Penal Code § 503 PC defines embezzlement as “the fraudulent appropriation of property by a person to whom it has been entrusted.” Embezzlement can be charged as a felony if the value of the property is greater than $950. Otherwise, it is a misdemeanor.
Examples
- a cashier at Walmart pockets some cash from the cash register to buy drinks at a nightclub that night for herself.
- the treasurer of a neighborhood sports club takes some money out of the club’s bank account to pay for a personal vacation and hotel expenses.
- an investor takes some of his client’s money to pay off a gambling debt and other personal expenses.
Defenses
You can fight embezzlement charges by claiming that you:
- did not fraudulently use money or property,
- believed in good faith that you had a right to the property, and/or
- had no intent to deprive.
Penalties
The following table summarizes the potential punishments for PC 503 convictions.
| Type of Property Embezzled | Maximum Jail Sentence |
| Misdemeanor: Up to 1 year in jail or Felony: 16 months, 2 years, or 3 years in jail |
| Misdemeanor: Up to 6 months in jail |
Below our California criminal defense attorneys discuss the following topics re. embezzlement.
- 1. Elements
- 2. Defenses
- 3. Penalties
- 4. Immigration Consequences
- 5. Expungements
- 6. Embezzlement vs. Grand Theft
- 7. Related Offenses
- 8. Civil Remedies
- Additional Reading
1. Elements
California Criminal Jury Instruction “CALCRIM” 1806 spells out the elements of embezzlement under PC 503.1 For you to be convicted, prosecutors must prove beyond a reasonable doubt the following four elements:
- an owner entrusted their property to you,
- the owner did so because they trusted you,
- you fraudulently converted or used that property for your own benefit, and
- you intended to deprive the owner of its use.2
Note that a prosecutor does not have to prove that the owner of the property asked you to return their property. This “asking” is not an element of the crime.3
We discuss these elements in more detail below.
Under 503 PC, embezzlement is the fraudulent appropriation of property by a person in a position of trust to whom the property has been entrusted.
“Relationship of Trust”
A conviction for embezzlement requires a showing of trust between the owner of the property and you. Examples are when:
- you are the owner’s employee,
- the owner gives you temporary possession of their property (for example, giving a valet a car to park), or
- you are tasked with managing the owner’s money or property.
In terms of an employer-employee relationship, a relationship of trust requires concrete evidence of trust or confidence. The mere fact that you are an employee is not enough to support an embezzlement charge.4
Example: You are not necessarily in a relationship of trust with an employer-restaurant if you serve food or bus tables. However, there is a relationship of trust if you are tasked with depositing the restaurant’s money in its bank account.
“Fraudulently Used”
For purposes of this statute, you act fraudulently when you either:
- take undue advantage of another person, or
- cause a loss to that person by breaching a duty, trust, or confidence.5
Example: Michelle is a nanny and the family gives her their credit card every week to buy groceries. She does not fraudulently use the credit card if one day she uses some of it to buy the family a gift. However, she does fraudulently use the credit card if she takes it and pays her bills with it without the family’s permission.
In the first instance, Michelle is not taking advantage of the family or breaching a confidence. However, she definitely is in the second situation.
“Intent to Deprive”
You can be guilty of embezzling only if you intend to deprive a property owner of their property or its use. Even a temporary intent to deprive an owner is enough for a guilty conviction.6
Example: Juan does not embezzle property if he takes it out of his employer’s safe and hides it as a joke. Here, there is no intent to deprive. However, there is if he now takes the property and pawns it. Juan would still be criminally liable even if he takes the property for just a few minutes with the intent to keep it as his own.
Note that an intent to return the property at the time of the taking is not a defense to embezzlement. The only exception to this rule is if you restored the property before you were charged.7
2. Defenses
Here at Shouse Law Group, we have represented literally thousands of people charged with theft offenses like embezzlement. In our experience, the following three defenses have proven very effective with prosecutors, judges, and juries at getting these charges reduced or dismissed.
There Was No Fraudulent Use
No embezzlement occurred if you did not:
- take undue advantage of another person, or
- cause a loss to a person by breaching a duty or confidence.
In these cases, the truth is our best defense. As long as the D.A. cannot prove fraudulent use beyond a reasonable doubt, your charge should be dropped.
You Had a Good Faith Belief in Your Right to the Property
You did not commit embezzlement if you genuinely believed you had a right to the property at issue. It is the job of the judge or jury to decide if your belief was warranted by analyzing the facts of your case.8
Fortunately, your belief can be “in good faith” even if you were mistaken.9
Example: Nia is a bank teller and pockets a customer’s deposit because she believes it is his payment of a lost bet. She had forgotten that the customer paid off the bet weeks ago. Here, Nia is not guilty of embezzlement because the facts support that she had a reasonable claim of right to the money.
You Had No Intent to Deprive
This is our strongest defense because intent is intangible: The prosecutors have no way of getting inside of your head, so it is difficult for them to prove anything about what you intended.
Perhaps, for example, you took some property to pull off a joke. Or perhaps the property was planted on you without you knowing.
As long as the D.A. has insufficient evidence to show your state of mind, criminal charges should not stand.
Note that other potential embezzlement defenses concern misconduct by law enforcement, such as entrapment or coercion of a confession.
A California conviction in a felony embezzlement case carries a penalty of up to 3 years in jail or prison.
3. Penalties
In California, embezzlement is charged as grand theft (PC 487) if it involved property that was either:
- worth more than $950,
- an automobile, or
- a firearm.
Grand theft is a wobbler, meaning that it can be charged as either:
- a misdemeanor carrying up to one year in jail or
- a felony carrying up to three years in jail.
Meanwhile, embezzlement is charged as petty theft (PC 488) if the value of the property is worth $950 or less. This is always a misdemeanor punishable by up to six months in jail.10
4. Immigration Consequences
Non-citizens risk being deported for a felony embezzlement conviction if the facts show that the crime qualifies as an aggravated felony. Therefore, non-citizens should retain legal counsel right away to try to get the charge dismissed or reduced to a non-deportable offense.11
5. Expungements
If you are convicted of embezzlement, you are entitled to an expungement provided you:
- successfully complete probation, or
- complete a jail term (whichever is relevant).
An expungement releases you from virtually “all penalties and disabilities” arising out of the conviction.12
6. Embezzlement vs. Grand Theft
Embezzlement is stealing money or property that was entrusted to you. Grand theft is stealing money or property that was not entrusted to you.
Example: Jim goes into a Target and steals an iPad. Jack is a cashier at that same Target and steals $1,000 in cash from the register for his own use. Here, Jim would face grand theft charges because he stole an item – the iPad – he was never entrusted with; in short, Jim shoplifted. Meanwhile, Jack would face embezzlement charges because he stole company cash for his personal use when he – as a cashier – was entrusted with that cash.
Grand theft refers to taking property valued at more than $950. Otherwise, stealing would be prosecuted as petty theft. Meanwhile, embezzlement applies to any dollar amount.
Despite the definitional difference between embezzlement and theft, these two crimes have identical penalties in California.13
7. Related Offenses
Burglary – PC 459
Per Penal Code 459 PC, you commit burglary when you:
- enter any residential or commercial building or room
- with the intent to commit a felony or a theft (such as embezzlement) once inside.
Forgery – PC 470
Penal Code 470 PC makes forgery a crime. Forgery occurs when you either:
- sign someone else’s name,
- fake a seal or someone else’s handwriting,
- change or falsify any legal document, or
- fake, alter, or present as genuine a false document pertaining to money, finances, or property.
As with embezzlement, you must act fraudulently to be guilty of forgery.
Misappropriation of Public Funds – PC 424
Penal Code 424 PC says that the misappropriation of public funds is a crime when:
- you misuse public funds, and
- you were responsible for those funds.
This offense can be committed only by the misuse of public funds, while embezzlement applies more to private funds.
Embezzlement/Misappropriation by a Public Officer – PC 504
Penal Code 504 PC makes a public officer guilty of embezzlement if they:
- fraudulently use any public property or funds, and
- use them in a way not consistent with their official authority.
This crime is punished in the same manner as ordinary embezzlement under PC 503.
Receiving Stolen Property – PC 496(a)
Penal Code 496(a) PC makes receiving stolen property a crime if you know that it has been stolen. As a wobbler, this crime can be a misdemeanor or a felony.
Bribery of an Executive Officer – PC 67
Penal Code 67 PC makes it a crime to bribe officials such as district attorneys and police officers. A violation is a felony punishable by two, three, or four years in prison.
Extortion – PC 518(a)
Penal Code 518 PC prohibits blackmail, also called extortion. It is defined as using force or threats to compel:
- another person to hand over money or property, or
- a public officer to perform an official act.
Extortion is a felony that carries two, three, or four years in prison.
8. Civil Remedies
Embezzlement victims can also file civil lawsuits against you. Depending on the case, possible claims include:
- Breach of contract,
- Conversion, and
- Unjust enrichment
Most civil cases are resolved through negotiation. However, if the plaintiff (victim) goes to trial and wins, the court may order that you pay full restitution. The court can also set up a constructive trust as a mechanism to return the money.
Note that civil lawsuits may be unnecessary. If you get convicted of criminal charges, the court can order that you pay restitution.
One of the most infamous examples of embezzlement is the Ponzi scheme orchestrated by investor Bernie Madoff – who had a fiduciary relationship with his clients. It has taken a long period of time and several lawsuits for his victims to recover some of their lost personal property.
Additional Reading
For more in-depth information, refer to these scholarly articles:
- The psychology of Embezzlement: The art of control and intervention – Palgrave MacMillan.
- Investigating The Crime Of Embezzlement Of Managers From The Perspective Of Criminological Theories – Journal of Positive School Psychology.
- A Case for Diversionary Restorative Justice in Cases Involving the Embezzlement of Funds from Small Businesses – Cardozo Journal of Conflict Resolution.
- A blockchain-based forensic model for financial crime investigation: the embezzlement scenario – Digital Finance.
- The Case Study of Los Angeles City & County Fraud, Embezzlement and Corruption Safeguards during times of pandemic – Public Organization Review.
Legal References:
- California Penal Code 503 PC.
- CALCRIM No. 1806 – Theft by Embezzlement. Judicial Council of California Criminal Jury Instructions (2017 edition). See also In re Basinger (1988) 45 Cal.3d 1348; and, People v. Wooten (1996) 44 Cal.App.4th 1834. See also People v. Kronemyer (1987) 189 Cal.App.3d 314.
- People v. Hill (1934), 2 Cal. App. 2d 141. See also People v. Sobiek (1973) 30 Cal.App.3d 458.
- CALCRIM No. 1806. See also People v. Wooten, supra; and, People v. Threestar (1985) 167 Cal.App.3d 747.
- CALCRIM No. 1806. See also People v. Talbot (1934) 220 Cal. 3; and, People v. Stein (1979) 94 Cal.App.3d 235.
- CALCRIM No. 1806.
- People v. Sisuphan (2010) 181 Cal.App.4th 800. See also People v. Davis (1998) 19 Cal.4th 301. People v. Casas (2010) 184 Cal.App.4th 1242.
- CALCRIM No. 1806. See also People v. Stewart (1976) 16 Cal.3d 133.
- See same.
- California Penal Code 514 PC. See also People v. Warmington (Cal. App. 3d Dist., 2017) 16 Cal. App. 5th 333. Note that PC 12022.6 has been repealed – this law increased grand theft prison terms by: One year if the loss exceeded $65,000; two years if the loss exceeded $200,000; three years if the loss exceeded $1,300,000; and four years if the loss exceeded $3,200,000.
- See INA 237 (a) (2) (A).
- California Penal Code 1203.4 PC.
- PC 487. PC 488.