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Seven Examples of Embezzlement | Sanctuary Bail Bonds

by | Aug 21, 2019 | Uncategorized | 0 comments


Most people think that embezzlement charges only involve things like intricate Ponzi schemes, complex corporate shenanigans, and/or bank accounts in far-flung foreign countries. All these things could constitute embezzlement, but Section 13-1802 of the Arizona Criminal Code is much broader than that.

In fact, in most ways, embezzlement charges are almost exactly like theft charges. The main difference between the two is very subtle. Theft is the unlawful taking of money or property, and the main example of embezzlement is the unauthorized taking of money or property. Legally, the thief takes property that s/he has no legal right to possess. The embezzler exceeds given authority to take items s/he does not lawfully own.

Generally, if an owner discovers embezzlement, the owner is not legally obligated to call the police. However, if the owner makes such a call, Sanctuary Bail Bonds (Phoenix bail bonds) will probably have to arrange pretrial release for the person accused. Embezzlement charges, regardless of the amount, almost always result in arrests instead of citations.

Below are a few common examples of embezzlement. There are others as well, but they do not occur as frequently. Note that the complex Ponzi schemes did not make our top five lists even though these are the ones heard about in the news. These incidents always make the headlines, but statistically, they are very rare.

Check Kiting

This embezzlement scheme was once quite common, but internet banking has largely ended it. Back in the day, people wrote checks to pay for goods and services. Those checks took several days to clear. So, Mike could open an account with Bank A and write as many checks as he wanted. Before they cleared, he opened another account at Bank B and did the same thing. He could usually maintain that pattern for several months going from one bank to another just writing one bad check after another.

Back in those days (before electronic systems) one bank did not necessarily communicate with another and the whole check clearing system was analogous to doing a math problem with pencil and paper without a calculator. Today, if it happens, this scheme usually involves fake debit cards backed by fake accounting entries. Paper check-kiting still can occur in some remote parts of the US but this is usually more likely with smaller locally owned banks.

Funds Siphoning

Technology has changed this example of embezzlement, but it has not ended it. When people paid cash for goods and services, clerks could manipulate the register and pocket some of the money. Today, funds siphoning is more common in professional offices, such as doctors and lawyers, who often accept cash. The person who accepts and processes payments inflates the charges and pockets the difference.

Funds siphoning also occurs at some mostly-cash retailers, like medical marijuana dispensaries. Since marijuana is illegal under federal law for all purposes, many banks will not work with these vendors. They are afraid of being charged with money laundering or drug trafficking. Thus you can see where “cash is king” and more anonymous.

Overtime Fraud

Arguably, technology in general, and electronic time card-punching in particular has made this crime easier. Alice leaves at 5 but does not clock out. She comes back at 5:15, claiming she forgot her purse, and clocks out at that time. This scam, which can be quite common at places which employ several hundred workers and use faraway payroll processors, could go on for months before anyone notices. A mere 15 minutes a day in overtime fraud can really add up at months end.

Overtime embezzlement is a little more common in states like California. The Golden State calculates over time by the day and not by the week. So, if Alice clocked out late one day, she gets overtime even if she is under 40 hours for the week.

Payment Lapping

This complex activity is a little like a Ponzi scheme for accountants. In a Ponzi scheme, a fund manager uses money from new investors to pay dividends to current investors and then pockets the difference. Payment lappers do basically the same thing. Steve takes a $200 payment from Client A and transfers the money to a personal account. When Client B pays, he transfers that payment to Client A’s account. He does the same thing with C, D, E and the other letters of the alphabet until his boss catches on.

Payment lapping sometimes involves elements of other embezzlement schemes, such as payee fraud.

Payee Fraud

Sometimes, accountants invent fraudulent vendors and pay fake invoices with real money. Other times, service providers tell clients or customers to write personal checks, and the service providers then create false accounting entries to cover their tracks.

Many times, payee fraud involves a large number of very small accounts. That way, the payments are more likely to go under the radar.

Payroll Scams

This straightforward scheme may be the most common example of embezzlement. Payroll managers place members of their household on the payroll and then cash the checks themselves.

A similar embezzlement scheme was once common on income tax returns. Way back in the day, taxpayers listed nonexistent dependents and claimed tax exemptions for them. But when the IRS began requiring Social Security numbers on all dependents instead of just a name, this scam quickly evaporated.

Requiring Kickbacks

This scheme is very common in government. Many times, it is also public record. Former Pakistan President Asif Ali Zardari, who was Benazir Bhutto’s husband, was commonly known as “Mr. Ten Percent .” He demanded a 10 percent kickback in all government contracts before he approved them. In many states, this kind of corruption is most common on the local level.

In these cases, a kickback is an illegal finder’s fee or commission. Other times, vendors submit inflated invoices which the government or company duly pays. The worker who arranged payment receives an illegal benefit, such as a percentage of the money paid for a given job, service, or project.

Honorable mention, or perhaps dishonorable mention, go to item embezzlement and computer embezzlement. Item embezzlement is simply taking goods meant for someone else. Computer embezzlement often involves a “trap door” program which automatically sends a few cents of each transaction to another account.

Sanctuary Bail Bonds (Phoenix bail bonds) is a good resource for information about the bonding process for the arrest of a financial crime. Sanctuary Bail Bonds offers fast, respectful, and discreet bail bond services throughout the state of Arizona. We will guide you through the bail bonding process and help ease you and your family through this stressful situation. We are available 24/7 and our licensed and professional bail bond agent is ready to help you.Contact us at (602) 224-5247 or (602) BAIL-247. To learn more visit our FAQ-page.

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