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 Pennsylvania, embezzlement is recognized as a white-collar crime where an individual unlawfully takes property or funds that they have been entrusted with, typically in an employment or fiduciary context. The state's legal framework categorizes embezzlement based on the value of the property taken, with the severity of the charges ranging from a misdemeanor for smaller amounts (less than $50 is a summary offense, $50 to $200 is a third-degree misdemeanor, and $200 to $2,000 is a second-degree misdemeanor) to a felony for larger amounts (over $2,000 is a third-degree felony, and if the amount exceeds $100,000 or the property is taken during a manmade, natural, or war-caused disaster, it is a second-degree felony). The penalties can include fines, restitution, and incarceration, with more severe penalties for higher amounts embezzled. Additionally, embezzlers may face federal tax evasion charges if they fail to report the embezzled funds as income to the IRS. Embezzlement involving federal government funds or contracts is prosecuted under federal law, specifically 18 U.S.C. §641, which can lead to additional penalties.