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State Embezzlement/Fraudulent Misappropriation

Pursuant to Arizona Revised Statute 13-1802, entitled Fraudulent Misrepresentation (commonly known as Embezzlement), states that this crime occurs when the following elements exist:

  • A person has been entrusted with legal and authorized access;
  • To money or property;
  • Without full ownership; and
  • Once entrusted to monitor, manage or protect that property, they instead use it for personal gain.

Examples of Embezzlement: Often times, Embezzlement is committed through counterfeit financial practices that include “Fake Vendor” payments; expense reimbursement reports which are submitted and contain items for personal or quasi-personal expenses; altered Profit and Loss statements or Balance Sheets (this is most commonly seen with accountants, bookkeepers, bank tellers, lawyers and board members).

The simplest types of Embezzlement are usually seen with a person who controls the check book or credit card. For example;

  • A check written directly to the check writer or a family member;
  • A check to a valid vendor that has then been endorsed on the back with “Pay to the Order Of”, along with the check writer or family member’s name;
  • A check to a Fake Vendor that has been created by the employee (I.e. a false company that they have set up which includes a bank account);
  • And small monetary amount written as a “Repeating Check” for things that appear to be common payments that simply float “under the radar.”

POSSIBLE PUNISHMENT

The following list is of Possible Punishments regarding Felony Embezzlement. In Arizona, Felonies range from Class 1 (such as Murder) which is the most serious, down to Class 6. All Felonies contain the possibility of prison time:

  • Class 6 Felony: if the theft is between $1,000-$2,000, then the possible prison range is 4 months to 2 years in DOC;
  • Class 5 Felony: if the theft is between $2,000-$3,000, then the prison range could be 6 months to 5 years in DOC;
  • Class 4 Felony: if the theft is between $3,000-$4,000, then the possible prison time is between 1 and 3.75 years in DOC;
  • Class 3 Felony: if the theft is between $4,000-$25,000, then the possible prison range is 2 to 8.75 years in DOC;
  • Class 2 Felony: if the theft is $25,000 or greater, then the possible prison range is 3 to 12.5 years in DOC;

If any of the amounts are below $100,000, then it is possible to be sentenced to Probation with jail time instead of prison. That jail time can be anywhere from zero days in jail, up to one full year in jail.

WARNING: If the amount is $100,000 or greater, there is a statutory sentence Enhancement which requires that prison time (and not probation with jail) be imposed. Many times we are able to have this enhancement dropped during the plea negotiation phase, and we have had many clients with allegations of over $1,000,000 who have been sentenced with probation and zero days in jail.

POSSIBLE DEFENSES: 

There are many Defenses to Embezzlement/Fraudulent Misappropriation. These can include the following:

  • The Transfer was Unintentional; for example, many times there is a miscommunication or misunderstanding involving what can be placed on the company credit card. This is especially true with family members or long time employees who have a close relationship with the owner.
  • Gift; often times, the owners of a business will convey a gift to an employee, only to change their mind or “forget” when the relationship goes bad.
  • Legitimate Business Purposes; often times, the payments to the employee were for reimbursement of legitimate business purposes. Or, the amount that was sent to the vendor was actually for a proper business purpose, and it was the vendor who was defrauding the company, not the employee.
  • Sloppy Bookkeeping; many times there is accidental comingling of funds which occurs when the employee is trying to manage the company’s finances while simultaneously trying to manage their own. In these situations, we attempt to resolve the case as a “Civil Resolution” rather than a criminal resolution.
  • Owner Covering up Their Own Failures; we have seen many times where the owner is the one who is actually taking money from a company, or they have driven the company into near bankruptcy, then they attempt to blame their employees/bookkeeper. It is important for us to interview all witnesses to find out exactly what has occurred. Many times, we will employ a forensic accountant in order to comb through the financial records in order to show that there was no intentional defrauding of the company by the employee.

Additionally, because our law firm fights convictions from all angles, we would assert a wide range of defenses and challenges regarding constitutional violations which can apply in all criminal cases.  The possibilities are numerous and diverse.  One of those that we frequently assert is a “Miranda Rights Violation.”  In Arizona, the standard of whether any incriminating statement, (i.e., a statement which intends to admit guilt) is only admissible into evidence based upon a “voluntariness” standard.  If we can demonstrate that the police coerced you (i.e., intimidated or tricked you) into making a confession or an inculpatory statement, or that they did not properly read your Miranda rights, then we can suppress those statements and have any evidence gathered as a direct result of those statements.  In addition, “Denial of Right to Counsel,” is another common defense which is often raised.  This occurs when a suspect is in custody and requests to speak to their attorney, but is denied that request and the questioning continues.

Other defenses which can be used in more serious cases may include challenging the validity of any search warrant, or whether there were any “forensic flaws” during the investigation of your case.  Depending on what else you have been charged with, this could include exposing flawed procedures regarding computer analysis/cloning hard-drive procedures; forensic and financial accounting reviews; etc.

Lastly, one of the most common defense tactics is exposing sloppy or misleading police reports which include everything from misstatements, false statements, flawed photo lineups, and witness identification procedures.

PRE-INDICTMENT/PRECHARGE REPRESENTATION

If these allegations are being made prior to an indictment being handed down, it is important to have DM Cantor involved as quickly as possible. The Felony Statute of Limitations is seven years from the date that the Fraud is discovered. So even if the alleged Fraud has not been discovered for several years, the seven year time limit does not begin “tolling” pursuant to Arizona Revised Statute 13-107(B)(1) until that time. If we can get involved quickly, many times we can convince the Detectives to hold off on filing any charges as we attempt to come to a “Civil Resolution.” If we can convince the owners that the misappropriation was Unintentional or the result of Sloppy Bookkeeping, and we can then arrange for a partial payback of the monies missing and we can resolve the case.

It is important to have an attorney who is skilled in this area, otherwise allegations of “Compounding” per Arizona Revised Statute 13-2405 can occur. Compounding is when a person negotiates a settlement which includes the provision that a person will “not seek and/or refrain from reporting to law enforcement the commission or suspected commission or a crime.” Compounding is a Class 6 Felony in and of itself. If everybody agrees that the action was not criminal, then a settlement can be legally reached without law enforcement being involved.

Click Here for Pre-Charge / Pre-Indictment Stage

It is important to hire the right Embezzlement/Fraudulent Misappropriation defense attorney in order to have your charges dismissed.  Our firm has handled numerous cases such as these and we have had them successfully defended throughout Arizona.  Visit our case victories pages and click on Embezzlement/Fraudulent Misappropriation in order to view our most recent successes.

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