Embezzlement

Statutes governing the offense vary widely throughout the states. To determine exactly what elements comprise the offense, it is necessary to examine the particular statute applicable.

Elements common to embezzlement are as follows: (1) the property must belong to a person other than the accused, such as an employer or principal; (2) the property must be converted subsequent to the defendant's original and lawful possession of it; (3) the defendant must be in a position of trust, so that the property is held by him or her pursuant to some fiduciary duty; and (4) the defendant must have an intent to defraud the owner at the time of the conversion.

Ownership The principal or employer must be the owner of the property embezzled by an agent or employee at the time the offense is committed. Under many statutes, the ownership requirement is expressed as the property of another. It is sufficient if any person, other than the defendant, owns the property and it does not matter who has title to it or that it is owned by more than one person.

Jurisdictions differ on the question of whether a person can embezzle funds belonging to a spouse. In states that retain the spousal privilege, a person can be prevented from testifying to a crime against a spouse; therefore, spousal embezzlement will not be prosecuted.

Unless a statute provides otherwise, coowners of property, such as joint tenants or tenants in common, cannot be guilty of the offense with respect to the property that is jointly owned. A co-owner who wrongfully transfers jointly owned property converts his or her own property as opposed to that of another; therefore, there is no conversion. If a person has any interest in property held jointly with another, the person cannot be convicted of the offense relating to that property. For example, a coowner of an automobile cannot be guilty of embezzling it if both owners have an equal right to possession. A number of states, however, have statutes punishing embezzlement by co-owners, such as partners who wrongfully convey partnership assets.

In most states, an agent authorized to collect money for his or her principal and to keep a certain amount as commission is guilty of embezzlement if he or she wrongfully transfers the entire sum collected.

Possession or Custody of Property Possession is the essential element for distinguishing between embezzlement and larceny. While larceny requires that the thief take the property out of the victim's possession, the person must lawfully possess the property at the time that it is converted for embezzlement.

It is not necessary for the defendant to have physical or exclusive possession. It is sufficient if the person has constructive possession, a form of possession that is not actual but that gives the holder power to exercise control over the property either directly or through another person. Alternatively, mere custody is insufficient for embezzlement. If a master puts a servant in charge of property for purposes of guarding or caring for it, the master is considered to have constructive possession of such property while the servant has mere custody. A servant who wrongfully converts property over which he or she has custody may be guilty of larceny, but not embezzlement.

The fact that an accused person lawfully receives property at different times will not negate an embezzlement charge provided all other elements of the offense are met.

Trust Relationship Since the offense is aimed at punishing persons who convert property for their own use when possession is lawfully acquired, prosecution is limited to instances where the parties are in a fiduciary, or trust, relationship.

Generally, a debtor and a creditor, or an agent and a BROKER, do not have a fiduciary relationship sufficient for the offense. There must be some further indication that one person has a duty to care for and exert some control over the other's property. The most common type of trust relationships are those existing among corporate officers, partners, and employers and their employees.