There is no question that stealing is wrong and is punishable as a crime under the law. However, the severity of the offense is amplified when the thief is placed in a position of trust by another person, company or organization and the thief uses his or her access to carry out and conceal the theft of money and goods. This could be as minor as a retail store cashier stealing money from the cash register or as serious as a chief financial officer fraudulently transferring millions in company funds to his private bank account. Theft while acting as an agent or servant of the victim is known as embezzlement and, if caught, the severity of the punishment is based on what the value of the stolen property was. Embezzlement can be charged and punished whether you stole from a sole proprietor, a non-profit organization, a major corporation or even a governmental unit. Anyone convicted of this crime can expect a lengthy incarceration, a long probation or parole sentence, and the legal obligation to repay all of the stolen funds to the victim.
An individual is guilty of embezzlement by agent or employee, contrary to MCL 750.174, if the prosecutor can prove all of the following beyond a reasonable doubt (See Model Criminal Jury Instruction 27.1):
- First, that the money or property belonged to another person, governmental entity within this state, or other legal entity.
- Second, that the individual had a relationship of trust with another person, governmental entity within this state, or other legal entity because the individual was its agent, servant, employee, trustee, bailee, or custodian.
- Third, that the individual obtained possession or control of the money or property because of this relationship. It does not matter whether or not the individual was legally authorized to handle and disburse the money by his employer or by law as long he actually handled it. For example, a probation officer who received a check from a probationer intended to be transferred to an individual on a mother’s pension list but instead deposited the money commits embezzlement even though “no duty was imposed on him to receive, pay out or account for the safekeeping of any money belonging to the county” but he, nevertheless, received the funds in his possession by virtue of his office or employment.” People v Burns, 242 Mich 345; 218 NW 704 (1928).
- Fourth, that the individual dishonestly disposed of the money or property, covered the money or property to his or her own use, or took or hid the money or property with the intent to convert it to his or her own use without the consent of the person, governmental entity or legal entity. The fact that the individual was in a position in the organization to “consent” to a transfer of money on behalf of the organization does not create actual consent If the intent was to fraudulently dispose of or convert the money. For example, the managing officer and sole director of a hospital does not avoid embezzlement when funds came under his control as a result of his position and he transferred the funds to personal accounts with an intent to defraud the hospital. People v Wood, 182 Mich App 50; 451 NW2d 563 (1990).
- Fifth, that at the time the individual did this, he or she intended to defraud or cheat another person, governmental entity within this state, or other legal entity of some property.
The penalties for embezzlement by agent or employee are as follows:
- A misdemeanor conviction punishable with a fine up to $500.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 93 days in jail, or both, contrary to MCL 750.174(2), IF the amount of the money or property embezzled was less than $200.00.
- A misdemeanor conviction punishable with a fine up to $2,000.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 1 year in jail, or both, contrary to MCL 750.174(3), IF EITHER:
- The amount of the money or property embezzled is $200.00 or more but less than $1,000.00; OR
- The individual commits the crime of embezzlement by agent or employee under $200.00 AND the individual has a prior conviction for committing or attempting to commit embezzlement by agent or employee under $200.00.
- A felony conviction punishable with a fine up to $10,000.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 5 years in prison, or both, contrary to MCL 750.174(4), IF EITHER:
- The amount of the money or property embezzled is $1,000.00 or more but less than $20,000.00; OR
- The individual commits the crime of embezzlement by agent or employee between $200.00 and less than $1,000.00 AND has one or more prior convictions for committing or attempting to commit embezzlement by agent or employee less than $1,000.00.
- A felony conviction punishable with a fine up to $15,000.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 10 years in prison, or both, contrary to MCL 750.174(5), IF EITHER:
- The amount of the destruction or injury is $20,000.00 but less than $50,000.00; OR
- The individual commits the crime of embezzlement by agent or employee between $1,000.00 and less than $20,000.00 AND has two or more prior convictions for committing or attempting to commit embezzlement by agent or employee less than $20,000.00.
- A felony conviction punishable with a fine up to $25,000.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 15 years in prison, or both, contrary to MCL 750.174(6), IF the amount of the money or property embezzled was $50,000.00 or more but less than $100,000.00.
- A felony conviction punishable with a fine up to $50,000.00 (or 3x the amount of the money or property embezzled, whichever is greater) and/or up to 20 years in prison, or both, contrary to MCL 750.174(7), IF the amount of the money or property embezzled was $100,000.00 or more.
In addition, a court may order a term of imprisonment imposed by a felony conviction for embezzlement to be served consecutively to any term of imprisonment imposed for any other criminal offense, under MCL 750.174(12), if the victim of the violation was ANY of the following:
- A nonprofit corporation or charitable organization under federal law or the laws of this state.
- A person 60 years of age or older.
- A “vulnerable adult”, defined as “[a]n individual age 18 or over who, because of age, developmental disability, mental illness, or physical disability requires supervision or personal care or lacks the personal and social skills required to live independently.”
A consecutive sentence means that the defendant must fully serve the incarceration time imposed on one offense before earning any credit on the next offense. For example, an individual convicted of embezzling funds from an elderly woman’s bank account as her caretaker and convicted of assaultive crimes for elder abuse is sentenced to 5 years in prison on each offense. This means that the offender must serve his five-year sentence first for the elder abuse before starting his five-year sentence for the embezzlement, for a total of TEN years.
Additionally, the prosecutor can use the values of embezzlements committed in separate incidents within any 12-month period during a common scheme and combine them to determine a total value. The prosecutor may then use that number as a basis to authorize a more severe criminal charge of embezzlement by agent or employee. If the scheme or course of conduct is directed against only one person, governmental entity within this state, or other legal entity, NO time limit applies for aggregation (the prosecutor is not limited to a 12-month period). MCL 750.174(8).
“In a prosecution under this section, the failure, neglect, or refusal of the agent, servant, employee, trustee, bailee, or custodian to pay, deliver, or refund to his or her principal the money or property entrusted to his or her care upon demand is prima facie proof of intent to embezzle.” MCL 750.174(10). This is a potential fact that a jury will be instructed on to infer that the individual intended to embezzle money, although the jury is not necessarily required to make this inference. (Model Criminal Jury Instruction 27.2).
This being said, the embezzlement statute does NOT require the prosecutor to prove, as elements of the offense, a demand and failure to pay on demand. People v Hopper, 274 Mich 418, 422; 264 NW 849 (1936). In addition, the actual return of the money or property upon demand or the individual’s intent to return the property at a later date does not allow that individual to escape prosecution. People v Butts, 128 Mich 208, 214; 87 NW 224 (1901). The presumption of intent to embezzle after a demand and failure to return is not unconstitutional because it is “a rationally presumed fact and is more likely than not to flow for the basic or proved fact of failure, neglect or refusal to pay such money upon demand”. People v Rafalko, 26 Mich App 565; 182 NW2d 732 (1970).
The most common defenses to embezzlement by agent or employee include:
- NOT IN POSSESSION OF VICTIM’S PROPERTY: In People v Bergman, 246 Mich 68; 224 NW 375 (1929), an individual was charged with embezzlement from his employer by fraudulently granting credits to customers and lying about the full amount being remitted, although he did not actually take and convert customer’s money for his own use (any money that was collected was deposited with the employer). The Michigan Supreme Court vacated his conviction, finding that he could not be guilty of embezzlement if he did not “fraudulently misappropriated or converted” property that never came into his possession.
- NOT CLEAR THAT DEFENDANT WAS NOT ENTITLED TO MONEY OR PROPERTY: In People v Gadient, 185 Mich App 280; 460 NW2d 896 (1990), an individual who conducted real estate transactions for a business was accused of misappropriating interest proceeds. The offense was dismissed because the agreement between the individual and the business gave him wide latitude to determine his fees, that the business received the full benefit of the bargain, and that the business should not be rewarded because it failed to closely read a letter sent by the individual stating that his compensation would partially come from the interest on account. The business gave the individual carte blanche on paying himself in these matters which, although not considered proper business practices, could not be considered a crime.
- NO INTENT AND DEFENDANT ACCIDENTALLY IN POSSESSION OF MONEY OR PROPERTY: To commit a crime requires intent and a showing that the individual accidentally retained another person’s funds in his possession can be a defense to embezzlement, but this is fact-dependent. If the individual was taking funds to the bank on behalf of his employer but one of the envelopes of money was accidentally left in his car and was discovered later by accident, then there may be an argument that the possession was accidental. However, if the defendant actually deposited funds in his own personal account, then it is more difficult to prevail on an “unintentional argument”.
In addition to the fines and penalties, the embezzler will also be required to repay the victims for the stolen funds through restitution. This requirement often becomes a requirement of prison or parole and the offender must adhere to a court-imposed repayment schedule. Failure to make reasonable efforts to pay down the restitution can result in a violation of probation or parole that puts the offender back behind bars.
Embezzlement is a serious criminal offense that judges and prosecutors take very seriously. If the crime was committed against a particularly vulnerable individual (e.g. elderly person, charitable or non-profit organization), then the possibility of going to jail or prison is nearly certain. In these situations, you need a skilled criminal defense lawyer in your corner to protect your rights and hold the prosecutor to their standard of proof. Anything less can result in a conviction that will destroy your life now and for years to come.
If you or a loved one have been charged with embezzlement by agent or employer and need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.