Embezzlement

Table of Contents

Embezzlement: The Dirty Deets

Embezzlement. It’s a word that makes most people cringe. Just the sound of it seems shady and illegal. And yeah, embezzlement is totally illegal. It’s when someone takes money or property that was entrusted to them through their job and uses it for their own benefit. Kinda like stealing from your employer. Def not cool.

But what exactly counts as embezzlement? And how do people even pull it off without getting caught? Let’s break it down.

The Nitty Gritty on Embezzlement

Legally speaking, embezzlement happens when someone who was entrusted to manage or monitor someone else’s assets or property takes it for their own personal use. The person had lawful access to the property, but they abused that access and misappropriated the assets.

Some common examples:

A bookkeeper who makes payments to a fake vendor and pockets the money.
An investment advisor who takes funds from a client’s account and invests it in their own private business.
An employee who creates ghost employees on the payroll and collects their paychecks.

You get the idea. It’s basically a breach of trust for financial gain. Now, the person who got ripped off doesn’t have to be totally clueless. As long as the embezzler was legally entrusted with the property, it can be considered embezzlement. Even if the victim was negligent in their oversight.

The key factors are:

The embezzler had lawful access to the property through their job or role
They misused the property in violation of that trust
They did it intentionally for personal gain

If all three of those conditions are met, it’s likely embezzlement.

How Do They Get Away With It?

People who embezzle are usually pretty clever about covering their tracks. After all, they don’t wanna get caught!

Some common techniques:

Cooking the Books

This just means messing with the financial records to hide any evidence of theft. An employee might delete transactions, modify amounts, or forge signatures to make the books balance. This can cover up large sums of money taken over time.

Submitting Fake Expenses

Lots of companies reimburse employee expenses like travel, meals, or supplies. Embezzlers take advantage by submitting inflated or totally false expenses, then pocketing the difference.

Fake Vendors

By creating shell companies or fake vendor accounts, embezzlers can bill their employer for goods or services that were never actually provided. They direct payments to their own accounts.

Check Tampering

This low-tech scam involves stealing legitimate checks, altering the payee/amount, then cashing or depositing them. Embezzlers can also fabricate checks out of thin air.

As you can see, there are tons of different schemes for siphoning off funds. And embezzlers are always coming up with new tricks! They often start small to test the waters before ramping up to larger amounts over months or years.

How Do They Finally Get Caught?

Despite their best efforts, most embezzlers do eventually get found out. Here are some of the most common ways the jig is up:

Routine audits – External or internal audits can uncover financial discrepancies that trigger deeper investigation.
Tips from coworkers – Employees who notice shady behavior by a coworker often notify management or ethics hotlines.
Changes in personnel – Transition to new leadership or staff can bring fresh eyes to spot embezzlement.
Irregularities in records – Sloppiness with cooked books can raise red flags that prompt further review.
Lavish lifestyle – Sudden displays of wealth arouse suspicion about how it was funded.
Confessions – Some embezzlers voluntarily come clean out of guilt or desire for leniency.

Once the fraud is uncovered, the company usually conducts a forensic audit to determine the full scope of the theft. Then they fire the employee and get law enforcement involved.

But catching an embezzler quickly is ideal before losses balloon. That’s why internal controls and oversight are so critical.

How Companies Try to Prevent Embezzlement

Companies have a big incentive to deter embezzlement before it happens. Some ways they do this:

Job rotation – Regularly switching up duties makes it harder to hide ongoing theft.
Mandatory leave – Requiring vacations forces someone else to fill in and review activities.
System controls – Things like purchase limits and dual authorization help block unauthorized transactions.
Surprise audits – Random spot checks by managers keep employees on their toes.
Whistleblower policy – Providing anonymous reporting channels encourages tips.
Background checks – Vetting people before hiring can uncover red flags like money problems.

Even with precautions, embezzlement sometimes still happens. But companies are getting smarter about how to prevent and catch it earlier.

What Happens If You’re Caught Embezzling?

If you get busted for embezzlement, you’re in big trouble. We’re talking massive fines, prison time, and a criminal record. Not fun.

The exact penalties depend on the amount stolen and where it occurred. But expect prosecution for crimes like fraud, larceny, and breach of fiduciary duty.

You’ll have to pay back the money of course. And there might be additional civil damages too. Say bye to that job and your career prospects in the industry.

Jail sentences are common, ranging from 1-20+ years for larger amounts. Even small embezzlement under $5k can mean prison. And don’t expect leniency for a first offense.

Some key factors that increase penalties:

Higher dollar amounts stolen
Longer duration of embezzlement
Victim is a nonprofit or government agency
Holding an elected office or leadership role
Past fraud convictions
Lack of cooperation and remorse

The risks are just not worth it. While you might get away with embezzlement temporarily, that high never lasts.

Famous Embezzlement Cases

Some notorious embezzlers have made headlines over the years. A few big ones:

Rita Crundwell – A small town comptroller who embezzled $54 million to fund her horse breeding business!

Allen Stanford – This billionaire scammed investors out of $7 billion in a Ponzi scheme.

Kevin Spacyznski – An accountant for bands like Fleetwood Mac who swindled over $10 million.

Karen Febles – As a university administrator, she used student fees to embezzle $650k for personal shopping sprees.

Brian and Shawn Votaw – Husband and wife pastors who plotted to defraud their church of over $800k.

Barry Minkow – Went from teenage millionaire to embezzler. He stole $23 million from his public company.

Craig Greenberg – An investment advisor who made $30 million disappear from client accounts.

Cynthia Roselli – An office manager who forged checks and stole $1.5 million from her employer over 9 years!

Marie Levin – Worked at a family charity and transferred $40 million to her own accounts.

Frederick D. Smith – He ran a huge embezzlement scheme at HealthSouth that cost over $2.7 billion!As you can see, embezzlement comes in all shapes and sizes. But the huge sums of money often involved captures public attention.

The Takeaway

At the end of the day, embezzlement is a serious crime. Those who go down that path put their freedom, reputations, and finances in jeopardy. While schemes might work for a while, the consequences when caught are dire.

For companies, being diligent with financial oversight and fraud prevention is key. But determined employees can find ways around controls. Embezzlement often comes down to individual morality and ethics.

So think carefully before betraying the trust and responsibility placed in you. Is lining your pockets with stolen money really worth ruining your life and future? For most rational people, the answer is clearly no.