Fraud and Embezzlement – California Penal Code Section 503
Individuals who are charged with fraud or embezzlement may be subject to state or federal charges. Individuals facing these charges should understand the nature of the charges against them, the possible consequences of conviction and the potential defenses to these charges.
About California Fraud and Embezzlement Charges
Fraud and embezzlement are considered white collar crimes because they often do not involve violence and are often committed by individuals in professional settings. Embezzlement is often theft by an employee. It is the act of taking property that was entrusted to you by another individual. Often, this crime involves an employee who has possession of certain property, including cash. The employee has access to the property, money, credit card numbers or bank account information that allows him or her to remove it or use it without permission.1
Elements of Embezzlement
In order for a prosecutor to secure a conviction, he or she must prove the following elements by proof beyond a reasonable doubt:
- The individual had a relationship with the victim that formed the basis to entrust him or her with certain property, often in an employee/employer relationship.
- The individual was entrusted with property, money or an item of value within the scope of the relationship.
- The individual took the money, property or item of value with the intent to deprive the owner of the property of its value.2
The first element can be satisfied when the defendant is the victim’s employee, when he or she was given temporary possession of the property or there was some other relationship of confidence between the victim and the defendant. The second element arises when the defendant specifically uses his or her position of trust to gain access to the property in question.
The final element is established when the defendant fraudulently used the property, took advantage of the victim or caused a loss by breaching a duty, trust or confidence.3 The misuse of the property must provide some type of benefit to the defendant. The defendant must have the intent to deprive the owner of its use, even if the deprivation is temporary.
Consequences of Conviction
A person who is convicted of fraud or embezzlement is subject to possible imprisonment and loss of their freedom. Additionally, a court may impose significant fines on the accused. The defendant may be ordered to pay restitution to return the funds stolen to the victim. Embezzlement charges in California is punished as either grand theft or petty theft. It can be charged as either a misdemeanor or a felony, depending on the circumstances of the case and the defendant’s criminal history. Grand theft charges result when the property is more than $950 in value, a vehicle or a firearm. If this theft is charged as a misdemeanor, it carries a maximum penalty of up to one year in jail. Felony grand theft carries a maximum sentence of up to three years in jail.4 Misdemeanor petty theft when the embezzlement had a value under $950 and is punished as a maximum of six months in jail and a fine up to $1,000. However, for property of high value, there can be sentence enhancements between one and four years, depending on the value of the property involved.5
A conviction will result in acquiring a negative criminal history. The defendant may be sentenced to probation for years. In addition, an embezzlement conviction can prevent a person from being able to find future employment, especially when the job involves handling money.
Federal Embezzlement Penalties
If the defendant is facing federal charges, he or she is subject to the federal sentencing guidelines. These guidelines assign a base offense level that is associated with the general type of offense. Then, additional points are added for various reasons that increase the amount of the sentence range.6 Additional points may be added for the following reasons:
- A higher amount of property was involved
- 10 or more victims were involved
- The crime was committed through mass-marketing
- The property involved belonged to a national cemetery or veterans’ memorial
- The defendant derived more than $1 million in gross receipts from one or more financial institutions
- The offense involved a computer system used to maintain a critical infrastructure
- The offense caused a substantial disruption of a critical infrastructure
- A firearm was taken
- Arson or property damage by the use of explosives was caused
There may be other situations that cause an increase in the amount of time that is imposed. Additionally, the defendant’s criminal history can impact the sentencing. Additionally, there are specific fraud charges that carry with them specific sentencing guidelines.
Criminal Defenses to Embezzlement and Fraud
There are a number of defenses that may be raised to charges of embezzlement or fraud, including the following:
- Mistake of fact7 – this defense is available if you believed in good faith that you had the right to property, you did not conceal that you were taking the property and you did not take the property because the owner of it owed you a debt.
- Lack of criminal intent – California embezzlement charges require the defendant to have the specific intent to deprive the owner of the property. If the prosecutor cannot demonstrate this element of the offense, the defendant cannot be convicted.
- False accusations – In other situations, a person may be falsely accused of the crime, or someone else may have stolen from the company.
An experienced criminal defense lawyer can explore whether other possible defenses may be available in the case.
1 Penal Code 503 PC – Definition [of embezzlement]. (“Embezzlement is the fraudulent appropriation of property by a person to whom it has been entrusted.”)
2 Judicial Council of California Criminal Jury Instructions (“CALCRIM”) 1806 – Theft by Embezzlement (Pen. Code, §§ 484, 503) (“The defendant is charged [in Count ] with [grand/petty] theft by embezzlement [in violation of Penal Code section 503]. To prove that the defendant is guilty of this crime, the People must prove that: 1 An owner [or the owner’s agent] entrusted (his/her) property to the defendant; 2 The owner [or owner’s agent] did so because (he/she) trusted the defendant; 3 The defendant fraudulently (converted/used) that property for (his/her) own benefit; AND 4 When the defendant (converted/used) the property, (he/she) intended to deprive the owner of (it/its use).”)
3 CALCRIM 1806 – Theft by Embezzlement (Pen. Code, §§ 484, 503). (“A person acts fraudulently when he or she takes undue advantage of another person or causes a loss to that person by breaching a duty, trust or confidence.”)
4 Penal Code 489 PC – Grand theft [including theft through embezzlement]; punishment. (“Grand theft is punishable as follows: (a) If the grand theft involves the theft of a firearm, by imprisonment in the state prison for 16 months, or two or three years. . . . (c) In all other cases, by imprisonment in a county jail not exceeding one year or pursuant to subdivision (h) of Section 1170.”) See also Penal Code 1170(h) PC. (“(h)(1) Except as provided in paragraph (3), a felony punishable pursuant to this subdivision where the term is not specified in the underlying offense [including California embezzlement] shall be punishable by a term of imprisonment in a county jail for 16 months, or two or three years.”)
5 Penal Code 12022.6 PC. (“(a) When any person takes, damages, or destroys any property in the commission or attempted commission of a felony [including felony embezzlement], with the intent to cause that taking, damage, or destruction, the court shall impose an additional term as follows: (1) If the loss exceeds sixty-five thousand dollars ($65,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of one year. (2) If the loss exceeds two hundred thousand dollars ($200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of two years. (3) If the loss exceeds one million three hundred thousand dollars ($1,300,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of three years. (4) If the loss exceeds three million two hundred thousand dollars ($3,200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of four years.”)
6 See U.S.S.G. §2B1.1.
7 Penal Code 511 PC – Defenses [to embezzlement charges]; claim of title; unlawful retention of property to offset or pay demands not excused. (“Upon any indictment for embezzlement, it is a sufficient defense that the property was appropriated openly and avowedly, and under a claim of title preferred in good faith, even though such claim is untenable. But this provision does not excuse the unlawful retention of the property of another to offset or pay demands held against him.”)