Fraud

Is Embezzlement a Felony? Real-World Examples That Could Happen to Your Business

Is embezzlement a felony? In most states, including Florida, embezzlement is classified as a felony when the stolen amount exceeds $750. When the value falls below $750, it may be considered a misdemeanor. In Florida specifically, embezzlement is typically charged as a felony, with the degree (first, second, or third) determined by the amount stolen.

Embezzlement happens when someone steals or misuses funds for personal gain that were intended for company use. Typically, the person stealing the money was entrusted to manage these funds. This type of business fraud can devastate companies of all sizes.

Is Embezzlement a Felony? – Legal Consequences for Embezzlement in Florida

The consequences for embezzlement in Florida include prison time:

Up to five years if the amount is over $750 and under $20,000
Prison sentences increase proportionally with the amount embezzled

Embezzlement cases may involve both civil and criminal charges. Victims can sue to recover their losses, while law enforcement can press criminal charges, usually felony charges.

Common Embezzlement Examples

Here are several real-world embezzlement examples that businesses should watch for:

Executive Misappropriation

A company CEO uses funds to pay for a beach vacation instead of legitimate business travel expenses

Direct Theft

An office manager writes checks to themselves using company accounts, stealing money directly
At a small business, an employee collects small cash deposits over time

Accounting Fraud

A bookkeeper creates fake vendors and sends payments to their personal bank account

Embezzlement vs. Wire Fraud

Financial statement fraud is often associated with embezzlement. Wire fraud occurs when someone steals money using electronic means. While similar to embezzlement, wire fraud is a federal crime involving electronic communications (internet, phone, email, or bank transfers).

Embezzlement may be charged under state or federal law depending on the circumstances. It occurs when a person steals money or property they were entrusted to manage, typically when someone has access to company funds and misuses them for personal expenses.

Fortunately, technology makes evidence in these cases more accessible, especially for wire fraud. Embezzlement may become wire fraud when someone embezzles money electronically in these ways:

Transferring stolen funds via online banking
Emailing fake invoices to get paid
Using company credit cards for personal use and covering tracks in accounting software
Moving stolen funds through PayPal, Venmo, ACH, or other wire transfers

Additional Fraud Schemes Related to Embezzlement

1. Shell Company Scheme (Vendor Fraud)

This occurs when an employee establishes a fake company and submits fraudulent invoices to their employer. The company pays the shell company for products or services never delivered. The employee then steals these funds. This scheme affects businesses of all sizes, from small to large companies.

2. Payroll Ghost Employee Scheme

This fraud happens when a payroll manager creates fake employee records and directs deposits to their own bank account. This type of fraud usually involves someone from human resources or payroll.

3. Kickback Scheme

Kickback schemes involve an employee selecting a vendor based on under-the-table payments or gifts. These typically involve procurement staff and corrupt vendors, resulting in the company paying premium prices for substandard products or services.

4. Financial Statement Manipulation

When executives or managers inflate revenue, profits, or hide expenses to appear more profitable to banks or investors, financial statement manipulation may be occurring. Employees typically involved include the chief financial officer or accounting team members.

5. Fake Expense Reports

These fraud schemes occur when an employee repeatedly submits inflated or duplicate receipts for business expenses like hotel stays or restaurant meals. While usually involving smaller amounts, these false claims can significantly damage small businesses and accumulate in larger companies.

Statute of Limitations for Wire Fraud

Generally, legal action must be taken within five years from the offense date. Since fraud may not be discovered immediately, the statute of limitations begins when the fraud was discovered or should have been discovered.

The situation becomes more complex if the fraud violates both state and federal law. Under federal law, the timeframe to file a lawsuit is usually five years, but extends to 10 years if the wire fraud affects a financial institution like a bank.

Remember that the clock starts on the date the fraudulent act occurred or when the last act in the scheme took place. If you’re dealing with potential wire fraud in Florida, consult with a legal professional who can provide guidance based on your specific situation.

Protecting Your Business from Embezzlement

Understanding if embezzlement is a felony and recognizing common embezzlement examples are crucial first steps in protecting your business. Implementing strong financial controls, regular audits, and employee education can help prevent these crimes from occurring in your organization.