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 Vermont, embezzlement is defined as the fraudulent appropriation of funds or property by a person to whom such funds or property has been entrusted, typically occurring in an employment or official capacity. Vermont state statutes categorize embezzlement as a crime that can be prosecuted as either a misdemeanor or a felony, depending on the value of the property taken. For smaller amounts, typically up to $900, it may be treated as a misdemeanor (under 13 V.S.A. § 2537), while larger amounts can lead to felony charges, potentially resulting in more severe penalties, including imprisonment. Additionally, embezzlers in Vermont may face federal charges if the embezzlement involves federal funds or tax evasion, as the IRS requires all income, including funds acquired through embezzlement, to be reported. Failure to do so can lead to federal tax evasion charges. Embezzlement of federal property is also a federal crime under 18 U.S.C. § 641, which applies when the embezzled funds or property belong to the United States government or are associated with a federal contract.