Our California criminal defense lawyers defend clients accused of embezzlement throughout the state, including Metro Los Angeles, the Inland Empire, San Diego, San Jose and the San Francisco Bay Area.
Embezzlement is a white collar crime that is also commonly referred to as employee theft and employee fraud. California embezzlement is defined under Penal Code 503 PC as unlawfully taking something from another that has been entrusted to you.1
The "entrusting" is the major difference between embezzlement and other types of theft. In order to be convicted of embezzling property, it must be property that you legally possessed or had authority to access.
Embezzlement is most frequently seen in connection with employment situations...which explains its other common names.
Because of the stigma that a California embezzlement charge carries, it is certainly a charge worth fighting. False accusations, misleading evidence, or even a lapse in judgment shouldn't jeopardize your future job opportunities...or, more importantly, your freedom.
In order to gain a better understanding of California's embezzlement laws, our California criminal defense lawyers will provide a comprehensive guide to understanding this crime...and the defenses that are available to it...by addressing the following topics:
If, after reading this article, you have additional questions, we invite you to contact us. You may also find helpful information in our related articles on Theft Crimes, Penal Code 487 pc Grand Theft, California Petty Theft Laws, Penal Code 459 pc Burglary, Penal Code 470 pc Forgery, and Penal Code 496 pc Receiving Stolen Property.
Although embezzlement used to be a crime in and of itself, it now falls under the umbrella of Penal Code 484 theft.2 Embezzlement is simply one way to commit a theft. In its very definition, theft refers to embezzlement. "Every person...who shall fraudulently appropriate property that has been entrusted to him/her...is guilty of theft".3
The value of the property that you allegedly embezzle will determine whether you are penalized under Penal Code 487 grand theft or Penal Code 488 petty theft.
The prosecutor will charge you with embezzlement as grand theft if the value of the embezzled property is worth more than $950, or if you embezzle a firearm (grand theft firearm), or a car (grand theft auto), regardless of their values.4 He/she will charge you with embezzlement as petty theft if the value of the allegedly embezzled property is worth $950 or less.5
Despite the fact that embezzlement is simply a form of theft, there are rules that apply specifically to California embezzlement law. In order for the judge or jury to find you guilty of this offense, the prosecutor must prove the following three facts (otherwise known as "elements of the crime"):
- that you had a relationship of trust with the victim,
- that, pursuant to that relationship, you were entrusted with certain property, and
- that you specifically intended to deprive the victim of that property by fraudulently taking it as your own.6
So what exactly does all of this mean? Let's take a closer look.
"A relationship of trust"
In order to be convicted under California embezzlement law, you must be involved in a relationship of trust and confidence with the person from whom you allegedly embezzled.7 If that relationship doesn't exist, you may have committed a theft...but you would not be guilty of embezzlement.
The relationship has been defined as one similar to a fiduciary relationship. A "fiduciary" relationship is one in which one person has complete faith and trust in the other. The "fiduciary" acts in the best interests of the other person, putting his/her own interests aside.
Some examples of these types of trusted relationships include an employer/employee, a doctor/patient, and a lawyer/client. People involved in ordinary commercial exchanges, such as creditors/debtors, or a taxi driver/passenger, for example, do not typically have the relationships of trust contemplated by California embezzlement laws.
"Entrusted with property"
If you are entrusted with property, it means that you are responsible for using or holding it for the owner's desired purposes...it does not mean that you are free to do with it as you please. This concept also implies that the "entrusted" property is that which you do not own or subsequently acquire through legal means...rather, you hold it for someone else.
If your job requires you to handle cash that belongs to your company, and instead of putting it in the safe or register, you take some for yourself, you have embezzled "entrusted property". But...
Let's say your boss asks you to perform work on his house (something clearly outside your job description). He gives you $1,000 with the understanding that that amount is for your payment and costs. If you spend all $1,000 on yourself...and don't buy any supplies...you haven't been "entrusted with property" for purposes of embezzlement, since the money was paid to you.
California embezzlement laws hold that you can't be convicted of embezzling money or other property that is yours...if it belongs to you, it hasn't been entrusted to you.8
"Specific intent to deprive"
In order to be convicted of Penal Code 503 pc embezzlement, you must specifically intend to deprive the rightful owner of his/her property. Although there is no requirement that you intend permanently to deprive him/her of that property, you must intend to at least deprive him/her of it at least temporarily.9
Even if you intend to replace the property at a later time, you are still temporarily depriving the owner of that property...and therefore still subjecting yourself to this charge. The bottom line is that you violate California embezzlement law the minute you misappropriate property from its trusted purpose.10
You act fraudulently if you take advantage of or cause a loss to another by breaching that individual's trust.11 For purposes of California embezzlement law, you "fraudulently take" another's property when you use it for your own benefit.12
Let's look at some examples to further illustrate these elements.
Let's say you serve as a care-giver for an elderly couple, living in their home. If you take any property or money from the home, you could be guilty of embezzlement. The couple "entrusts" you with their property when they permit you to reside with them.
For a more obvious example, let's say that you work in a clothing store. Instead of "restocking" a pair of jeans that someone has returned, you intentionally place them in your bag to take home. You would be guilty of Penal Code 503 embezzlement.
Many times when an employer accuses you of employee theft or employee fraud, he/she will withhold your wages and conduct an audit to investigate his/her claim.
Depending on the type of company you work for and on the level of sophistication of its management, the owner may not even put you on notice of his or her suspicion. Rather, the employer may report it directly to the police in the hopes that they will obtain a California search warrant and do a surprise search of your car, home or other property.13
There are some people who may invite embezzlement charges even though they don't share the typical "trusted" relationships with those from whom they allegedly embezzle. Some of these examples include:
Embezzlement by California Contractors
Penal Codes 484b and 484c relate to theft offenses, but specifically deal with embezzlement situations involving contractors.
If, for example, you are a contractor and you
- divert funds from one project to another,
- willfully fail to complete a project for which you have already received funds, or
- submit a voucher for a loan, intending to use the funds for a purpose other than the one you stated in your loan application,
you may be guilty of Penal Code 503 embezzlement.14
Embezzlement by Bailees15
A "bailee" is someone who has possession of someone else's property. If, for example, you are a valet, you act as a bailee when someone gives you their car to park. During that time, you are not permitted to use it for your own purposes but are simply supposed to park the car.
If instead of parking the car, you take it for a ride, you are guilty of embezzling the car.
Similarly, let's say you are a jeweler and someone leaves his watch for you to fix. If instead of repairing the watch, you either keep it for yourself or sell it to someone else, you are guilty of embezzling the watch.
Embezzlement by Tenants16
If you are, for example, renting an apartment and you sell the refrigerator that is provided to you by the apartment owner, you are guilty of embezzling the refrigerator.
In addition to Penal Code 484 theft (encompassing both grand theft and petty theft), there are a variety of other offenses that relate to California embezzlement law...typically because they are frequently charged together. The following are a few of the most common.
Penal Code 459 burglary
Penal Code 459 defines California burglary as entering a structure with the intent to commit a felony (or a petty theft) once inside.17 This means that if, for example, you enter your workplace intending to steal from your employer once inside, you may be convicted of both California's burglary law and embezzlement.
Penal Code 496 receiving stolen property
Penal Code 496 defines "receiving stolen property" as buying, selling, receiving, concealing, or withholding stolen property.18 While California "receiving stolen property" law is typically aimed at the person who receives the already stolen property (as opposed to the actual thief), the prosecutor could opt to charge you with this offense and embezzlement as a way of covering all of his/her bases.
This means that if you embezzle property that you then sell to another, you could face prosecution for both charges.
Penal Code 470 forgery
Penal Code 470 defines forgery as knowingly altering, creating, or using a written document, intending to commit a fraud.19 This means that if, for example, you sign your boss's name to a check that you make out to "cash" and then cash it, you would be guilty of both forgery and embezzlement.
Embezzlement is typically punished as either Penal Code 487 grand theft (if the value of the embezzled property is worth more than $950) or as Penal Code 488 petty theft (if the value is $950 or less).20
California Penal Code 487 PC grand theft is a "wobbler", which means that depending on (1) the circumstances of your case, and (2) your criminal history, you may be charged with embezzlement as either a misdemeanor or a felony.
If you are convicted of grand theft embezzlement as a misdemeanor, you face sentencing of up to one year in a county jail and a maximum $1,000 fine. If you are convicted of embezzlement as a felony, you face a sentence of 16 months, or two or three years in the California State Prison, and a $10,000 maximum fine.21
If you are convicted of petty theft embezzlement, you face up to six months in a county jail and a maximum $1,000 fine.22 If the property you embezzled was valued at $50 or less...and you have no other theft-related convictions, your California embezzlement defense lawyer may be able to convince the prosecutor to reduce your charge to an infraction, subjecting you to a maximum $250 fine.23
Multiple violations -- grand theft
If you embezzle more than $950 over a 12-month period from your employer, each act of embezzlement will be added up to penalize you as if you had committed one act of grand theft.24
On a similar note, if you embezzle from your employer on different occasions, the prosecutor will attempt to charge you with each instance as a separate count. If this happens, your criminal defense attorney can argue that each instance was part of an overall plan and should only be charged as one offense.
Although it may seem odd to concede the offense, it may be a strategy to reduce your potential jail or prison sentence.
Aggravated white collar crimes are subject to additional enhancements. If the embezzled property is worth more than $65,000, you face an additional and consecutive one-year California State Prison sentence. This additional sentence can be as high as four years if the property is worth more than $3,200,000.25
Aggravating and mitigating circumstances
Aggravating and mitigating circumstances are factors that the judge takes into consideration before imposing your sentence under California embezzlement law.
If you embezzled from someone who is a "dependent person" (that is, someone whose mental and/or physical impairment affects his/her daily activities) or a "senior", the judge will consider that an aggravating factor when determining your punishment.27
If you voluntarily and actually reimburse or replace the embezzled property before you are arraigned or indicted by a grand jury, that fact may serve as a mitigating factor when the judge imposes your sentence. It will not however, act as a complete legal defense.27
On that note, it is advisable that you contact a California embezzlement lawyer immediately upon being accused. Depending on the circumstances, he/she can help you initiate a civil compromise (which basically means that you repay the victim) in an effort to prevent criminal charges from being filed.28
There are many legal defenses that are applicable to embezzlement charges. Below is a brief description of some of the most common that a California embezzlement attorney may argue on your behalf.
Claim of right / good faith belief
If you obtained the property under what you believed to be a "claim of right", you can't be convicted of embezzlement. This defense applies so long as you had a good faith belief that you were entitled to the property, regardless of whether that belief was wrong or unreasonable.
That said, your belief in your right must be so outspoken that you take the property in an open manner, without concealing your act.29
You used your employer's corporate credit card to purchase company supplies...as well as fuel for your car when you traveled to the supply stores. Even though you were never explicitly authorized to do this, you had a good faith belief that you were entitled to make these types of purchases with the company card.
If, however, you used the company credit card to buy yourself a new couch for your home, you would be guilty of Penal Code 503 embezzlement.
Lack of criminal intent
If you didn't specifically intend to deprive the owner of the property or to convert it for your own use, you can't be convicted of this crime.
Your boss leaves you the keys to his car to start it every few days while he's away. You decide that you would like to surprise him by having it detailed before he returns. He unexpectedly returns early, while you're on your way to the carwash. He accuses you of embezzling his car.
Since you had no intent to deprive him of his car...or to take the car as your own...you must be acquitted of the embezzlement charge.
False accusations / Innocence
Let's not forget the best defense -- you didn't do it. Maybe someone falsely accused you of embezzling out of revenge or anger...maybe the property in question had been embezzled, but someone else embezzled it...or maybe the police or prosecutor are relying on misleading evidence...
Regardless of how damaging the evidence appears, a skilled California criminal defense attorney knows how to
- investigate the allegations,
- critically evaluate all of the evidence, and
- highlight inconsistencies and weaknesses in the prosecution's case.
For more information about California embezzlement laws or to discuss your case confidentially with an attorney, please don't hesitate to contact us. We are located throughout California and have local criminal law offices in San Bernardino, Orange County, Riverside, Los Angeles, Ventura, San Diego, San Jose and the San Francisco Bay area.
For information about Nevada embezzlement laws, go to our article on Nevada embezzlement laws.
1California Penal Code 503 -- Definition. ("Embezzlement is the fraudulent appropriation of property by a person to whom it has been intrusted.")
2People v. Counts, (1995) 31 Cal.App.4th 785, 793. ("In California, the ancient common law distinctions between the theories of larceny by trick and theft by false pretenses [and embezzlement] no longer exist by statute; under [California Penal Code] section 484, there is simply one consolidated crime of theft, which the jury may find upon either theory, if there is an "unlawful [taking]" (� 952). As stated by our Supreme Court in People v. Ashley (1954) 42 Cal.2d 246, 258 [267 P.2d 271], "The purpose of the consolidation was to remove the technicalities that existed in the pleading and proof of these crimes at common law.... Juries need no longer be concerned with the technical differences between the several types of theft, and can return a general verdict of guilty if they find that an 'unlawful taking' has been proved.")
3California Penal Code 484 -- Theft defined.
4California Penal Code 487 -- Grand theft defined. ("Grand theft is theft committed in any of the following cases: (a) When the money, labor, or real or personal property taken is of a value exceeding nine hundred and fifty dollars ($950), except as provided in subdivision (b)...(d) When the property taken is any of the following: (1) An automobile [grand theft auto]...(2) A firearm [grand theft firearm].")
5California Penal Code 488 -- Petty theft defined. ("Theft in other cases is petty theft.")
6Judicial Council Of California Criminal Jury Instruction 1806 -- Theft by Embezzlement. ("The defendant is charged [in Count ] with [grand/petty] theft by embezzlement [in violation of Penal Code section 503]. To prove that the defendant is guilty of this crime, the People must prove that:  An owner [or the owner's agent] entrusted (his/her) property to the defendant;  The owner [or owner's agent] did so because (he/she) trusted the defendant;  The defendant fraudulently (converted/used) that property for (his/her) own benefit; AND  When the defendant (converted/used) the property, (he/she) intended to deprive the owner of (it/its use).")
7See above. Also see People v. Wooten, (1996) 44 Cal.App.4th 1834, 1845. ("Appellant contends the trial court erred in giving this instruction because Darrik-Marten and CGF did not have the required relationship of trust and confidence. We agree. The crime of [California] embezzlement requires the existence of a "relation of trust and confidence," similar to a fiduciary relationship, between the victim and the perpetrator. " 'If the relation is that of creditor and debtor merely, an appropriation by the latter does not constitute embezzlement.' ")
8People v. Holder, (1921) 53 Cal.App. 45, 48. ("Appellant, therefore, could not justly be found guilty under section 503, which defines [California] embezzlement [law] as the "fraudulent appropriation of property by a person to whom it has been intrusted." In no true sense of the words can it be said that that which is absolutely one's own is property that "has been intrusted" to him. As the crime of embezzlement is ordinarily understood and defined, one cannot be guilty of embezzling his own property.")
9See endnote 6, above. "When the defendant (converted/used) the property, (he/she) intended to deprive the owner of (it/its use)....[An intent to deprive the owner of property, even temporarily, is enough [to constitute a violation of California embezzlement law].]")
10People v. Parker, (1965) 235 Cal.App.2d 100, 109. ("The offense of embezzlement is complete when the agent or trustee diverts the trust money from the trust purpose; his intent to restore the money at some later time is of no avail.") See also endnote 6, above. ("[Intent to restore the property to its owner is not a defense.]")
11See endnote 6, above. ("A person acts fraudulently when he or she takes undue advantage of another person or causes a loss to that person by breaching a duty, trust or confidence.")
12People v. Stein, (1979) 94 Cal.App.3d 235, 241. ("The fraudulent intent required for embezzlement in [California law] Penal Code section 506 is the intent unlawfully to deprive the owner of the property or "devote the same to his own use.")
13In this type of situation, the company may simply want you picked up and arrested for the suspected activity, in which the company would hope that a California arrest warrant would issue, or it could ask the police to investigate your financial accounts, in which case the police would need a California search warrant to do so. In either event, a California warrant attorney can try to nullify the search or arrest warrant and ask the court to suppress any evidence that was collected as a result.
14California Penal Codes 484b and 484c. 484b -- Embezzlement as a diversion of funds received to obtain or pay for services, labor, materials or equipment. ("Any person who receives money for the purpose of obtaining or paying for services, labor, materials or equipment and willfully fails to apply such money for such purpose by either willfully failing to complete the improvements for which funds were provided or willfully failing to pay for services, labor, materials or equipment provided incident to such construction, and wrongfully diverts the funds to a use other than that for which the funds were received, shall be guilty of a public offense...")
484c -- Submission of false voucher to obtain construction loan funds. ("Any person who submits a false voucher to obtain construction loan funds and does not use the funds for the purpose for which the claim was submitted is guilty of embezzlement.")
15California Penal Code 507 -- Bailee; tenant; lodger; attorney in fact. ("WHEN BAILEE, TENANT, OR LODGER GUILTY OF EMBEZZLEMENT. Every person intrusted with any property as bailee, tenant, or lodger, or with any power of attorney for the sale or transfer thereof, who fraudulently converts the same or the proceeds thereof to his own use, or secretes it or them with a fraudulent intent to convert to his own use, is guilty of embezzlement [under California embezzlement law].")
17California Penal Code 459 -- Burglary Law -- Legal Definition. ("Every person who enters any house, room, apartment, tenement, shop, warehouse, store, mill, barn, stable, outhouse or other building, tent, vessel, as defined in Section 21 of the [California] Harbors and Navigation Code, floating home, as defined in subdivision (d) of Section 18075.55 of the Health and Safety Code, railroad car, locked or sealed cargo container, whether or not mounted on a vehicle, trailer coach, as defined in Section 635 of the Vehicle Code, any house car, as defined in Section 362 of the Vehicle Code, inhabited camper, as defined in Section 243 of the Vehicle Code, vehicle as defined by the Vehicle Code, when the doors are locked, aircraft as defined by Section 21012 of the Public Utilities Code, or mine or any underground portion thereof, with intent to commit grand or petit larceny or any felony is guilty of burglary. As used in this chapter, "inhabited" means currently being used for dwelling purposes, whether occupied or not. A house, trailer, vessel designed for habitation, or portion of a building is currently being used for dwelling purposes if, at the time of the burglary, it was not occupied solely because a natural or other disaster caused the occupants to leave the premises.")
18California Penal Code 496 -- Receiving stolen property; punishment; etc... ("(a) Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a state prison, or in a county jail for not more than one year.")
19California Penal Code 470 -- forgery; signatures or seals; corruption of Records. Sets forth a myriad of ways that one may violate California forgery law.
20California Penal Code 514 -- Punishment; determination of value; defalcation of public funds; disenfranchisement. ("Every person guilty of [California] embezzlement is punishable in the manner prescribed for theft of property of the value or kind embezzled; and where the property embezzled is an evidence of debt or right of action, the sum due upon it or secured to be paid by it must be taken as its value; if the embezzlement or defalcation is of the public funds of the United States, or of this state, or of any county or municipality within this state, the offense is a felony, and is punishable by imprisonment in the state prison; and the person so convicted is ineligible thereafter to any office of honor, trust, or profit in this state.")
21California Penal Code 489 -- Grand theft; punishment. ("Grand theft is punishable as follows: (a) When the grand theft involves the theft of a firearm, by imprisonment in the state prison for 16 months, 2, or 3 years. (b) In all other cases, by imprisonment in a county jail not exceeding one year or in the state prison.") See also California Penal Code 672 -- Offenses for which no fine prescribed; fine authorized in addition to imprisonment. ("Upon a conviction for any crime punishable by imprisonment in any jail or prison [such as California embezzlement under Penal Code 503], in relation to which no fine is herein prescribed, the court may impose a fine on the offender not exceeding one thousand dollars ($1,000) in cases of misdemeanors or ten thousand dollars ($10,000) in cases of felonies, in addition to the imprisonment prescribed.")
22California Penal Code 490 -- Petty theft; punishment. ("Petty theft is punishable by fine not exceeding one thousand dollars ($1,000), or by imprisonment in the county jail not exceeding six months, or both.")
23California Penal Code 490.1 -- Petty theft where value taken under $50; penalty. ("(a) Petty theft, where the value of the money, labor, real or personal property taken is of a value which does not exceed fifty dollars ($50), may be charged as a misdemeanor or an infraction, at the discretion of the prosecutor, provided that the person charged with the offense has no other theft or theft-related conviction...A violation which is an infraction under this section is punishable by a fine not exceeding two hundred fifty dollars ($250).")
24California Penal Code 487 -- Grand theft defined. ("(3) Where the money, labor, or real or personal property is taken by a servant, agent, or employee from his or her principal or employer [otherwise known as California embezzlement] and aggregates nine hundred and fifty dollars ($950) or more in any 12 consecutive month period.")
25California Penal Code Section 12022.6 -- Taking, damaging or destruction of property; commission of felony; additional punishment. ("(a) When any person takes [pursuant to California embezzlement law], damages, or destroys any property in the commission or attempted commission of a felony, with the intent to cause that taking, damage, or destruction, the court shall impose an additional term as follows: (1) If the loss exceeds sixty-five thousand dollars ($65,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of one year. (2) If the loss exceeds two hundred thousand dollars ($200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of two years. (3) If the loss exceeds one million three hundred thousand dollars ($1,300,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of three years. (4) If the loss exceeds three million two hundred thousand dollars ($3,200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of four years.")
26California Penal Code 515 -- Felony convictions; aggravating circumstances; elder or dependent person victims. ("Upon conviction of a felony violation under this chapter [dealing with California embezzlement law], the fact that the victim was an elder or dependent person, as defined in Section 288, shall be considered a circumstance in aggravation when imposing a term under subdivision (b) of Section 1170.")
27California Penal Codes 512 and 513. 512 -- Legal defenses under California embezzlement law; mitigation of punishment; intent to restore property; time. ("The fact that the accused intended to restore the property embezzled, is no ground of defense or mitigation of punishment, if it has not been restored before an information has been laid before a magistrate, or an indictment found by a grand jury, charging the commission of the offense.")
513 -- Legal defenses under California embezzlement law; mitigation of punishment; restoration of property or tender before indictment or information. ("Whenever, prior to an information laid before a magistrate, or an indictment found by a grand jury, charging the commission of embezzlement, the person accused voluntarily and actually restores or tenders restoration of the property alleged to have been embezzled, or any part thereof, such fact is not a ground of defense, but it authorizes the court to mitigate punishment, in its discretion.")
28California Penal Code 1377 -- Authority to compromise misdemeanors for which victim has civil action; exceptions. ("When the person injured by an act constituting a misdemeanor has a remedy by a civil action [such as in the case of embezzlement], the offense may be compromised, as provided in Section 1378, except when it is committed as follows: (a) By or upon an officer of justice, while in the execution of the duties of his or her office. (b) Riotously. (c) With an intent to commit a felony. (d) In violation of any court order as described in Section 273.6 or 273.65. (e) By or upon any family or household member, or upon any person when the violation involves any person described in Section 6211 of the Family Code or subdivision (b) of Section 13700 of this code. (f) Upon an elder, in violation of Section 368 of this code or Section 15656 of the Welfare and Institutions Code. (g) Upon a child, as described in Section 647.6 or 11165.6.")
29California Penal Code 511 -- Defenses; claim of title as a defense to embezzlement; unlawful retention of property to offset or pay demands not excused. ("CLAIM OF TITLE A GROUND OF DEFENSE. Upon any indictment for embezzlement, it is a sufficient defense that the property was appropriated openly and avowedly, and under a claim of title preferred in good faith, even though such claim is untenable. But this provision does not excuse the unlawful retention of the property of another to offset or pay demands held against him.")