Misuse of Corporate Funds under New York Law

Corporate embezzlement refers to the fraudulent appropriation of an organization’s funds or assets by someone entrusted with their management. This type of financial crime can significantly harm the financial stability, reputation, and trustworthiness of businesses, and is treated seriously under New York law. It is a form of white-collar crime that violates the trust placed in an individual by the corporation and its shareholders. The legal framework in New York addresses this offense with stringent penalties to deter such fraudulent activities and protect corporate integrity.

Corporate embezzlement occurs when an individual, typically an employee or officer of a corporation, misappropriates funds or property they are entrusted to manage. The key elements of this crime in New York are:

• 1. The property did not belong to the accused: The embezzled property must belong to someone other than the defendant, meaning the company's assets are the corporation's property, not the individual's.
• 2. Legal possession: The defendant must have initially gained possession of the property lawfully, such as through their role as a company treasurer or director.
• 3. Fiduciary duty and trust: The crime requires a breach of a fiduciary duty, where the individual, in a position of trust, misuses assets they were entrusted to manage for the benefit of the company.
• 4. Criminal intent: The prosecution must prove that the defendant had the specific intent to defraud or permanently deprive the rightful owner of their property.

Under New York Penal Law, corporate embezzlement is considered a form of larceny and can lead to severe penalties. The amount of money taken as part of an embezzlement charge dictates the degree of severity to which the crime is charged. 

• Embezzlement of less than $1,000
  Classified as a Class A misdemeanor, which could result in up to 1 year in jail or fines.
• Embezzlement of more than $1,000
  This is a fourth-degree grand larceny, punishable between one third and 4 years in prison, which is a Class E felony.
• Embezzlement exceeding $3,000, not greater than $50,000
• This is a Class D felony, punishable by between two and a third and seven years in prison. 

Corporate embezzlers often employ various methods to steal funds. Some of the most common tactics include:

• Bank Transfers
  Moving company funds into personal accounts, often by exploiting weak internal financial controls.
• Misuse of Corporate Credit
  Using corporate credit cards or accounts for personal expenses.
• Invoice Fraud
  Creating fake invoices or falsifying financial records to siphon off company funds.
• Asset Misappropriation
  Stealing physical company assets or inventory for resale or personal use

When determining the penalty for corporate embezzlement, New York courts consider several aggravating and mitigating factors. These factors help judges tailor the sentence to the specific circumstances of the crime and the defendant's conduct, aiming for a fair and just outcome that reflects the severity of the offense and the harm caused.

Corporate embezzlement cases can be complex and involve intricate legal, financial, and technical issues. Engaging a skilled attorney experienced in corporate crime law is crucial to navigating these legal waters. A corporate lawyer can help:

• Investigate the circumstances surrounding the embezzlement.
  Defend or prosecute cases involving corporate theft.
  Offer strategies to recover stolen assets.
  Strengthen internal controls to prevent future crimes

If you or your business faces allegations of corporate embezzlement, it is critical to act swiftly and secure expert legal counsel. Reach out to SJKP LLP for assistance from our experienced corporate crime attorneys.