The crime of embezzlement is most often carried out in an employer/employee situation because of the authority given to the violator by the owner of the property. This does not necessarily mean it has to be through employment, but any form of relationship where trust is given to someone else to watch over your property.
There are three components that are essential for a case to qualify for embezzlement charges. If any of the three parts are not satisfied, then these charges would not apply to the case. The three necessary components of embezzlement are:
- While in a position of trust and confidence, the person was trusted with possession of property belonging to someone else.
- That person took the property, or hid the property, or somehow converted it to your own use without the owner’s consent to do so.
- The had to have intended to do these acts to permanently take ownership enjoyment away from the owner.
The general description of the crime leaves a wide range of activities that can fall under this class of crime. It can be from a small scale operation at a local shop, but can also become a huge operation as part of a large multi-state or multi-national organization.
Examples of Types of Embezzlement
There is an unlimited number of ways that a person could commit the crime of embezzlement. By going over the six main types, a better understanding of the crime can be achieved by looking at examples of each of the types.
- Siphoning-This is accomplished by the people that we see working on the front line in stores or restaurants. They devise a way to pocketing money from the register without creating discrepancies between what the computer shows and what the drawer shows. They do not enter the item into the computer part of the register, but need to keep track of how much money they get after their shift is over.
- Check Kiting-In this practice, the criminal makes a series of deposits and withdrawals between several banks. The checks grow in value gradually, drawing and withdrawing money from the other banks with money that is not real. This takes advantage of “float” which is the amount of time it takes for deposited checks to clear their home banks. A person that handles the bill paying function at a corporation would be able to do this crime. He could use the company checkbook to get the scam started and progress it until the banks realize what is happening.
- Lapping-This type is found in the part of the business that accepts incoming payments from customers or vendors. A person working in this capacity for a church, for example, could use bank deposits for several companies and change the allocation of the funds to cover up their own personal taking of certain cash payments from certain customers. This accumulation of funds obtained while in a trusted position of fiduciary responsibility would quality as a money laundering crime.
- Payroll-Using the company payroll in order to illegally take money is another type of embezzlement. A large scale corporation will often have a manager and possible an entire department just involved in the calculation and completion of the payroll duties within that company. If that manager decided to try to steal some money through this crime, he would add some of his family members that are not employed with the company, maybe his wife and/or kids, and have them drawing income against the company. At home, then, he would be able to cash each of the checks himself, increasing his level of income.
- Kickbacks-Any people involved in purchasing activities in any organization could be prospective embezzlers through kickbacks. This involves a vendor, from whom the company purchases materials in their course of business, agrees to give that employee money, directly to them, if they continue to buy a certain product from that vendor. Often times these situations involve inflated prices, since the vendor agent is possibly trying to make some personal profit as well.
- Overtime-Another way that people can commit embezzlement is through the falsification of overtime records. An hourly-paid manager for the local branch office of the bank could do this. If he punched in his card at the beginning of his shift, and then left at the end of his regular shift, say eight hours later, without punching his card out. Suppose he comes back in two hours later, pretending to have forgotten his wallet, and secretly punches his card out then. If the manager is continuing to do this over time, he is guilty of embezzlement by falsifying his overtime records.
These examples of embezzlement make the relationship of an embezzler much more clear. They must be in a position of authority in the organization, and responsible for the property that they are attempting to steal. These are some of the most prominent types, but any case can be examined for whether it is embezzlement by comparing it against the three essential elements listed above.