What is embezzlement?
Under the California Penal Code, embezzlement is a kind of theft committed by a person entrusted with property of another. It is defined and penalized in Articles 503-515 of the California Penal Code. It involves a person using fraudulent means to appropriate or take away the property of another after it had been entrusted to him or her.
How is embezzlement different from theft?
Embezzlement requires a relationship of trust between the owner of the properties or monies and the person entrusted with them. If there is no relationship of trust then the unlawful taking is theft but if there is a relationship of trust, then the unlawful taking is then embezzlement.
Who can commit the crime of embezzlement?
The rule is, persons who are entrusted with properties of another are required to keep the properties in accordance with the purpose of the trust. If they convert the properties, fail to account for them, appropriate them, or lose them, they commit embezzlement. They do not need to physically take the properties, there must be proof of fraudulent intent to convert the properties for their own purposes.
Employees, trustees, officers, clerks, servants, agents or directors who have been entrusted with monies or properties can commit embezzlement. They commit embezzlement by taking the properties for themselves or for their personal gain or using the properties or monies for a purpose that is not in line with the execution of the purpose of the trust.
The properties may be goods, chattels, physical objects, monies, accounts, evidences of debt, cheques or other negotiable instruments such as promissory notes or letters of credit.
Under 504a, a seller or merchant who has entered a contract of purchase, sale or lease with a buyer or customer, has goods or chattels in his possession, if he removes, conceals or disposes of the goods or chattels even when he or she knows that they are subject to a lease or contract of sale or purchase, for injuring or defrauding the buyer or lessor, they are guilty of embezzlement.
Under 504b, embezzlement may also be committed by a debtor. If under a security agreement, a debtor has a right to sell property which is security of a debt but after having sold the property, and received the proceeds of the sale, the debtor willfully, wrongfully, and fraudulently fails to pay the secured party the amounts due under the security agreement is also guilty of embezzlement.
Under 505, when a carrier or operator of transportation for hire who has control over personal property of a passenger fraudulently appropriates the property or uses the property for a purpose that is inconsistent with the safekeeping of the property and its transportation will be guilty of embezzlement.
Under 506, professionals such as bankers, lawyers, executors, administrators or any person who has been entrusted with controlling property for another person but fraudulently appropriates the property or uses it for a purpose not in keeping with the due and lawful execution of the trust or loses the property with fraudulent intent or a purpose other than the purpose for which they received the property. The property includes payment for laborers and materialmen who performed work or furnished material on the property under a contract.
Under 506a, embezzlement may also be committed by persons employed as a collector of accounts or debts is deemed to be an agent to account or make payments, if they have monies or properties in their control or possession, and they either mix the collected amounts or monies with their own properties or monies, or use the properties fraudulently for their own purposes, or hand over the properties or monies to another person other than the true owner of the properties, or use up and lose the properties for purposes not in keeping with the purpose of the trust.
Under 507, persons entrusted with property as bailees, tenants or lodgers, or entrusted by a power of attorney for the sale or transfer of properties, if they convert the properties or the proceeds of the sale of the properties to their own use or they lose the properties for their own uses commits embezzlement.
What defenses are available when charged with embezzlement?
The person charged with embezzlement can defend himself by proving that the appropriation of the entrusted property was not fraudulent but was open and avowed, under a claim of preferred title and in good faith. The person charged can also establish the defense that retention of the property was necessary to offset or pay demands against him or her for keeping the properties.
If the person charged is to be paid for keeping the properties and he has not been paid for keeping the properties, then this may fall under demands for payment that can be offset. Payment for taxes or fees to the government can also fall under demands for payment.
An offer to return the properties or actual restoration of the properties can be a possible defense if this was done before the charges were laid before a magistrate or an indictment has been entered by a grand jury. If the offer to return the properties or the actual restoration of the properties is accomplished after the charges have been laid or entered, then this can be a mitigating factor when the penalty is being considered.
A person’s advanced age is not a defense in embezzlement. It is a circumstance that aggravates the penalty.
How is the penalty for embezzlement determined?
Just like in other crimes against property, the value of the property determines the penalty. If the property embezzled is an evidence of debt or right of action, then the sum due on it is its value.
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