Embezzlement

California Embezzlement Penal Code 503 PC

INTRODUCTION

Penal Code 503 defines embezzlement as fraudulently appropriating property that

1. belongs to someone else, and
2. has been entrusted to you.

Embezzlement does not only refer to crimes involving large amounts of wealth. Misappropriating even small amounts of property or money can be the basis of a charge of embezzlement.

Note that Embezzlement does not require intent to keep the property. Unauthorized “borrowing” can also be embezzlement.

Here are some examples of embezzlement:

• You allow your brother to borrow your company’s car. Your brother returns the car later to the company.  Even though your brother returns the car, you gave away a car that belonged to someone else and that was enstrusted to you.
• You ask your secretary to deposit some cash in your bank account. Instead, she keeps the money for herself.
• The treasurer of a church uses the money in the church’s charity fund to pay for his son’s college education.

In California Embezzlement may be classified as a form of California grand theft or California petty theft, depending the property involved.

If the property in question is worth more than nine hundred fifty dollars ($950), or an automobile, or a firearm,then the embezzlement is a form of grand theft and is a wobbler in California law.

A wobbler is an offense that a prosecutor may charge as either a misdemeanor or a felony, depending on the circumstances.  A conviction for misdemeanor grand theft embezzlement can result in up to one (1) year in county jail. Felony grand theft embezzlement can lead to jail for up to three (3) years.

When the property involved is worth less than $950, embezzlement is considered a form of petty theft which is a misdemeanor punishable by up to six (6) months in county jail.

Legal defenses to a charge of violating Penal Code 503 PC embezzlement include: Good faith belief that you had a right to the property; lack of criminal intent; and false accusation.

WHAT MUST THE PROSECUTOR PROVE

The legal definition of embezzlement in California includes a number of elements all of which a prosecutor must prove in order to obtain an embezzlement conviction.

These elements are:

1. An owner of property entrusted their property to the defendant either directly or through their agent;
2. The owner trusted the defendant;
3. The defendant fraudulently converted the property or used it for his or her own benefit; and
4. The defendant intended to deprive the owner of the property or its use.

Let’s look a closer look at the elements:

The property was “entrusted” to you

A relationship or expectation of trust can be established through several circumstances, as in the following contexts:

• An employer/employee relationship,
• The defendant was a trustee, board member, or principal of an organization and therefore had the right to manage the organization’s money or property.
• The defendant was given temporary possession of the property (such as a mechanic).

For example, Jill is a teller at a bank.  Jill is entrusted with the responsibility of managing customer accounts and moneys.  If Jill takes money every day from each customer’s bank account and uses that money to pay off her credit cards, Jill is guilty of embezzlement.

In addition to a relationship which would suggest the delegation of trust, a prosecutor also needs to prove that the defendant actually had the trust or confidence of the property owner.

In the example above, Janet is hired to do janitorial work for a store for just one day.  Janet only works in the store when there are other workers in the store.  One day, the store owner temporarily leaves Janet in the store.  Janet steals a piece of jewelry.  Though Janet is guilty of theft, she is not guilty of embezzlement because there was no relationship of trust between her and the jewelry store.

Fraudulently taking or using the property

Acting fraudulently means taking unfair advantage of another person, or causing a loss to that person through a breach of duty, trust, or confidence.

It is important to note that a conviction for embezzlement requires that the defendant was benefited by the owner’s loss.

Consider the following example: John is the treasurer for a church.  As treasurer, John is entrusted with $50k and instructed to use that money towards youth educational classes.  Thinking that the money should instead be allocated towards more urgent matters, John uses the 50k to fix the church’s plumbing problems.  John did not personally benefit from this specific use of the money.  He is therefore not guilty of embezzlement.

Intent to deprive the owner of the use of the property

A conviction for embezzlement requites that the defendant intended to deprive the property owner of the property or its use for whatever period of time, even temporarily.

It is important to note that an intent to return the property or repay the money is not a defense to a charge of embezzlement under California Embezzlement, PC 503.

For example, John is a treasurer of a church. John removes $50k form the church’s charity fund and uses that money to pay for his son’s college tuition. John has every intention of returning that money to the charity fund.  Nonetheless, John is guilty of embezzlement.

PENALTIES FOR PENAL CODE SECTION 503 EMBEZZLEMENT

The penalties for violating Penal Code 503 PC embezzlement vary depending on the type of the property and its value

Grand theft embezzlement penalties

Penalties for California grand theft, Penal Code 487 PC, will apply if the property involved is either:

1. Worth more than nine hundred fifty dollars ($950),
2. An automobile (in which case the embezzlement will be treated as grand theft auto), or
3. A firearm (in which case embezzlement will be treated as grand theft firearm).

In addition, if a defendant is charged with embezzling several sums smaller than $950 but which add up to $950 or more over the course of a 12 month period, the offense will be considered grand theft embezzlement.

Grand theft embezzlement is usually a wobbler.  This means it may be charged as either a misdemeanor or a felony, depending on

• the circumstances of the case, and
• the criminal history of the defendant.

However, grand theft firearm is always treated as a felony

Misdemeanor grand theft embezzlement carries the following penalties:

• Misdemeanor (summary) probation; and/or
• Up to one (1) year in county jail; and/or
• A fine of up to one thousand dollars ($1,000).

Felony grand theft embezzlement can result in the following penalties:

• Felony (formal) probation;
• 16 months or two (2) years or three (3) years in county jail; and/or
• A fine of up to ten thousand dollars ($10,000).

Felony grand theft embezzlement of firearms can result in the following penalties:

• Felony (formal) probation;
• 16 months or two (2) years or three (3) years in California state prison; and/or
• A fine of up to ten thousand dollars ($10,000).

Also note that if the felony embezzlement results in a very high monetary loss to the rightful owner, the defendant will face an additional and consecutive sentence.

These sentence enhancements for felony embezzlement of high-value property include:

• One (1) year if the property was worth more than sixty-five thousand dollars ($65,000),
• Two (2) years if the property was worth more than two hundred thousand dollars ($200,000),
• Three (3) years if the property was worth more than one million three hundred thousand dollars ($1,300,000), and
• Four (4) years if the property was worth more than three million two hundred thousand dollars ($3,200,000).

Penalties for petty theft embezzlement

Under Penal Code 488 PC, Petty theft is a misdemeanor in California.

The potential penalties for petty theft include:

• Misdemeanor probation;
• Up to six (6) months in county jail; and/or
• A fine of up to one thousand dollars ($1,000).²⁸

 Aggravating and mitigating factors

Embezzlement against a victim who is elderly or who has a mental or physical impairment is punished more severely, resulting in additional charge and penalties for elder abuse under California Penal Code 368 elder abuse.

Voluntarily returning the property before one is charged with Penal Code 503 embezzlement is not a defense but a mitigating factor that may shape the sentence.  Imagine that, in the example above, John returns the money $50k to the charity fund before the church discovers John’s actions.  While John is still guilty of embezzlement, his returning the money before his conduct was discovered is a mitigation factor that may result in reduced charges.

LEGAL DEFENSES TO CALIFORNIA EMBEZZLEMENT

• You had a good faith belief that you had a right to the property

For this defense to apply, the defendant will have had to take possession of the property openly and not taken the property to satisfy the owner’s debt to the defendant.  For example, Jill’s mother leaves two wills.  In one of the wills, Jill’s mother leaves expensive Jewelry to Jill.  In another will, Jill’s mother leaves the jewelry to Jill’s sister, Janet.  It is later discovered that the second will leaving the property to Janet was null and void.  Thinking that the jewelry belongs to her, Janet openly takes possession of it.  Janet is not guilty of embezzlement because she had a reasonable belief that she had a right to the property.

• You lacked the requisite criminal intent

To obtain a conviction for California embezzlement, a prosecutor must prove that you intended to deprive the owner of his/her property or of its use, even if for a short amount of time. If the prosecutor cannot prove this intent element, you cannot be convicted.

CALIFORNIA EMBEZZLEMENT AND RELATED CHARGES

A number of other offenses often accompany a charge of Penal Code 503 embezzlement.  These offenses include:

• Penal Code 470 forgery

 

Penal Code 470, California's forgery law, makes it a crime to knowingly alter, create, or use a written document, with the intention to commit a fraud.

PC 470 forgery is a wobbler, which means that it may be charged as a felony or a misdemeanor. If charged as a misdemeanor,  the penalties for PC 470 include up to one (1) year in county jail. If charged as a felony, the penalties for PC 470 include sixteen (16) months, two (2) years or three (3) years in county jail.

• Penal Code 459 burglary

In California, Burglary is entering any structure with the intent to commit theft or felony once inside. Under Penal Code 459 PC, burglary is a wobbler. If the structure is not inhabited, then the offense is considered a second-degree burglary.  But it if the structure is inhabited , the offense is first-degree burglary, a felony.

• California fraud crimes

In California, "Fraud" broadly refers to an act that results in an unfair or undeserved benefit for the defendant and that causes harm or loss to another person.

Some types of fraud may be prosecuted as embezzlement in California. Others are prosecuted under specific laws for offenses such as

• Mail fraud
• Insurance fraud,
• Real estate fraud
• Check fraud

Penal Code 424 misappropriation of public funds

Misappropriation of public funds means that a person who had control over government funds (often someone who works for the government) takes, uses, or lends those funds without the authority to do so. This charge can also cover fraudulently altering or deleting financial records relating to government funds or creating false financial records. PC 424 misappropriation carries an intent requirement: in order to get a conviction, the prosecutor must prove that the defendant must have known that his/her behavior was illegal OR displayed criminal negligence in his or her failure to discover whether or not the action was illegal. Misappropriation of public money is a felony. Penalties include a state prison sentence of two (2), three (3) or four (4) years.