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 Illinois, embezzlement is considered a form of theft and is covered under the Illinois Criminal Code. The crime involves the fraudulent appropriation of funds or property by someone to whom it was entrusted, typically in an employment or fiduciary context. The severity of the charge and the corresponding penalties in Illinois depend on the value of the property embezzled. For example, if the value is $500 or less, the offense is generally classified as a Class A misdemeanor, which can result in up to one year in jail and fines. If the value exceeds $500 but is less than $10,000, it is a Class 3 felony, with more severe penalties including longer prison sentences and higher fines. The penalties increase with the value of the property embezzled, with the highest offenses being Class 1 or Class X felonies for amounts over $100,000, which can lead to up to 30 years in prison. Additionally, embezzlers in Illinois may face federal charges if the embezzlement involves federal funds or tax evasion, as failing to report embezzled funds as income can lead to prosecution by the IRS under federal tax laws.