Penal Code 503 PC defines the crime of embezzlement as “the fraudulent appropriation of property by a person to whom it has been intrusted.” The offense can be charged as a felony if the value of the embezzled property is greater than $950.00. Otherwise, it is only a misdemeanor.
- a cashier at Walmart pockets some cash from the cash register to buy drinks at a nightclub that night for herself.
- the treasurer of a neighborhood sports club takes some money out of the club’s bank account to pay for a personal vacation and hotel expenses.
- an investor takes some of his client’s money to pay off a gambling debt and other personal expenses.
Embezzlement charges can be a difficult criminal offense for the prosecutor to prove. Some defenses to the crime of embezzlement are that the defendant:
- did not fraudulently use money or property,
- believed in good faith that he had a right to the property, and/or
- had no intent to deprive.
When is embezzlement a felony under California state law?
Embezzling money or property with an aggregate value of $950 or less is a misdemeanor punishable by up to 6 months in county jail. Embezzlement greater than $950 can be charged as a felony, which carries a sentence of up to 3 years in custody.
Our California criminal defense attorneys will highlight the following in this article:
- 1. How does California law define embezzlement?
- 2. Are there defenses to 503 PC?
- 3. What is the punishment for embezzlement in California?
- 4. Are there immigration consequences?
- 5. Can a person get a conviction expunged?
- 6. What is the difference between embezzlement and grand theft?
- 7. Are there related offenses?
- 8. Are there civil remedies for victims of embezzlement?
1. How does California law define embezzlement?
Penal Code 503 PC is the California statute that makes it a crime for a person to unlawfully take property that someone entrusts to him.1
A prosecutor must prove the following four facts to obtain a conviction:
- an owner entrusted his property to the defendant,
- the owner did so because he trusted the defendant,
- the defendant fraudulently converted or used that property for his own beneﬁt, and
- he intended to deprive the owner of its use.2
Note that a prosecutor does not have to prove that the owner of the property asked the embezzler to return his property. This “asking” is not an element of the crime.3
Questions often arise under this statute on the meaning of:
- relationship of trust,
- fraudulent use, and
- intent to deprive.
1.1. Relationship of trust
A conviction for embezzlement requires a showing of trust between the owner of the property and the embezzler.
Examples of when there is a relationship of trust between the owner of the property and the defendant are when:
- the defendant is the owner’s employee,
- the owner gives the defendant temporary possession of his property (e.g., giving a valet a car to park), and
- the defendant is tasked with managing the owner’s money or property.
Note, that in terms of an employer-employee relationship, a relationship of trust requires concrete evidence of trust or confidence. The mere fact that an accused is an employee is not enough to support an embezzlement charge.4
Example: A defendant is not necessarily in a relationship of trust with an employer- restaurant if he serves food or buses tables. However, there is a relationship of trust if the accused is tasked with depositing the restaurant’s money in its bank account.
1.2. Fraudulently used
For purposes of this statute, a person acts fraudulently when he either:
- takes undue advantage of another person, or
- causes a loss to that person by breaching a duty, trust, or conﬁdence.5
Example: Michelle is a nanny and the family gives her their credit card every week to buy groceries. She does not fraudulently use the credit card if one day she uses some of it to buy the family a gift. However, she does fraudulently use the credit card if she takes it and pays her bills with it without the family’s permission.
In the first instance, Michelle is not taking advantage of the family or breaching a confidence. But she definitely is in the second situation.
1.3. Intent to deprive
A defendant can only be guilty of embezzling if he intends to deprive a property owner of his property or its use. Note that even a temporary intent to deprive an owner is enough for a guilty conviction. The intent to deprive does not have to be permanent.6
Example: Juan does not embezzle property if he takes it out of his employer’s safe and hides it as a joke. Here, there is no intent to deprive. However, there is if he now takes the property and pawns it. Juan would still be criminally liable even if he takes the property for just a few minutes with the intent to keep it as his own.
Further, note that an intent to return the property at the time of the taking is not a defense to embezzlement. The only exception to this rule is if the defendant restored the property before he was charged.7
2. Are there legal defenses to 503 PC?
A person can oppose an embezzlement charge by asserting a legal defense.
Some common defenses to 503 PC are to show that:
- no fraudulent use,
- good faith belief of a right to property, and/or
- no intent to deprive
(Other defenses concern misconduct by law enforcement, such as entrapment or coercion of a confession.)
2.1. No fraudulent use
Recall that a defendant must fraudulently use property or money to be guilty under this code section. This means it is a defense if the accused did not:
- take undue advantage of another person, or
- cause a loss to a person by breaching a duty or confidence.
2.2. Good faith belief in a right to property
An accused is not guilty of violating this law if he acted with a good faith belief that he had a right to the money or property in question. A judge or jury decides if this belief was warranted by analyzing the facts of a given case.8
Note that the defendant may hold a belief in good faith even if the belief is mistaken or unreasonable.9
Example: Nia is a bank teller and pockets a customer’s deposit because she believes it is his payment of a lost bet. She does this though while forgetting that the customer paid off the bet weeks ago. Here, Nia is not guilty of embezzlement because the facts support that she had a reasonable claim of right to the money.
2.3 No intent to deprive
Recall that a defendant is only guilty of embezzlement if he acted with the intent to deprive the property owner of his property or its use. Therefore, it is a defense for the defendant to show that he did not have this intent. Perhaps, for example, he took some property to pull off a joke.
3. What is the punishment for embezzlement in California?
Embezzlement in California is charged and punished as either grand theft (Penal Code 487 PC) or petty theft (Penal Code 488 PC). This depends on the value and type of property that is stolen or misappropriated. 10
The crime is charged as grand theft if it involved property that was either:
- worth more than $950,
- an automobile, or
- a firearm.
If charged as grand theft, the offense is treated as a wobbler, meaning that it can be charged as either a misdemeanor or a felony. As a misdemeanor, the offense is punishable by imprisonment in the county jail for up to one year. Felony grand theft embezzlement can lead to a maximum of three years in jail.
If a defendant is guilty of embezzling, and the value of the property is worth $950 or less, then he will be charged with petty theft – which is a misdemeanor offense. Misdemeanor petty theft embezzlement is punishable by custody in the county jail for up to six months.
4. Are there immigration consequences?
A conviction under 503 PC may have negative immigration consequences.
United States immigration law says that certain kinds of criminal convictions can lead to:
A category of “deportable” or “inadmissible” crimes includes “aggravated felonies.”11
This means that if a defendant:
- is charged with felony grand theft embezzlement, and
- the facts show that the felony is an aggravated felony,
he may face damaging immigration results.
5. Can a person get a conviction expunged?
A person convicted of embezzlement is entitled to an expungement. This is provided that he:
- successfully completes probation, or
- completes a jail term (whichever is relevant).
If a party violates a probation term, he could still possibly get the offense expunged. This, though, would be in the judge’s discretion.
Under Penal Code 1203.4, an expungement releases an individual from virtually “all penalties and disabilities” arising out of the conviction.12
6. What is the difference between embezzlement and grand theft?
Embezzlement is stealing money or property that was entrusted to the person. Grand theft is stealing money or property that was not entrusted to the person.
Example: Jim goes into a Target and steals an iPad. Jack is a cashier at that same Target and steals $1,000 in cash from the register for his own use. Here, Jim would face grand theft charges because he stole an item – the iPad – he was never entrusted with; in short, Jim shoplifted. Meanwhile, Jack would face embezzlement charges because he stole company cash for his personal use when he – as a cashier – was entrusted with that cash.
Recall that grand theft refers to taking property valued at more than $950. Otherwise, stealing would be prosecuted as petty theft. Meanwhile, embezzlement applies to any dollar amount.
Despite the definitional difference between embezzlement and theft, these two crimes have identical penalties in California.13
7. Are there related offenses?
There are five crimes related to the fraudulent conversion of money or property. These are:
- burglary – PC 459,
- forgery – PC 470, and
- misappropriation of public funds – PC 424.
- embezzlement/misappropriation by a public officer – PC 504
- receiving stolen property – PC 496(a)
7.1. Burglary – PC 459
Per Penal Code 459 PC, a person commits burglary when he:
- enters any residential or commercial building or room, and
- does so with the intent to commit a felony or a theft once inside.
Note that a person would be guilty of this crime if he entered a building with the intent to commit embezzlement. This is because the offense is a theft crime.
7.2. Forgery – PC 470
Penal Code 470 PC is the California statute that makes forgery a crime.
Forgery takes place when a person does any one of the following:
- signs someone else’s name,
- fakes a seal or someone else’s handwriting,
- changes or falsifies any legal document, or
- fakes, alters, or presents as genuine a false document pertaining to money, finances, or property.
As with embezzlement, an accused must act fraudulently in order to be guilty of forgery.
7.3. Misappropriation of public funds – PC 424
Penal Code 424 PC says that the misappropriation of public funds is a crime when:
- the defendant misuses public funds, and
- he was responsible for those funds.
This crime is similar to embezzlement. But note that the major difference is that this offense can only be committed by the misuse of public funds, while embezzlement applies more to private funds.
7.4. Embezzlement/misappropriation by a public officer – PC 504
Penal Code 504 PC is the California statute that makes a public officer guilty of embezzlement if he or she:
- fraudulently uses any public property or funds, and
- uses them in a way not consistent with his official authority.
This crime is punished in the same manner as ordinary embezzlement under PC 503.
7.5. Receiving stolen property – PC 496(a)
Penal Code 496(a) PC is the California statute that makes receiving stolen property a crime if the person knows that it has been stolen. As a wobbler, this crime can be a misdemeanor or a felony.
8. Are there civil remedies for victims of embezzlement?
Embezzlement victims can also file civil lawsuits against the embezzler. Depending on the case, possible claims include:
- Breach of contract,
- Conversion, and
- Unjust enrichment
Most civil cases resolve through negotiation. But if the plaintiff (victim) goes to trial and wins, the court may order that the defendant (embezzler) pay full restitution. The court can also set up a constructive trust as a mechanism to return the money.
Note that civil lawsuits may be unnecessary. If the defendant gets convicted of criminal charges, the court can order that the defendant pay restitution.
One of the most infamous examples of embezzlement is the Ponzi scheme orchestrated by investor Bernie Madoff – who had a fiduciary relationship with his clients. It has taken a long period of time and several lawsuits for his victims to recover some of their lost personal property.
For additional help…
For additional guidance or to discuss your white collar crime case with a criminal defense attorney, we invite you to contact us at Shouse Law Group.
For similar accusations in Nevada, please see our article on NRS 205.300 – Nevada Embezzlement Laws.
For similar accusations in Colorado, please see our article on Embezzlement in Colorado (CRS 18-4-401).
- California Penal Code 503 PC.
- CALCRIM No. 1806 – Theft by Embezzlement. Judicial Council of California Criminal Jury Instructions (2017 edition). See also In re Basinger (1988) 45 Cal.3d 1348; and, People v. Wooten (1996) 44 Cal.App.4th 1834. See also People v. Kronemyer (1987) 189 Cal.App.3d 314, 234 Cal.Rptr. 442.
- People v. Hill (1934), 2 Cal. App. 2d 141. See also People v. Sobiek (1973) 30 Cal.App.3d 458, 106 Cal.Rptr. 519.
- CALCRIM No. 1806. See also People v. Wooten, supra; and, People v. Threestar (1985) 167 Cal.App.3d 747.
- CALCRIM No. 1806. See also People v. Talbot (1934) 220 Cal. 3; and, People v. Stein (1979) 94 Cal.App.3d 235.
- CALCRIM No. 1806.
- People v. Sisuphan (2010) 181 Cal.App.4th 800. See also People v. Davis (1998) 19 Cal.4th 301, 79 Cal.Rptr.2d 295, 965 P.2d 1165. People v. Casas (2010) 184 Cal.App.4th 1242, 109 Cal.Rptr.3d 811.
- CALCRIM No. 1806. See also People v. Stewart (1976) 16 Cal.3d 133.
- See same.
- California Penal Code 514 PC. See also People v. Warmington (Cal. App. 3d Dist., 2017), 224 Cal. Rptr. 3d 291, 16 Cal. App. 5th 333. Note that PC 12022.6 has been repealed – this law increased grand theft prison terms by: One year if the loss exceeded $65,000; two years if the loss exceeded $200,000; three years if the loss exceeded $1,300,000; and four years if the loss exceeded $3,200,000.
- See INA 237 (a) (2) (A).
- California Penal Code 1203.4 PC.
- PC 487. PC 488.