Embezzlement in Federal Court: Exposure and Sentencing.

Federal Embezzlement Charges and Penalties

There is no single general offense of federal embezzlement. Instead, federal embezzlement is prosecuted through several different criminal statutes, each of which imposes different substantive and procedural requirements.

A federal offense requires federal jurisdiction. As a result, all embezzlement statutes require some specific, federal statutory connection to the property, entity, funding, or activity involved. With the exception of embezzlement targeting government-protected program funds, federal embezzlement charges primarily involve embezzlement of money or property that was initially entrusted to the accused.

The statutes that establish federal criminal embezzlement liability are 18 U.S.C. Sections 641, 656, 657, 659, 664, 666, 669, and 1711.

These statutes also establish the federal criminal penalties for embezzlement.

• 18 U.S.C. Section 641, Embezzlement or theft of government property
• 18 U.S.C. Section 642, Tools and materials for counterfeiting purposes
• 18 U.S.C. Section 656, Theft, embezzlement, or misapplication by bank officer or employee
• 18 U.S.C. Section 657, Lending, credit and insurance institutions
• 18 U.S.C. Section 664, Embezzlement, theft, or misapplication from employee benefit programs
• 18 U.S.C. Section 666, Embezzlement, theft, or misapplication involving programs or transactions
• 18 U.S.C. Section 659, Theft or embezzlement from interstate shipment
• 18 U.S.C. Section 669, Theft or embezzlement in connection with health care
• 18 U.S.C. Section 1711, Misappropriation of postal funds

  What are the Federal Criminal Penalties for Embezzlement?

  The federal embezzlement statutes are listed above. Of these, 18 U.S.C. Sections 641, 656, 657, 664, 666, 669, and 1711 do not carry any mandatory minimum prison sentences.

As a result, federal embezzlement prosecutors have complete discretion.

What is the “Grand Theft” Threshold in California?

In California, the “grand theft” threshold applies across all offenses. Except where an offense has a specific theft threshold (i.e., a smaller amount that triggers a felony charge), the grand theft threshold is currently $950.

• For misdemeanors, embezzlement typically means property valued at less than $950.
• For felonies, embezzlement typically means property valued at $950 or more.

  When Does Employee Theft Become a Federal Embezzlement Case?

  If you embezzle money or property from your employer, you may face a federal embezzlement charge. But, generally speaking, if you embezzle money or property from your employer’s private business, you will face state embezzlement charges.

This has nothing to do with whether you were entrusted with the property you stole. In the case of private-sector embezzlement, you may be entrusted with the property and your actions may qualify as embezzlement, but your actions will typically fall under the jurisdiction of the appropriate state court.

What changes in cases involving hospitals, universities, and non-profit organizations is that they are subject to 18 U.S.C. Section 666. This means that embezzlement that targets these entities (and even local governments in some cases) may become a federal embezzlement offense.

However, Section 666 also includes the provision that the organization or jurisdiction from which the government funds were stolen must have received federal funding from the government in the last 12 months in an amount equal to or exceeding $10,000.

Even if the employer in question does not qualify under Section 666, if you embezzle something from a private business and take it in a shipment over interstate lines, or if the shipment came from an international shipment, Section 659 may apply.

Finally, if a theft is not a federal offense, there is nothing stopping the prosecutor from charging you under state law.

What is the Difference Between Theft and Embezzlement?

The difference between federal criminal embezzlement and federal theft is that, while federal embezzlement often includes property that the accused was entrusted to handle, theft includes property that the accused was never entrusted to handle.

Even if federal charges do not apply, failure to charge under federal law does not mean that you will avoid criminal charges. The appropriate state authorities have jurisdiction to pursue charges against you.

Similarly, the theft classifications in state law do not apply in federal cases. For federal embezzlement charges, the sentencing will depend on the type of offense, the amount of money or property stolen, the victim, and other factors as well.

What Are the Penalties Under 18 U.S.C. Section 641?

18 U.S.C. Section 641 pertains to money, property, or records belonging to any department or agency of the United States, or that otherwise comes into the custody or control of the United States, with & #x27;value' defined in Section 641 itself as face, par, or market value, or cost price, whichever is greater.

Pursuant to Section 641, it is illegal to:

• Sell, convey, convey, lease, transfer, or dispose of, in any manner, any record, voucher, money, or thing of value of the United States or of any department or agency thereof, through any means, including fraud, a false pretense, or otherwise
• Embezzle, steal, purloin, or knowingly convert to his own or another’s use, or dispose of in any manner, any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any record, voucher, money, or thing of value of the United States or of any department or agency thereof that has come into the custody of the United States.

The offenses under 18 U.S.C. Section 641 include:

• The felony of embezzlement of federal property involving more than $1,000.
• The misdemeanor of embezzlement of federal property involving $1,000 or less.

The federal statutory penalties for federal embezzlement are broken down on a case-by-case basis. In the case of a conviction under Section 641, the federal statutory penalty is as follows:

• For a felony conviction under 18 U.S.C. Section 641, the federal statutory penalty is up to ten years of federal imprisonment and a $250,000 fine.
• For a misdemeanor conviction under 18 U.S.C. Section 641, the federal statutory penalty is up to one year of federal imprisonment and a $100,000 fine.

For an individual convicted of a federal felony embezzlement offense, the fine pursuant to the sentencing statutes may go up to $250,000 under 18 U.S.C. Section 3571(b).

The money, property, or records involved in a Section 641 conviction must belong to a federal department or agency. They must also include federal records, vouchers, or other valuables.

What are the Penalties Under 18 U.S.C. Section 642?

Under Section 642, it is a crime to secrete, embezzle, or take away any tool, implement, paper, or material prepared for use in making U.S. currency, bonds, stamps, or other federal obligations.

Unlike Section 641, Section 642 does not reach money, property, or records generally; it applies only to the tools, paper, and materials used to produce U.S. obligations and documents.

A conviction under Section 642 will impose the same federal statutory penalties as a Section 641 conviction.

Which Other Federal Statutes Carry Embezzlement Charges and Penalties?

18 U.S.C. Section 666 governs embezzlement, bribery, and theft offenses involving organizations that receive $10,000 or more in annual federal funding or benefits.

The types of entities that receive federal benefits include:

• State governments
• Local governments
• Tribal governments
• Universities
• Hospitals and clinics
• Non-profit organizations
• Public utility companies and corporations

Pursuant to Section 666, an organization qualifies as “government-related” as long as it is the recipient of $10,000 or more in federal funds.

Section 666 embezzlement requires an amount embezzled of $5,000 or more. Unlike Section 641 embezzlement, Section 666 embezzlement does not require the property to be federal funds. For example, embezzling funds from a federally connected non-profit organization will qualify as Section 666 embezzlement regardless of whether it is federally-provided funds or non-government provided funds that were stolen.

The statutory penalty for embezzlement under Section 666 is up to 10 years of federal imprisonment. 18 U.S.C. Section 656 is applicable to embezzlement crimes involving bank officers, bank employees, and other types of financial institutions. If the amount embezzled under Section 656 exceeds $1,000, the sentencing range can go up to 30 years. 18 U.S.C. Section 657 prohibits embezzlement and misapplication of funds by officers, agents, and employees of federally connected lending, credit, mortgage, savings and loan, and insurance institutions. It is also a federal offense. 18 U.S.C. Section 664 prohibits theft from employee benefit programs. Embezzlement from such programs can result in a federal sentence of up to five years of imprisonment. 18 U.S.C. Section 641 prohibits theft and embezzlement of money and property of the United States. Embezzlement from federal employee retirement plans can also result in criminal charges under this statute. 18 U.S.C. Section 669 prohibits embezzlement and theft of the assets of a health care benefit program. Under this statute, the amount involved must exceed $100 to carry a federal sentencing penalty of up to 10 years of federal imprisonment; otherwise the maximum is one year. 18 U.S.C. Section 1711 prohibits misappropriation of postal funds by a Postal Service officer or employee, and applies penalties of up to 10 years of federal imprisonment where the amount exceeds $1,000.

What Must Prosecutors Prove to Convict of Federal Embezzlement?

In federal embezzlement cases involving property of the United States under 18 U.S.C. Section 641, prosecutors must prove that the accused “knowingly converted” the property to their own use.

Knowledge is a key element of federal criminal embezzlement. Prosecutors must prove the accused knowingly misused the property in an embezzlement scheme, rather than making an innocent mistake.

If the funds or property were taken through an innocent mistake or error in financial transactions, the accused cannot be convicted under Section 641.

However, for a federal embezzlement conviction under Section 641, prosecutors do not need to prove that the accused knew the government owned the property.

Similarly, in Section 666 embezzlement cases, unless the statute otherwise requires, prosecutors generally do not need to prove that the accused knew that the victim organization received federal benefits or federal funding.

What are Other Factors That Can Affect the Outcome of Federal Embezzlement Cases?

There are several factors that can either influence a federal embezzlement investigation or defend against a federal embezzlement conviction in court.

• Returned property, Returning or attempting to return the embezzled property will not necessarily eliminate a federal criminal embezzlement charge.
• Justification, If you are an employee who is authorized to use certain government property for the benefit of the government, your use of this property can have strong defenses.
• Lack of criminal intent, As established above, if you embezzled money, property, or other funds by mistake or in the course of a good-faith accounting error, this can defeat a prosecution under Section 641.
• Intent, To satisfy the statutory requirement for criminal intent, federal prosecutors will use any available evidence in order to show that a defendant embezzled property knowingly and intentionally.

They will present evidence such as:

• The defendant’s access to the property;
• The defendant’s timing of the unauthorized transactions;
• The amount of money involved; and,
• The amount of money lost to the government or other victim.

In federal embezzlement cases, prosecutors will use the knowledge, information, and records they obtain from forensic accountants to reconstruct financial transactions. They will use this to show that the defendant had access to the property, that the defendant accessed the property on the dates in question, that the defendant converted the property, and that the victim suffered a loss in federal embezzlement cases.

If you are being targeted in a federal embezzlement investigation or if you are facing federal embezzlement charges, federal criminal defense attorneys and forensic accountants can use the same information to identify mistakes, gaps in evidence, and other defenses.

Why Is the Statutory Maximum Not My Likely Sentence?

The statutory maximum is the maximum sentence that a court can impose. In federal criminal cases, the federal sentencing guidelines (USSG) are advisory and don’t bind federal sentencing judges.

USSG Section 2B1.1 is the section that applies to federal embezzlement convictions. This is the section that sets out the guideline sentence for fraud, embezzlement, theft, and related crimes.

The sentencing guidelines provide a recommended range of prison time based on the accused’s total offense level and criminal history level. In federal embezzlement cases, the base offense level is typically six or seven.

If the statutory maximum sentence under 18 U.S.C. Section 641 or another applicable federal statute is 20 years or more, the base offense level is seven. If the statutory maximum is less than 20 years, the base offense level is six.

While the base offense level is usually six or seven, Section 2B1.1 allows for increases to the offense level in cases involving fraud, embezzlement, or theft. Some examples of factors that trigger enhancements under Section 2B1.1 include:

• The financial amount at issue in the fraud or embezzlement scheme;
• The defendant’s role in the crime (or crimes);
• Abuse of a position of trust;
• Sophisticated means of embezzlement or theft; and,
• Vulnerable victims.

The federal embezzlement guidelines specifically include a loss table under Section 2B1.1(b)(1). The amount of loss or value involved is an important factor that prosecutors will use to increase a defendant’s offense level in federal criminal embezzlement cases.

The calculated total offense level and the defendant’s criminal history level are then used to determine the range of recommended sentences in the sentencing table. However, sentencing judges are not required to sentence within the range of the federal sentencing guidelines.

Under 18 U.S.C. Section 3553(a), federal sentencing judges have discretion to sentence below or above the guidelines based on various mitigating and aggravating factors. Some examples of mitigating factors that can lead to a downward variance from the federal sentencing guidelines include:

• The defendant’s lack of a prior criminal record;
• The defendant’s good family and work history;
• The defendant’s good character;
• The defendant’s voluntary restitution to the government or other victim; and,
• The defendant’s good behavior and cooperation during a federal embezzlement investigation.

At Spodek Law Group, our federal criminal defense attorneys use Section 3553(a) to seek the most favorable sentencing outcomes for our clients. We use all available information and evidence to mitigate federal embezzlement charges, and we have experience successfully seeking deviations from the federal sentencing guidelines for our clients in federal criminal cases.

Does Paying the Money Back Reduce a Federal Embezzlement Sentence?

Under 18 U.S.C. Section 3565, the loss amount is equal to the greater of the actual or intended loss. If a defendant committed federal embezzlement but failed to realize a loss because the crime was detected, the intended loss will still count toward the defendant’s sentencing guidance range.

However, if the defendant repaid some or all of the stolen money or property, they may be entitled to a credit under Section 2B1.1(b)(1) (specifically, the Note to section (b)(1)). If the property was returned prior to the detection of the offense, the amount returned is subtracted from the amount used to determine the loss amount (subject to any intent to maintain control over the property).

If the funds or property were not returned prior to the detection of the offense, the defendant cannot use a repayment defense to avoid prosecution for federal embezzlement.

Even though federal embezzlement charges may not be affected by repayment of embezzled funds, the act of repayment can affect the accused’s sentencing under the federal sentencing guidelines. Specifically, under Section 3E1.1, defendants who accept responsibility and seek to resolve their cases can be eligible for up to a two-level sentencing reduction.

However, repayment of the embezzled funds or property after the embezzlement has become known to federal prosecutors will not result in a sentencing reduction under Section 3E1.1.

A repayment after the offense was detected may not eliminate criminal liability for federal embezzlement, but it can help mitigate the sentencing penalty.

An example of a scenario in which a repayment can eliminate criminal liability is when a mistake was made and a repayment was made without the defendant ever having intention of wrongfully taking the funds or property.

Similar to the sentencing penalty, the sentencing guidelines generally provide the same punishment regardless of whether an attempt to repair the crime by paying back the embezzled funds or property was made.

What is Restitution?

Restitution refers to the requirement that a defendant make repayment for any loss or harm caused to the government or other victims in federal cases involving fraud, embezzlement, theft, tax evasion, and related property crimes.

Restitution is governed by the Mandatory Victims Restitution Act of 1996 (MVRA). The MVRA mandates restitution by defendants convicted under any qualifying property crime within the United States.

Restitution amounts vary from case to case. Generally, a defendant convicted of federal embezzlement is required to reimburse the victim, in whole or in part, depending on the specific circumstances at hand.

While a restitution award is part of the sentence, it does not affect prison time, supervised release, or criminal fines.

What Collateral Consequences Follow a Federal Embezzlement Conviction?

In most cases, a criminal charge does not provide employers with any legal authority to withhold pay or wages.

Similar to the employment context, a federal charge can negatively affect any individual’s ability to renew or obtain professional certification or licensing. However, a federal charge alone does not result in any legal prohibition or restriction on licensing or certification.

As with other federal criminal charges, certain collateral consequences may follow a federal embezzlement conviction under the federal statutes that govern employment:

• The U.S. federal government, under Section 641, provides that “any person who shall have committed embezzlement, theft, or by fraud or otherwise knowingly or willfully converted to his own use or disposal any record, voucher, money, or thing of value of the United States or of any department or agency thereof” shall forfeit any federal office held, and shall be disqualified to hold any such office.
• Under FAR 9.406-2, the U.S. government can bar contractors whose officers, employees, or directors have been convicted of embezzlement or other types of fraud related to federal contracts.
• Under Section 1829, individuals who have been convicted of a crime involving dishonesty or breach of trust may be barred from working at FDIC-insured banks and other depository institutions.
• Under the Immigration and Nationality Act (INA), any individual who commits a theft offense as defined in INA Section 101(a)(48)(A), that carries a maximum sentence of at least one year, may face an aggravated felony conviction.
• Along with other fines and penalties, individuals convicted of federal felony embezzlement will be required to pay a $100 special assessment per offense count under 18 U.S.C. Section 3013.
• When authorized, the federal government can seize property used to commit a crime or for which the government obtained an ownership interest as a result of the crime.

Contact a Federal Criminal Defense Attorney

Nothing here is legal advice, and the details of your case matter. Todd Spodek and Spodek Law Group take federal criminal and white collar cases nationwide, from offices in New York, Brooklyn, Queens and Los Angeles. You can reach the firm at 212-300-5196.