Many people find it difficult to distinguish between embezzlement and fraud. They both involve dishonest personal gain and fall under white collar crime, but the differences are significant and important. And both will result in criminal prosecution.

There are five key differences between the two white collar criminal offenses.

1. Fraud involves an act or acts of dishonesty committed for personal gain. But a person can be guilty of fraud without embezzlement, for example when a person falsely claims to be professionally qualified in order to get a job.
2. Embezzlement is a subset of fraud involving theft in connection with fraudulent activity involving a business. In embezzlement cases, the perpetrator of the offense has a legitimate right to possession of the property, but steals it or seizes it through fraudulent activity, such as an entrepreneur in a position trustee who has access to the company’s bank account and illegally transfers money to his own account. A bank teller transferring funds is a common example.
3. Fraud does not always involve embezzlement. Fraud can happen outside of a business. Thus, in the situation described above involving a manager having access to a bank account, a fraud can take place without the perpetrator being in such a situation. He or she may seek to obtain financial information by deception, false pretences or misrepresentation via email scam or any other type of theft without actual misappropriation of funds.
4. Generally, fraud offenses will carry a lesser criminal penalty than embezzlement offenses. Fraud cases are often criminal cases, but they are also frequently heard in civil court involving different types of theft or deception. In many states this will be a misdemeanor, while embezzlement will often be both a misdemeanor and a felony charge.

Types of Fraud Offenses

The kind of theft by common fraud crimes will involve the following types of financial crimes:

• Identity theft
• Breach of fiduciary duty
• Public service misconduct
• Crime and misdemeanor theft
• credit card fraud

Fraud offenses run the gamut from minor financial fraud to major financial fraud, as shown below. The range of cases is wide and we often read, for example, mail fraud charges which relate to the commission of fraud offenses by physical or electronic mail and which constitute a serious offense within the meaning of the penal code.

Individuals can be charged separately with fraud and embezzlement offences. Those who control the assets are held to a high level of trust.

Types of embezzlement offenses

The crime of embezzlement involves charges that occur in businesses include the following –

• false invoicing and overcharging of customers
• Overtime Fraud
• Falsification of invoices and documents for profit
• Stealing customer data or sensitive information for personal gain
• Use of fake checks
• Misuse of expense reports
• Use specific information for your own business
• Insurance scams

Insurance company scams and fraud are very common and are one of the most common forms of theft. Coalition Against Insurance Fraud reports that insurance fraud is implicated in the theft of at least $80 billion a year in the United States and that such fraud occurs in approximately 10% of property and casualty insurance losses.

Ponzi scheme and other fraud offenses

The type of Ponzi scheme that was perpetuated by Bernie Madoff is one of the most publicized forms of financial fraud that often makes headlines.

Other “profile” frauds include wire fraud, tax evasion, insider trading, and serious breach of trust situations which will result in criminal charges and often a lengthy prison sentence for perpetrators of such crimes. .

High profile cases in recent years have included the Enron scandal in 2001, followed the following year by Worldcom and Tyco, and more recently Elizabeth Holmes who founded Theranos and was found guilty of 3 counts of fraud and of conspiracy to commit fraud in early 2022.

Recently, Ranesh ‘Sunny’ Balwani, the former COO of Theranos, was found guilty to defraud investors.

These major fraud and embezzlement lawsuits are making headlines globally and involve major law firms and lawsuits, ranging from cases like Theranos to The Vatican.

These major cases of fraud and embezzlement always involve the same ingredients as these less serious charges, particularly in the case of embezzlement, and will frequently involve the use of false documents or the manipulation of property that the offender does not own. not.

Often the penalties for fraud or embezzlement include not only jail time and fines, but also the forfeiture of assets and the abandonment of financial gains accrued through dishonesty.

While the types of cases differ and range from those involving a confidential relationship, misuse of sensitive information, stolen property and other items, it can range from the smallest business or malpractice to those involving large financial institutions.

No person in a position of trust or in a position where they have control of anything of value is exempt from the long arm of the law when illegal means are used to use property or funds that do not belong to them.

The distinctions between fraud and embezzlement are often lost in the midst of major trials, but these are mostly lower level offenses that combine civil and/or criminal penalties. For many, however, the distinction is often lost in the “heat” of the charges that are being defended.

Nevertheless, they remain important.