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 Massachusetts, embezzlement is defined as the fraudulent appropriation of funds or property by a person to whom such funds or property has been entrusted, or who is in lawful possession of it. This often involves employees who have access to their employer's funds or assets as part of their job responsibilities. The state's General Laws Chapter 266, Section 30, outlines the crime of embezzlement and provides for penalties based on the value of the property embezzled. If the value is $1,200 or less, it is considered a misdemeanor, punishable by imprisonment for not more than one year or by a fine of not more than $1,500, or both. If the value exceeds $1,200, the crime is treated as a felony, with potential imprisonment in the state prison for up to five years or by a fine of not more than $25,000 and imprisonment in jail for up to two years. Additionally, under federal law, embezzlement of government property or funds, or embezzlement related to government contracts, is a crime under 18 U.S.C. §641. The IRS also requires that embezzled funds be reported as income, and failure to do so can lead to federal tax evasion charges.