According to statistics, an average U.S. company loses around 7% of its revenue annually to employee theft. Moreover, a third of all bankruptcies in the country are caused by embezzlement. Obviously, in order to stay afloat, businesses are striving to eliminate theft in the workplace. In this article, criminal attorneys at NYC firm Joseph Potashnik and Associates delve into the topic and explain the types of this crime, what punishment it carries and how to protect oneself from the consequences of embezzlement.
Embezzlement and Its Types
Embezzlement is willful misappropriation of company assets by an employee who has been entrusted to manage or use the property to the benefit of its rightful owner.
It may take various forms:
- stealing cash from the register;
- raising the price of the product or service without authorization and pocketing the difference;
- taking inventory or merchandise for personal use;
- adding non-existing employees to the payroll;
- meddling with time logs;
- stealing from the company’s customers;
- accounting embezzlement: altering records to hide theft or losses;
- wasting the company’s funds when traveling on business;
- fake hard money loans
- fake reverse mergers
- padding bills and expense accounts;
- stealing sensitive information and using it to obtain profit;
- check or credit card kiting;
- Ponzi schemes;
So why do people commit these crimes? The thing is that most commonly employees don’t commit a one-time huge theft but instead steal in small amounts over a large period of time. Reportedly, an average embezzler steals for over 2 years before detected. Taking $20 from the register or one printer cartridge from the office supplies box might seem like an innocent thing to do, and statistically, over three quarters of employees have stolen at least once from their employer. But such little things add up to incredible sums. U.S. companies lose over $50 bn to employee theft each year.
Factors of Embezzlement
In order to bring charges and obtain conviction, prosecutors need to prove the presence of four factors:
- firstly, fiduciary relationship between the victim and the defendant, most commonly it is an employee-employer relationship;
- the property is obtained through the relationship, which makes this crime different from theft or larceny;
- the property has been transferred to ownership of the defendant or a third party related to the defendant;
- the defendant acted willfully.
It may seem that some of the factors are hard to prove, and it’s true, which makes it easier for financial fraud lawyers to build proactive defense strategies based on disproving the factors.
Consequences and Penalties of Embezzlement
Such cases can be prosecuted both on federal and state levels. Most embezzlement cases are prosecuted in state courts unless the crime occurred in a federal organization or company which is funded by the federal government.
Embezzlement can result in both civil litigation and criminal prosecution. In the first case, the victim files a lawsuit against the alleged offender to obtain restitution of the embezzled assets. In order to obtain the restitution, the defendant’s wages can be garnished and their property seized. If the case is prosecuted in criminal court, then, depending on the type of property embezzled, its value, presence of aggravating factors, state where the case is prosecuted and some other circumstances, possible penalties may be imprisonment of up to 30 years, steep fines and victim restitution.
Embezzlement Classification by New York State Penal Law
If compared to most U.S. states, New York criminal statutes have probably the harshest penalties for theft by embezzlement. They depend mostly on the value of property stolen:
- up to $1,000: misdemeanor Class A, petit larceny – up to $1,000 fine, up to 1 year in jail;
- $1,000–$3,000: 4th degree, felony Class E – up to $5,000 fine, 4 years in prison;
- $3,000–$50,000: 3rd, D felony – up to $5,000 fine, 7 years in prison;
- $50,000–$100,000: 2nd, C felony – up to $15,000 fine, 15 years in prison;
- over $100,000: 1st, B felony – no more than $30,000 fine, 25 years in prison.
All the offenses except for embezzlement and grand larceny in the 1st degree have possible probation or a conditional discharge. Also, mind that these sentences are valid for non-predicate felons. Some aggravating factors and the fact that the person is a second and third time offender might result in a harsher punishment.
Most embezzlement cases are not quite straightforward. In some cases in a fiduciary relationship it is hard to draw a clear line between what can and cannot be done by the employee. A number of things are done without written authorization, which may lead to the employee being charged with funds misappropriation and embezzlement. Also, some financial losses in an organization may be traced back to honest mistakes by the bookkeepers, attorneys or accounts, and to err is human, but it doesn’t mean that such slip should be recorded on the criminal history of the person and affect their employment opportunities and livelihood.
Therefore, in order to ensure that the defendant’s rights are safeguarded, it is of vital importance to retain an experienced financial crimes attorney who will protect the person throughout all of the prosecution and litigation stages and ensure the best possible resolution of the case.
Criminal Defence Lawyers at Joseph Potashnik and Associates
As you may see, embezzlement allegations are a serious issue not to be taken lightly. It requires quick professional legal counsel. If you or someone close to you is under investigation or prosecution for employee theft in New York or New Jersey, contact Joseph Potashnik and Associates for a prompt consultation. We have years of experience defending clients accused of financial crimes, including embezzlement, extortion, bribery, bank fraud and others.