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 Virginia, embezzlement is defined as the wrongful and fraudulent taking of money or property by a person to whom it was entrusted, typically occurring in an employment or official capacity. Under Virginia law, embezzlement is treated as a form of larceny and is governed by the Virginia Code § 18.2-111. The severity of the charge and the associated penalties depend on the value of the property embezzled. If the value is less than $1,000, the offense is considered petit larceny, a misdemeanor punishable by up to 12 months in jail and a fine of up to $2,500. If the value is $1,000 or more, the offense is grand larceny, a felony that can result in imprisonment for one to 20 years, or, at the discretion of the jury or the court trying the case without a jury, confinement in jail for up to 12 months and a fine of up to $2,500. Additionally, embezzlers in Virginia 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 for federal tax evasion under the Internal Revenue Code.