The primary federal embezzlement statute is 11 U.S.C. Section 31. There is no federal criminal code. So, other embezzlement laws are scattered throughout federal laws. All these provisions have the same basic elements. Generally, embezzlement is using a position of trust to steal property or services.
The position of trust could be a multinational corporate CEO or a night cashier at a fast food restaurant. “Stealing” basically means unauthorized use. Many federal embezzlement laws require prosecutors to prove the defendant had the intent to permanently deprive the owner of the services or property.
Federal offenses usually involve extensive investigations that include multiple organizations. These entities do not always closely cooperate with each other. Therefore, procedural defenses, like search warrant problems, are quite common in these cases. So, even if prosecutors can prove the elements of the crime, a Chicago embezzlement defense lawyer can often successfully resolve the charges, especially if the defendant is a first-time offender.
Freelancing Using Company Resources
This kind of embezzlement is especially common among professionals. Lawyers, electricians, plumbers, accountants, and other professionals often service a few clients or customers on the side. If the employer knows about and approves the side gig, there is usually no problem. But if the client thinks she is hiring Dewey, Cheatam, and Howe but instead she pays cash to hire an individual Chicago embezzlement defense lawyer, that is illegal.
Business Identity Theft
Accountants, bookkeepers, and other workers who know how to cover their tracks sometimes apply for loans in the company’s name and then pocket the proceeds. This kind of embezzlement is also common in family businesses. A family member who has the right name, but does not have the proper authority, obtains a loan or line of credit for personal gain.
As James Bond (alias Mr. Fisher) remarked in You Only Live Twice, corporate espionage is big business. In the real world, corporate espionage is big business for startups. In 2020, a former Uber executive pleaded guilty to multiple counts of embezzlement for stealing driverless car secrets from Google. He was sentenced to 18 months in federal prison. Stealing other confidential information, such as customer contact information, could be embezzlement, as well.
Failure to Make Payroll Tax Payments
It is easy for unscrupulous accountants or bookkeepers to direct payroll tax payments to themselves instead of the IRS or other taxing authorities. Some less-reputable payroll companies often try the same thing. These embezzlement victims must unfortunately deal with both federal prosecutors and the taxing authority.
This embezzlement scheme is very common for medium-sized businesses with multiple locations. The embezzler creates a fictitious employee and directs the employee’s pay to his/her own account. This scheme is also rather easy to prevent. It is time-consuming for busy CEOs to personally meet every employee. But, this practice improves morale and almost eliminates the possibility of this embezzlement scam.
Stealing Returned Merchandise
Frequently, when customers return goods, the retailer stores them in a warehouse where they await sale by auction. An unscrupulous employee can load this merchandise onto a truck and sell it online. To cover their tracks, many of these embezzlers give a few dollars to the company and claim these funds were the auction proceeds.
Once again, retailers beware. An alarming number of retailers stuff goods into a back room or warehouse where there is little or no accounting or tracking. It is only a matter of time before someone takes advantage of this situation. A related grift is wait staff or other customer-facing employees who give unauthorized discounts to friends and family.
Stealing Office Supplies
Federal prosecutors usually are not interested in such nickel-and-dime affairs. However, for business owners, especially small business owners, the nickels and dimes quickly add up to quarters and dollars.
Skimming Fundraising Proceeds
This scam is closely related to the freelancing scheme discussed above. Fundraiser skimming is usually unique to nonprofits. The best way for business owners to prevent this kind of embezzlement, and most other kinds of embezzlement, is the two-person rule. If two people are in charge of merchandise control, fundraising events, or property much anything else, the chance of embezzlement plummets.
Petty Cash Theft
Many federal embezzlement laws do not have monetary minimums. Any breach of trust theft is illegal. This category includes taking a few dollars from the petty cash drawer. Frequently, the embezzler views the taking as a “loan” and they never repay it.
Skimming Cash Deposits
Nowadays, most customers pay for goods and services electronically. But a significant number of them still use cash. Therefore, someone has to go to the bank. An employee might only skim $50 or so per transaction. However, as is the case with stolen office supplies, the nickels and dimes quickly add up.
Voided Register Transactions
Technology has all but eliminated this once-common kind of embezzlement. The cashier voids a transaction and pockets the payment. Advanced POS hardware usually requires managers to void transactions. But not all retailers have such hardware, and not all managers are honest.
Unauthorized Credit Card Use
Technology has had the opposite effect on these rackets. Credit and debit card use is more common than ever. If these cases go to court, a Chicago embezzlement defense lawyer often uses the consent defense. Arguably, if the boss says it is okay to buy gas on Monday, it is also okay to buy it every other day, unless the boss clearly revokes that consent.
Customer Data Theft
Stealing credit cards or other information is not just identity theft. It also could be embezzlement. Legally, this act is basically a form of corporate espionage. The embezzler steals information that belongs to the company and uses it for personal gain.
This scam requires some sophisticated preparation, but it is common nonetheless, especially since many customers do not closely scrutinize bills before they pay them. The embezzler adds a small “processing fee” or other fees to each invoice and redirects that money to a different account. Ultimately, the business is responsible for this overbilling, which is why this scam constitutes embezzlement.
False Vendor Payments
Unscrupulous employees sometimes create fake employees, as outlined above. Other times, they create fake vendors. This scam is especially common if the business hires numerous consultants or other vendors whose work is intangible.
Contact Our Chicago Embezzlement Defense Lawyers
For more information about embezzlement scams to watch out for, or for effective representation in court, contact the experienced Chicago embezzlement defense lawyers at The Law Offices of Vadim A. Glozman.