Ever since the invention of money, thieves have developed any number of ways to steal money that doesn't belong to them. In some situations, the would-be thief already has possession of the money because the owner has entrusted him with it. If that person uses the money for his own purposes, this is known as misappropriation of funds.
Misappropriation of funds is one type of theft. Here are the common forms of theft crimes.
Larceny. When most people think of theft, they think of someone taking property that belongs to someone else, such as stealing a bicycle or shoplifting. This type of theft is sometimes referred to as larceny. To commit larceny, a person takes another's property without permission and with the intent of permanently depriving the owner of its use or possession.
Embezzlement. Another theft crime is embezzlement. A person embezzles property when they steal or convert another's property that's been entrusted to their care to their own unlawful use. An employee who uses company property for his personal projects commits embezzlement. Embezzlement can encompass both money and other forms of property.
Misappropriation. Misappropriation of funds is embezzlement of money only. For example, the treasurer of a club who diverts club funds to his own bank account has both embezzled and misappropriated the money.
When prosecutors bring a charge of misappropriation, they must convince a judge or jury that the following happened or is true.
Control but not ownership. The prosecutor must show that the owner of the property—whether it's a person, organization, or group—entrusted or gave the money to the defendant, or otherwise allowed the defendant control over it. In short, the defendant rightfully had possession of the money but not ownership.
Intent. The prosecutor doesn't need to show the defendant acquired the money or used it. It's enough to show that the accused intended to take some action that would likely result in the misappropriation of funds. In some states, the accused must know the action is illegal. In others, the accused only has to act intentionally and does not need to know that the conduct is criminal. A person who misappropriates funds with the intent of later returning the money to the rightful owner is still guilty of misappropriation. (Legitimate errors or mistakes on the defendant's part are not crimes.)
Conversion. In order to commit misappropriation of funds, a person must not only take the money but must use it for their own purposes. However, this doesn't require that the accused actually take the money and use it to buy something or otherwise spend it. Courts have held it's enough to transfer the money to a bank account or even to refuse or fail to hand over the owner's money when the owner demands it.
Depending on how the crime is charged, the state in which you live, and the circumstances of the case, a misappropriation of funds conviction can lead to significant penalties.
States allow for both felony and misdemeanor charges for theft, embezzlement, and misappropriation crimes. Misdemeanors generally carry a maximum penalty of one year in jail. Felonies can mean prison time of a year or more.
Value. What separates a misdemeanor offense from a felony offense often depends on the value of the funds that were misappropriated. For instance, a state might impose misdemeanor penalties when the amount involved is $1,000 or less and felony penalties for amounts that exceed $1,000.
Position of trust. Other states might impose felony penalties even if the amount involved was minimal because the crime involves violating a position of trust. Misappropriating funds from an elderly adult could also increase the penalty.
Public employee or funds. Some states specify certain types of misappropriations as felonies, such as those committed by a public employee or involving public funds. For example, a city employee who misappropriates $200 of parking fine revenues might still face a felony despite the small monetary value.
Fines with misappropriation convictions can be significant. While misdemeanor convictions typically have fines of $1,000 or less, felony convictions can exceed $10,000. Some states permit judges to order fines in an amount that doubles or triples a defendant's monetary gain.
On top of fines, a person convicted of any type of theft, including misappropriation of funds, must typically pay restitution to the victim. Restitution is designed to pay the victim back for the money stolen.
If you're facing criminal charges, talk to a criminal defense attorney as soon as possible. Even if the penalty seems minor, the repercussions of a criminal conviction for misappropriation often go beyond the actual sentence. Any person who holds a professional license (such as a CPA or lawyer) could lose that license. Public office holders might be subject to loss of their office. And a theft-related conviction won't bode well on a background check for a job or housing application.