Embezzlement
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Embezzlement is the fraudulent conversion of property from a property owner. For instance, a clerk or cashier can embezzle money from his employer; a public office can embezzle funds from the treasury.
Embezzlement differs from larceny in two ways. First, in embezzlement, an actual conversion must occur. Second, the original taking must not be trespassory. That is, the embezzler must have had the right to possess the item, and used that position of trust to convert the property. Embezzlement may range from the very minor, involving a few dollars, to immense, involving millions of dollars and very sophisticated schemes.
Conversion requires that the theft seriously interfere with the property, rather than just relocate it. As in larceny, the measure is not by the gain to the thief, but the loss to the true owner. Embezzlement was statutoraly created to deal with situations where theft could occur while the thief himself was innocent of larceny--typically because of the "lawful possession" element. That is, embezzlement fills in the blanks where larceny cannot.
Embezzlement sometimes involves falsification of records in order to conceal the theft. Embezzlers commonly steal relatively small amounts repeatedly over a long period of time, although some embezzlers steal one large sum at one time. Some very successful embezzlement schemes have continued for many years before being detected due to the skill of the embezzler in concealing the nature of the transactions.
One of the most common methods of embezzlement is to under-report income, and pocket the difference. Another method is to create a false vendor account, and to supply false bills to the company being embezzled so that the checks that are cut appear completely legitimate. Yet another method is to create phantom employees, who are then paid with payroll checks.
The latter two methods should be uncovered by routine audits, but often aren't if the audit is not sufficiently in-depth, because the paperwork appears to be in order. The first method is easier to detect if all transactions are by check or other instrument, but if many transactions are in cash, it is much more difficult to identify. Employers have developed a number of strategies to deal with this problem. In fact, cash registers were invented for just this reason.de:Unterschlagung