Embezzlement means someone misusing an asset or money which they were entrusted with, to look after. Embezzlement has become quite. The victims of these types of frauds are usually older people who are more likely to trust anyone. The term however, is more commonly used in the employment and corporate settings.
An example of embezzlement is accounting embezzlement whereby the accountant is in the possession of company assets but misuses them. They commit a crime by stealing the funds and manipulating the records where everything looks picture perfect. The offenders of this embezzlement are given the possession which they use for personal gains instead of the official use.
When a person is trusted with a property like an asset or a certain amount of money, they are also given some instructions. The purpose is to manage and monitor the assets in the best interest of the owner. If the person in possession of the asset uses the asset in other ways i.e. for personal gains, this is an example of embezzlement.
A common example is the cash counter of a bank where loose cash is handled by the cashier and they steal some. The cash is the property of the bank but the misuse is termed as embezzlement. This is also common in retail stores and at cash counters where cash and even inventory are often stolen. Another common example is of employees who are given laptops and vehicles to be used in the best interest of the company, but they instead use it for personal chores. Employees can even sell these assets and claim that the car or the laptop was stolen.
Cases of embezzlements are very common in corporate settings whereby the employees can either take large amount of money at once or in smaller chunks over a period of time. The methods used by the employees to embezzle vary greatly and are often quite creative. Some examples are generating payroll checks to fabricated employees and erroneous recording of data and inventory. Ponzifinancial scheme is another popular scam used by employees.
Embezzlement is a crime and can be prosecuted under civil or criminal fraud. The employer can file a lawsuit against the employee found involved in embezzlement. If the employer is ready to raise a charge against the employee on the basis of embezzlement, there are a few factors that they must consider. Smaller businesses are the usual victims of this kind of fraud and the losses can be drastic.
To prevent or minimize the risk of embezzlement, a fiduciary relationship must be established among the employees, employer as well as stakeholders. There should be a relationship of mutual trust, ownership and responsibility. This relationship can be proven before the judiciary through employment contracts which are signed by both parties. The job description and role of the employee will also be mentioned in the contract leaving no place for doubt.
Aside from that, the defendant must have proof that the property or asset they were entrusted with was given to them through a relationship rather than any other means. This can be tricky to prove when it comes to handling loose cash like a cashier at a counter. Proving this however, is important for a smooth case proceeding.
The defendant must have taken the ownership of the said property. This is another important factor that needs to be proved in the court of law. If the defendant had transferred the property to someone else, there should be proof available for that as well. The case cannot continue if these factors are not proven.
How can someone prove the intention of a culprit? The fourth and the most difficult factor that needs to be proved before the judiciary is intention. The defendant’s actions that led to embezzlement should have been done intentionally. If not, then the case may become void. This can be the game changing factor, which can result in the fraudster winning the case.
The penalties for embezzlement vary according to the amount of money stolen. The embezzler may be required to return the money they stole or pay a heavy fine to the employer. In some cases, an embezzler may be sentenced to serve sometime in prison.
A common example of embezzlement is of a bookkeeper who pockets any refunds from the customers for themselves. Another example is of a bank teller who steals a certain amount of deposit and manipulates the records. A payroll clerk who does not deposit full employment taxes and keeps some money in their pocket is another example of embezzlement.
Retail businesses suffer the most from embezzlement. Many employees in this industry have the habit of walking off with merchandise. Another common example is the theft of gift cards which is easy to hide in a pocket and walk off with. All these are termed as employee theft.
An employer can stay safe and keep their company safe from embezzlement by keeping a proper check and balance in the company. Personal involvement with employees can make them feel appreciated by their employer, thereby reducing the chances of them committing a fraud.
Having a close focus on cash transactions can reduce the chances of embezzlement in a company. Payroll and financial departments should be kept under review at all times and reconciliation of bank statements should be done on a monthly basis.