Embezzlement by Bank Employee – 18 U.S.C. § 657 Sentencing Guidelines

Thanks for visiting Spodek Law Group, a second-generation firm managed by Todd Spodek with over 40 years of combined experience defending clients in federal financial crime prosecutions. Section 657 criminalizes embezzlement specifically by bank employees—not officers or directors covered by Section 656, but tellers, clerks, agents, and other workers. Maximum sentence: 30 years and $1 million fine, identical to the officer provision. Congress drew no distinction between executive embezzlement and teller theft when setting penalties, sending a clear message that stealing from banks will be punished severely regardless of the thief’s position.

The practical difference between Sections 656 and 657 is narrow. Section 656 targets “any officer, director, agent or employee” while 657 focuses on “any officer, agent or employee.” The overlap is nearly complete except 657 explicitly excludes directors. Why have two statutes? Historical accident more than conscious policy choice—Congress added 657 years after 656 to close perceived loopholes, creating redundancy prosecutors exploit by charging both statutes for the same conduct.

The Teller Who Pockets Cash

Most Section 657 prosecutions involve straightforward theft. A teller accepts a customer’s $5,000 cash deposit but enters $4,500 in the computer system, pocketing $500. The teller repeats this over weeks or months, stealing $15,000 before the bank’s audit discovers the discrepancy. Federal prosecution follows within days.

These cases rarely go to trial. Tellers caught embezzling usually confess immediately, cooperate fully, and plead guilty hoping for mercy. They get minimal mercy. Federal guidelines don’t distinguish between desperate single mothers stealing to feed children and career criminals looting millions. The $15,000 embezzlement yields offense level 10—6 to 12 months even with acceptance of responsibility. The teller loses her job, her banking career, her ability to work in any position involving money handling. Criminal record ensures unemployment or underemployment for life.

Is federal prosecution necessary here? Could banks handle this through restitution and termination rather than destroying lives with federal convictions? Banks could, but they don’t. Financial institutions maintain zero-tolerance policies and refer all embezzlement to federal prosecutors regardless of amounts or circumstances. The deterrence theory: harsh prosecution of small thefts prevents larger ones.

What “Embezzle” Means Under Section 657

Taking money or property with intent to defraud or injure the bank. The employee must have lawful access initially—embezzlement isn’t robbery, it’s conversion by someone in lawful possession. Intent to deprive permanently is required; temporary borrowing with intent to repay doesn’t constitute embezzlement unless the employee concealed the borrowing or never actually intended repayment.

Prosecutors prove intent through conduct. Did the employee conceal the taking through false entries, altered records, or misleading documentation? Concealment suggests knowledge of wrongdoing and intent to permanently deprive. Did the employee spend stolen money on personal expenses rather than treating it as a loan? That shows intent to convert rather than borrow.

Defense challenges intent when employees claim they believed they had authorization or intended to repay. A loan officer who takes money thinking a supervisor approved the personal advance didn’t embezzle if that belief was reasonable. An employee who borrowed money during a personal crisis and made partial repayments before being discovered has stronger argument against permanent-deprivation intent.

But courts view these defenses skeptically. If the employee hid the taking, didn’t document it properly, or spent the money on obviously personal items, claiming good faith becomes difficult.

Sentencing Hits Hardest at the Bottom

The guidelines calculate offense levels from loss amounts without regard to the defendant’s position or resources. A bank president who embezzles $100,000 and a teller who steals $100,000 face the same offense level 12 base calculation. Both get 2-level position-of-trust enhancement. Both end up at level 14.

But the practical impact differs enormously. The president likely has resources to pay restitution, hire quality defense counsel, present compelling mitigation about previously unblemished career and charitable works. The teller has nothing—no money for restitution, overworked appointed counsel, no prestigious community ties to present in mitigation. The president might get probation with home confinement; the teller serves 12-18 months in federal prison.

This disparity isn’t explicitly in the guidelines but emerges from judicial discretion and defendants’ resources. Federal sentencing facially treats rich and poor equally but produces dramatically different outcomes based on ability to pay restitution, quality of representation, and

perceived social value of defendants’ prior contributions.

Loss Calculation Fights

Everything turns on how prosecutors calculate loss. Did the employee steal $20,000 total, or did they steal $50,000 but the bank recovered $30,000 through insurance? The difference is 2 offense levels—4 to 6 months additional imprisonment.

Prosecutors argue intended loss controls when greater than actual loss. They claim employees would have stolen more if not caught, so intended loss is whatever the employee could have accessed. Defense must prove actual loss after mitigation should control—amounts recovered, insurance payments, and defendant’s restitution should reduce loss for sentencing purposes.

In a $50,000 theft where defendant repaid $25,000 before prosecution, is the loss $50,000 or $25,000? Courts split. Some treat embezzled amount as loss regardless of repayment. Others credit repayment made before criminal charges, viewing it as reducing actual harm. The sentencing outcome varies by 3-4 offense levels depending on which approach the judge adopts.

Why Banks Don’t Forgive

Financial industry culture treats theft as unforgivable sin. Banks fire employees who steal even when amounts are trivial and restitution is made. Industry-wide databases flag convicted embezzlers, preventing employment at any financial institution. The message: steal once from any bank and you’ll never work in banking again.

This lifetime ban extends beyond banking to many other industries. Retailers, hospitality companies, government agencies—anyone who checks criminal backgrounds discovers embezzlement convictions and rejects applicants. Convicted embezzlers end up in cash-economy jobs or unemployment.

The harshness serves deterrence purposes but destroys any possibility of rehabilitation. Someone who made one mistake at 22 can’t rebuild their life. The federal conviction follows them forever, limiting employment, housing, professional licensing, and social opportunities. We punish embezzlement far more severely through collateral consequences than through criminal sentences.

The False Entries Problem

Many Section 657 cases involve not just theft but false accounting entries covering it up. Those false entries often get charged separately under 18 U.S.C. § 1005 (false bank entries), creating additional counts carrying additional penalties. A teller who stole $10,000 and made 20 false entries to conceal it faces 21 counts—one embezzlement and 20 false entries.

Prosecutors use multiple counts for plea leverage. Defendants facing 21 counts imagine juries convicting on all charges and judges stacking sentences consecutively. Reality is that false entries made to conceal embezzlement would likely run concurrent, but defendants don’t know that. They accept plea offers to embezzlement only, dropping false entry counts, in exchange for prosecutors recommending concurrent sentences.

This charging practice—multiplying counts for the same criminal episode—is legal but questionable policy. It creates coercive pressure unrelated to actual culpability. Someone who stole $10,000 once didn’t commit 21 separate crimes just because covering it up required 20 entries. Treating each concealment entry as independent federal felony overstates criminality and inflates defendants’ perception of exposure.

Defending the Indefensible

Most embezzlement defendants are guilty. They took money they weren’t authorized to take. What defense exists?

Focusing on mitigation. Why did the employee steal? Medical emergency, family crisis, gambling addiction, financial desperation? These don’t excuse theft but they contextualize it as aberration rather than character. First-time offenders who made terrible decisions under extraordinary pressure deserve consideration different from career criminals who prey on employers.

Emphasizing restitution and acceptance of responsibility. Defendants who repay stolen amounts before sentencing, who cooperate fully with investigations, who express genuine remorse—they receive lower sentences. The 3-level acceptance reduction cuts 4-6 months off sentences at typical embezzlement offense levels.

Challenging whether federal prosecution was necessary. When amounts are small, defendants immediately confessed and made restitution, banks suffered no actual loss after recovery, and employees had unblemished decades-long records before single incident—was federal prosecution proportionate? Could banks have resolved this through civil restitution and termination?

Federal judges rarely dismiss prosecutions as disproportionate but occasionally vary downward from guidelines when prosecutorial zeal seems excessive. Presenting compelling mitigation creates possibility of probation or short sentences with home confinement rather than federal prison time.

The Appointment-Counsel Reality

Most defendants charged under Section 657 are low-wage bank employees who can’t afford private counsel. They receive appointed attorneys—federal defenders or CJA panel lawyers who are competent but overwhelmed with cases. These lawyers lack resources to hire investigators, expert witnesses, or mitigation specialists that private counsel provides.

The quality-of-defense disparity affects outcomes. Appointed counsel handles embezzlement cases the same way: advise guilty plea, seek 3-level acceptance reduction, present basic mitigation about defendant’s family and remorse. Private counsel does more: challenges loss calculations with forensic accountants, presents comprehensive mitigation with character witnesses and detailed social history, negotiates pretrial diversion or deferred prosecution agreements that avoid convictions entirely.

This isn’t criticism of appointed counsel—they work incredibly hard with impossible caseloads and minimal resources. It’s recognition that federal criminal justice produces different outcomes based on defendants’ wealth. Rich defendants avoid convictions or receive probation; poor defendants plead guilty and serve prison time for comparable conduct.

If you’re facing Section 657 charges, contact Spodek Law Group immediately. Bank embezzlement prosecutions move rapidly once theft is discovered—internal investigations complete within days, criminal referrals follow immediately, federal charges get filed before defendants can prepare. We represent bank employees at all levels facing embezzlement allegations from hundreds to hundreds of thousands of dollars. Early representation allows us to negotiate restitution arrangements that might prevent criminal charges, challenge loss calculations that drive sentencing severity, and present mitigation showing our clients deserve consideration as human beings who made mistakes rather than hardened criminals. We’re available 24/7.