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Embezzlement is not as easy to detect as you might think

Embezzlement can occur in any business, big or small. How often it occurs depends on many factors, including the level of internal controls an organization has put in place.

Compared to other theft crimes, however, embezzlement is unusual. It's unusual in that the person who may face charges originally did have authorized access to the money.

What is embezzlement, and what can it look like? We will discuss this by using a real case example from New York.

What is embezzlement?

Embezzlement is when one or more persons entrusted with financial responsibility misappropriates funds for personal gain. It can occur in many forms and take years before it is discovered.

A case example in New York

Take for example the recent arrest of the 62-year-old CEO and president of a credit union in New York on charges of embezzlement and fraud. According to charges in federal court, the man embezzled money for at least five years.

From 2013 to his arrest in May, the credit union executive allegedly created false invoices for dental work that he never received or paid for. By way of these invoices, he was reimbursed for hundreds of thousands of dollars.

The former CEO also acquired payments from the credit union under "questionable circumstances," such as reimbursements for repairs on a company-leased luxury vehicle despite insurance already covering the charges.

The man allegedly hid the money from his schemes in a credit union account, from which he withdrew $1.9 million from July 2013 to January 2018. In addition, he spent $3.55 million on New York State lottery tickets.

How is embezzlement penalized?

Penalties for a conviction include a maximum prison sentence of 30 years each for embezzlement, bank fraud and wire fraud, and a mandatory two-year imprisonment for aggravated identity theft.

Who is capable of embezzlement?

It is important to remember that any person or employee is capable of embezzlement and fraud. Any person entrusted with financial responsibility could cross the line.

The causes of embezzlement can vary greatly. A person may struggle with addiction or gambling, expensive medical bills or other financial troubles. Sometimes, a person may just be greedy and think they won't get caught.

The signs of embezzlement may not be immediately recognizable. As seen in the case we've discussed, it can go undetected for years. That is why taking steps to prevent embezzlement within a business is an important protection for businesses of all types.

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