If the words felony embezzlement bring to mind Bernie Madoff stealing millions of dollars through complex Ponzi schemes, you aren't wrong. But embezzlement doesn't have to be that dramatic to be charged as a felony in California. You may be surprised by how felony embezzlement in California really works. Even wrongfully pocketing as little as $1,000 can put an act into that category.
Embezzlement in California
Embezzlement is considered a white collar crime because it involves wrongfully taking money or property with no force or violence. At the heart of embezzlement is a violation of trust. For example, someone who commits embezzlement has been entrusted with access to property or money belonging to an employer or a client. Embezzlers breach that trust by taking or using the property or money for their own benefit.
In California, embezzlement is defined in Penal Code Section 503 as "the fraudulent appropriation of property by a person to whom it has been intrusted." It is key to the crime of embezzlement that the embezzler was entrusted with access to the property or money.
To be convicted of the crime of embezzlement in California, you must: Take or use property or money for your own purposes that belongs to someone else and that has been entrusted to you.
Read More: Famous Embezzlement Cases
Acts of Embezzlement
Of course, Ponzi schemes qualify as embezzlement. They are operations where a criminal lures investors by pretending to run a sustainable business, but actually is paying out fake profits to earlier investors with funds from more recent investors.
But that's just the tip of the iceberg. Anyone in a position of trust with regard to someone else's money or property can be charged with embezzlement if they turn it to their own use, even if only small sums are involved. "Borrowing" entrusted property for personal use without permission qualifies as embezzlement in California, and having the intent to eventually return the money or property is no defense.
A few examples of conduct that could be charged as embezzlement under California Penal Code Section 503 are:
- A mechanic at a motorcycle repair shop uses one of the bikes in his charge to drive to a dentist appointment.
- An employee at a business takes money out of the office petty cash fund to pay for a drink after work.
- Someone working for a hair salon is responsible for depositing all of the hairdressers' tips in the bank at the end of the week, but takes out several hundred dollars and uses it to pay off personal debts.
- An attorney uses money from a client trust account to pay for a lavish birthday dinner for a friend, intending to repay the account when a verdict came in.
- A family member caring for a grandmother takes a piece of her jewelry and hocks it for personal pocket money.
White Collar Crime
Crimes that don't involve force or violence, like embezzlement, are sometimes called white collar crimes. Crimes like forgery, identity theft, fraud, bribery and perjury are included in this category.
Generally white collar crimes in California, even when charged as felonies, are considered less dangerous felonies. They carry less severe punishments than violent crimes. The crime of embezzlement can be charged as a misdemeanor or a felony in California depending on the amount embezzled and other circumstances.
California Grand Theft Laws
The California Penal Code defines theft of entrusted property as embezzlement. However, grand theft and petty theft laws apply when it comes to punishing the offense in criminal court.
These laws are found at Penal Code Section 487, which provides that a theft of property valued at less than $950 is petty theft, while a theft of property worth $950 or more is grand theft. There are a few exceptions: If the item stolen is either an automobile or a gun, it is punishable as grand theft regardless of the actual value of the item if the person accused is a registered sex offender or has violent crime convictions.
Misdemeanor Vs. Felony in California
Everyone knows that a misdemeanor is a lesser offense than a felony. But many don't realize that each of these terms is actually defined by the possible types of punishment that can result from a conviction.
California law defines a misdemeanor as a crime punishable by up to a year in the county jail and/or a fine of up to $1,000. A felony is defined as a crime punishable by imprisonment in state prison for a period greater than one year with or without a fine.
So, by definition, the punishment for a misdemeanor embezzlement conviction will be less severe than a felony embezzlement conviction. Even felony embezzlement probation is stricter than summary probation for a misdemeanor.
California Felony Embezzlement Penalties
Embezzlement of an amount equal to or greater than $950 qualifies as grand theft, but it isn't always charged as a felony. It is called a "wobbler" offense in California because it can be charged either as a misdemeanor or as a felony. The prosecutor decides which charge is appropriate based on the circumstances of the case and the person's criminal history.
The decision of the prosecutor in this matter will significantly impact the person charged. Someone convicted of felony grand theft can be sentenced to up to three years in state prison, a fine up to $10,000 and/or felony probation. And additional time can be added to the prison sentence if a large amount of money or property was embezzled:
- If the property was worth more than $65,000, one extra year.
- If the property was worth more than $200,000, two extra years.
- If the property was worth more than $1,300,000, three extra years.
- If the property was worth more than $3,200,000, four extra years.
Aggravating and Mitigating Factors
The judge in charge of sentencing a person convicted of embezzlement can also consider aggravating and mitigating factors. Embezzling from an elderly or dependent person is an aggravating factor for sentencing purposes in California. That includes any person in a nursing home. When this is the situation in an embezzlement case, the court will impose increased penalties.
Returning the funds voluntarily before discovery of the embezzlement can be used as a mitigating factor, resulting in lesser penalties. Taking money with the intent of returning it, or even returning it before the theft was discovered, is not a complete defense to embezzlement, but it can lessen a sentence.
Defenses to Felony Embezzlement
So what are the possible defenses to a charge of embezzlement in California? If a person accused of embezzlement can disprove any of the elements of the crime, they will not be convicted. For example, you can defend yourself against an embezzlement charge with any of these types of evidence:
- You didn't take or use the money or property at all and were falsely accused.
- The funds or property actually belonged to you.
- You believed in good faith that you had a right to take or use the property.
- You did not have criminal intent, but took the property without meaning to do it.
- The person who owned the property gave you permission to take or use it in the way you did.
- Although you took the property, you thought you were doing what you had been instructed to do.
Anyone charged in California with felony embezzlement will do well to hire an experienced defense attorney to pull together the best possible defenses.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.