Answering Common Questions About Fraud and Embezzlement

We've discussed some of the most common types of business partnership disputes: breaches of contracts, violations of non compete agreements, breaches of fiduciary duties, misuse of trade secrets, minority owner rights disputes, and embezzlement. While these are all considered crimes, embezzlement is a crime that can and typically does result in jail time. Let's answer some of the most common questions about embezzlement in regards to business partnership disputes:


What is the official definition of embezzlement/fraud?


Embezzlement is a type of fraud that has to do with a business's finances. It's essentially when someone is dishonest and improperly uses business funds -- most commonly, for personal use or gain. A business's finances and assets should be separate from its owners' personal finances, and dishonestly using or allocating these funds is considered embezzlement and can come with serious penalties.


What are the potential penalties for embezzlement?


The penalties for embezzlement vary from state to state, but most have similar statutes. In addition to your state, it also depends on the embezzled monetary amount. Typically, embezzlements of less than $2,500 are classified as a misdemeanor, while those above this amount are considered a felony. A felony charge may result in at least one year of jail time and a fine of at least $1,000. Consult a business lawyer to help you navigate this complex legal process.


What are some signs that one can look out for that indicate that embezzlement or fraud may be happening?


Typically, you can recognize embezzlement or fraud through a person's perceived financial status: if they seem to be living beyond their means, they may be committing fraud. If they can't explain their financial status or back it up with appropriate financial documents, or if they're coming up with ridiculous excuses or lies that are incredibly improbable regarding their lack of documentation, it's best to consult a business lawyer. 


While embezzlement is definitely a serious crime, it helps to hire a business lawyer, no matter what side of the law you're on. There are 1,315,561 lawyers in the United States, and a business lawyer can help you navigate the complexities of commercial disputes like embezzlement. For more information about business legal issues, contact Heritage.


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