Embezzlement is a form of financial fraud or theft where a person misappropriates or misuses funds or assets entrusted to them by an organization, employer, or another individual. The embezzler gains access to the funds or assets legally, often as part of their job or role, but then unlawfully converts or uses them for personal gain, without the owner's permission.

What You Need To Know

Embezzlement involves the fraudulent or deceitful handling of money or property that belongs to someone else. The embezzler abuses their position of trust to divert the funds or assets for their own benefit. The motive is usually financial gain, and the embezzler may use the stolen funds to finance personal expenses, luxury purchases, or even cover personal debts.

Embezzlement can take various forms, such as skimming cash receipts, making unauthorized transfers of funds, altering financial records, creating false invoices, or diverting company assets for personal use. It can be difficult to detect, especially if the embezzler is skilled at concealing their actions. Embezzlement may involve manipulating financial records or creating fraudulent documents to cover their tracks.

Embezzlement is considered a serious crime and is subject to criminal prosecution. If caught, the embezzler may face criminal charges, fines, restitution orders, and even imprisonment. It is distinct from theft in that the embezzler had legal access to the funds or assets initially, whereas theft typically involves unauthorized and illegal access.

Organizations can implement various internal controls and safeguards to prevent embezzlement, such as regular audits, separation of duties, and strict oversight of financial transactions.