Embezzlement is the fraudulent taking of property by a person to whom the property has been entrusted (or who is in lawful possession of it). The crime of embezzlement is often committed by an employee who embezzles money from the employee’s employer while lawfully handling or controlling the money in the course of the employer’s business operations.

Common forms of embezzlement include an employee (1) transferring money from an employer’s business account to the employee’s personal account; (2) altering the company’s records or books to conceal revenue or income to the employer (which the employee takes); (3) creating fictitious vendors and depositing funds payable to the fictitious vendors into bank accounts controlled by the employee; and (4) charging personal expenses to a business or corporate credit card.

Embezzlement differs from larceny or theft in that the original taking of the property was lawful, or with the consent of the owner—while in larceny or theft the felonious intent must have existed at the time of the taking.

Embezzlement of funds or property from a private employer is usually prosecuted under state law, and the definitions and penalties for the criminal charge of embezzlement are usually included in a state’s statutes. Embezzlement may often be prosecuted as a misdemeanor offense if the amount taken is relatively small (up to $1,500 for example)—or prosecuted as a felony offense for larger amounts of money. Felony convictions for embezzlement often include lengthy jail or prison sentences.

The Internal Revenue Service (IRS) requires embezzled funds to be reported as income on an embezzler’s tax return. Because embezzlers rarely report their embezzled funds as income, embezzlers are often prosecuted for federal tax evasion as well as the underlying crime of embezzlement.

Embezzlement is also a crime under federal law if the money or property embezzled belongs to the United States government, or is made under contract with the United States government. See 18 U.S.C. §641.

In Arizona, embezzlement is considered a form of theft and is covered under the state's theft statutes. The crime involves the fraudulent appropriation of property or funds by someone who was entrusted with its care—typically an employee or agent. The severity of the charge in Arizona depends on the value of the property embezzled, with smaller amounts potentially being charged as misdemeanors and larger amounts as felonies. For example, amounts less than $1,000 can be charged as a class 1 misdemeanor, while amounts exceeding $25,000 can be charged as a class 2 felony, which carries a more significant penalty, including possible prison time. Additionally, embezzlers in Arizona may face federal charges if they fail to report the embezzled funds as income, leading to tax evasion charges, or if the embezzlement involves federal government funds, which is a federal offense under 18 U.S.C. §641.