Embezzlement Totally Explained

Everything about Embezzlement totally explained

Embezzlement is the act of dishonestly appropriating goods, usually money, by one to whom they've been entrusted. For instance, a clerk or cashier can embezzle money from his or her employer, or a civil servant can embezzle funds from the government. Embezzlement may range from the very minor, involving only small amounts, to the immense, involving large sums and sophisticated schemes.
Embezzlement differs from larceny in two ways. First, in embezzlement, an actual conversion must occur; second, the original taking must not be trespassory. To say that the taking wasn't trespassory is to say that originally the embezzler had the right to possess the property in question, and that he subsequently converted the property to his own use. Conversion requires that the theft seriously interfere with the property, rather than just relocate it. As in larceny, the measure isn't the gain to the thief, but the loss to the true owner.
Historically, the crime of embezzlement was created by statute to deal with situations where theft could occur while the thief himself was innocent of larceny — typically because of the "lawful possession" element. That is, embezzlement fills in the blanks where larceny laws don't apply.

Methods of embezzlement

Embezzlement sometimes involves falsification of records in order to conceal the theft. Embezzlers commonly steal relatively small amounts repeatedly over a long period, although some embezzlers steal one large sum at once. Some very successful embezzlement schemes have continued for many years before being detected due to the skill of the embezzler in concealing the nature of the transactions.
   One of the most common methods of embezzlement is to under-report income, and pocket the difference. For example, in 2005, several managers of the service provider Aramark were found to be under-reporting profits from a string of vending machine locations in the eastern United States. While the amount stolen from each machine was relatively small, the total amount taken from many machines over a length of time was very large.
   Another method is to create a false vendor account, and to supply false bills to the company being embezzled so that the checks that are cut appear completely legitimate. Yet another method is to create phantom employees, who are then paid with payroll checks.
   The latter two methods should be uncovered by routine audits, but often aren't if the audit isn't sufficiently in-depth, because the paperwork appears to be in order. The first method is easier to detect if all transactions are by cheque or other instrument, but if many transactions are in cash, it's much more difficult to identify. Employers have developed a number of strategies to deal with this problem. In fact, cash registers were invented just for this reason.

Tax consequences

Proceeds of embezzlement must be included in gross income unless the embezzler repays the money in the same taxable year. Congress has ruled that lawful as well as unlawful gains are includable in gross income and that it's inconsequential that an embezzler may lack title to the sums he appropriates.” When the embezzler returns the victim’s funds either directly or indirectly (for example restitution) then the embezzler may have a reduction in taxable income.
However, if a corporate embezzler can show four things, then they need not include the embezzled funds in income:
“Where a taxpayer withdraws funds from a corporation 1) which he fully intends to repay and 2) which he expects with reasonable certainty he'll be able to repay, 3) where he believes that his withdrawals will be approved by the corporation, and 4) where he makes a prompt assignment of assets sufficient to secure the amount owed, he doesn't realize income on the withdrawals under the James test.”

Further Information

Get more info on 'Embezzlement'.

External Link Exchanges

Do you know how hard it is to get a link from a large encyclopaedia? Well we're different and will prove it. To get a link from us just add the following HTML to your site on a relevant page:

<a href="http://embezzlement.totallyexplained.com">Embezzlement Totally Explained</a>

Then simply click through this link from your web page. Our crawlers will verify your link, extract the title of your web page and instantly add a link back to it. If you like you can remove the words Totally Explained and embed the link in article text.
As long as your link remains in place, we'll keep our link to you right here. Please play fair - our crawlers are watching. Your site must be closely related to this one's topic. Any kind of spamming, dubious practises or removing the link will result in your link from us being dropped and, potentially, your whole site being banned.