As readers of this blog know, we write about various types of white-collar crimes regularly. One such crime that we often speak about is embezzlement. In todays post, we will focus on the defenses.
What is embezzlement?
The term, embezzlement, is an overarching term for larceny, which is the wrongful withholding or taking of property, but in an embezzlement allegation, the person doing the wrongful taking has a fiduciary relationship with the property’s rightful owner. In New York, embezzlement is not a standalone crime. Instead, it is included with our state’s larceny statutes. “Property,” refers to any money, personal property, real property, computer data, computer program, thing in action, evidence of debt or contract, or any article, substance or thing of value, including any gas, steam, water or electricity, which is provided for a charge or compensation.
What is a fiduciary relationship?
Essentially, the term, fiduciary relationship, refers to any relationship where one party trusts the other party with their property, and that trusted person (the fiduciary) knows and accepts that trust. These relationships can be created under law, contract or, sometimes, through the nature of the relationship itself. Fiduciaries include lawyers, some brokers, some financial advisors, business owners (including, CEOs, CFOs and the like), etc.
Factual defense
Perhaps, one of the most common defenses to an embezzlement case is that the wrongful taking did not actually occur. This is a factual defense, one where the accused argues that the crime did not occur as a matter of fact.
Affirmative defenses
For embezzlement, an affirmative defense is good faith. In this defense, the accused argues they obtained the property in good faith, meaning no wrongful taking occurred. Another affirmative defense is the wrongful taking was done because the fiduciary believed that, if they did not, the rightful owner would be charged with a crime. This must be a reasonable belief, and it must be provable that this was the sole purpose of the taking.
Statute of limitations
According to New York Criminal Procedure Law, Section 30.10, et. seq., depending on the nature of the alleged larceny, a criminal prosecution could be barred if the wrongful taking was not discovered or should have been discovered in 1 to 5 years. Misdemeanor charges carry a quicker statute of limitations, and felonies have a longer statute of limitations.