.
  • The defendant took or “converted” the property for his or her own use instead of the use the owner intended. “Converted” means the defendant used the property for his or her own purposes. This is true if the money or property was sold, given away or used to pay the defendant’s own bills, damaged or withheld from the owner for any reason.
  • The defendant’s intent was to deprive the owner of the use of the property.

Although an element of the crime is for the defendant to intend to permanently deprive the owner of the use of the property, it is no defense to the crime for the defendant to claim simply that he or she intended to return the property.

Is Embezzlement a Felony?

Embezzlement can be a misdemeanor or a felony depending on the amount of the funds that were stolen. In Texas, if the value of the property or cash embezzled is under $1,500, the crime is a misdemeanor.

If the amount embezzled is more than $1,500, the crime is a felony.

In addition to criminal charges for misdemeanor or felony embezzlement, the person from whom you embezzled may sue you in civil court asking the court to order you to repay the funds or value of the property or services you embezzled.

Examples and Types of Embezzlement

Some common examples of embezzlement are:

  • Employees who are in charge of depositing funds from a business at the end of the day withhold some funds for their own use.
  • A salesperson takes some of the money paid for merchandise and puts it into their own pocket. The salesperson also may take merchandise home for their own use.
  • Employees in charge of writing checks and paying bills for the business create bills and receipts for things that did not occur or purchases not actually made and use the money paid for these nonexistent things for themselves instead.
  • Bank tellers keep deposits for their own use.
  • Bookkeepers may keep for themselves money that was allocated for a customer refund.
  • Payroll clerks do not deposit the correct amount of employment tax and keep the rest for themselves.
  • A Ponzi scheme, where people entrust their funds to a person who claims to be investing on their behalf but instead uses the money for his or her personal gain. Bernie Madoff is currently the most well-known person who got rich by his Ponzi scheme and is now in prison.
  • Some embezzlers claim to own property, such as real estate, vehicles, or other items that have been entrusted to them. They then sell the items as though they were their own and pocket the profit.
  • In the government sector, employees may seize funding, either local, state or federal, and skim some money for their own use.

Consequences of an Embezzlement Conviction

If you are convicted, after a jury trial or guilty plea, of embezzlement, the consequences depend on the amount of the funds or value of the property that was taken. In Texas, the charges can range from a class C misdemeanor to a first-degree felony.

As laid out in Texas Penal Code, Section 31.03 the consequences of embezzlement are:

  • Class C misdemeanor. Value taken less than $100. Punishable by a maximum fine of $500. No jail time.
  • Class B misdemeanor. Value taken more than $100 but less than $750. Punishable by a fine not to exceed $2,000 and maximum jail time of 180 days.
  • Class A misdemeanor. Value taken more than $750 but less than $2,500. Punishable by a fine not to exceed $4,000 and jail time not to exceed one year.
  • State jail felony. Value taken is $2,500 or more but less than $30,000. Punishable by fine not to exceed $10,000 and a mandatory 180 days in jail with a maximum of two years.
  • Third-degree felony. Value taken is more than $30,000 but less than $150,000. A third-degree felony punishable by a fine not to exceed $10,000 and a mandatory minimum sentence of two years in prison not to exceed 10 years.
  • Second-degree felony. Value taken is more than $150,000 but less than $300,000. Punishable by a fine not to exceed $10,000 with a mandatory minimum of two years in prison not to exceed 20 years.
  • First-degree felony. Value taken is more than $300,000. Punishable by a fine not to exceed $10,000 with a mandatory minimum of five years in prison not to exceed 99 years.

Penalties are increased if the defendant has any prior felony charges. Penalties are also increased in the defendant is a public servant, involved in Medicare fraud, and for certain types of cattle or exotic animals involved in the embezzlement scheme.

What to Do If You Are Facing Embezzlement Charges

You need the services of an embezzlement lawyer who has years of experience in defending those charged with embezzlement. There are defenses available:

Consent. You believed the owner consented to your personal use of the cash or property.

Insufficient evidence. The prosecutor does not have sufficient evidence to prove beyond a reasonable doubt that you are guilty of embezzlement. There must be financial records, witness statements, or your confession to prove your guilt.

Duress. You were under duress and believed you were in danger if you did not embezzle the property or cash.

Entrapment. You were coerced into taking the money or property by a member of law enforcement and would not have taken it otherwise.

You had no intent to permanently deprive the owner of the property. You intended to pay back the owner for the money or property taken. You had no intend to permanently deprive the owner of the property or cash taken. Some specific defenses include:

  • You accidentally deposited the fund in your account instead of the business account because you were mistaken about what the money could be sued for.
  • You did not have the ability to form the intent to permanently deprive the owner because you lacked the mental capacity since you were under the influence of alcohol or drugs.

You may have other defenses depending on all the circumstances of your case. You need to contact an experienced embezzlement attorney as soon as you know you are under investigation for embezzlement. You can work together to decide on what steps to take next.

Contact Embezzlement Attorney Michael J. Wynne

Michael J. Wynne is a Harvard Law-educated former prosecutor who now specializes in white-collar criminal defense, including charges of embezzlement. He understands your stress and will explain to you what to expect, answer your questions and provide you the aggressive defense you need.

Contact him online or by calling (713) 942-2255 to schedule a consultation.

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