DPP Business Tax

What is Embezzlement?

Many different types of activities can be characterised as a type of fraud. Having a good understanding of how the law interprets these actions as fraud is crucial to keeping out of hot water and having your finances in order.

Embezzlement is one type of fraud and those guilty of embezzlement can hefty fines and prison sentences. But what is embezzlement, and how does it tie into fraud in the UK? DBT & Partner’s fraud specialist solicitors have all of the information you could need on embezzlement, including

  • What is embezzlement?
  • What are the most common forms of embezzlement?
  • What is the difference between embezzlement and theft?
  • How is embezzlement proven?
  • What are the penalties for embezzlement?
  • Speak to an expert at DBT & Partners today

What is Embezzlement?

Embezzlement is the term used to describe an illegal activity that is characterised as financial fraud. More specifically, embezzlement is when a person takes money or assets that were lawfully attained but used in a manner that goes against the original intention.

Most often, the person will have been entrusted with the assets. They will have then gone on to use them for a different purpose, often to acquire more assets without anyone else or any relevant businesses or companies knowing,

However, for a crime to be investigated and categorised as embezzlement, three benchmarks must be met:

  1. The person accused must have been entrusted with the assets or money that belonged to another person or company.
  2. There must be an identifiable intent to take ownership of the assets.
  3. The person accused must have used the assets, or have provable intention, to their benefit.

What Are The Most Common Forms of Embezzlement?

There are many different types of embezzlement, from falsifying overtime records to Ponzi schemes. Some of the most common types of embezzlement include:

Payroll Embezzlement

Payroll embezzlement is a type of embezzlement that involves a company or employee using the payroll system to commit illegal acts. This is usually seen as claiming wages on an employee that does not exist or no longer works there.

Falsifying Overtime Records

This type of embezzlement is often seen in workplaces where the amount of time a person has worked is submitted, rather than automatically tracked. For example, an employee may ask a manager to add some extra hours onto their shift that they haven’t worked, or an overtime manager who adds another shift onto their timesheet.

Ponzi Scheme

This type of embezzlement is often seen among financial advisors or financial planners who guarantee a strong investment return to a person. They then keep the assets for investment instead of investing them.

Charity Embezzlement

Charity embezzlement is a type of embezzlement committed by those involved in charities, such as volunteers, employees, and upper management. It’s often seen as taking charity money for themselves or using people’s financial information for their purchases.

Cheque Kiting

Embezzlement which is categorised as cheque kiting involves a kiter making deposits and withdrawals of assets across many banks. This type of embezzlement takes advantage of the time it takes a cheque to be registered with a bank, and it is very difficult to determine if this type of embezzlement has taken place.

What Is The Difference Between Embezzlement and Theft?

Whilst it is a form of theft, embezzlement is characterised as stealing assets from someone who trusted the assets with the person committing the crime. This is the key difference between embezzlement and theft, as there must have been a relationship or a sense of trust between the accused and the victim. Whether this is an employee and employer or a carer and the vulnerable person.

How Is Embezzlement Proven?

Proving that you have been a victim of embezzlement can be a difficult task. Firstly, the claimant must be able to prove that the accused had a fiduciary responsibility.

Secondly, the claimant must then be able to prove that the accused then acquired the embezzled assets through this relationship. The actions must also be proven to be intentional and throughout the activity, the accused must have taken ownership of the asset/s at one point or another.

What Are The Penalties For Embezzlement?

If all of the above factors can be proven to be true, then the accused may face an embezzlement charge. They can then be held either civilly or criminally charged and held for embezzlement. From here, a hefty fine can be issued, along with community orders and prison sentences.

Speak To An Expert At DBT & Partners Today

Overall, embezzlement is a serious, yet complex type of fraud that can cause severe distress for everyone involved. To get the best possible outcome, get in touch with the DBT & Partner’s expert team of solicitors to make the process smoother and the result as favourable as possible.

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