California companies both big and small try to keep an eye out for embezzlement. It happens more than people may assume, and it has the power to topple a business or non-profit organization, which is why the state imposes harsh penalties for those convicted of embezzlement.
What is embezzlement?
Financial trustees of a company, firm or non-profit organization are legally obligated to serve the best financial interest of the entity. As such, it’s illegal to access business funds and funnel them into personal or unauthorized accounts. The act of doing so is called embezzlement, and if the amount exceeds $5,000, it’s a federal crime.
A form of theft, embezzlement schemes can run the gamut. A retail worker who pockets a few bucks from a cashier is, technically, embezzling as are traveling salespeople who lie on their expense reports. There’s also large-scale embezzlement where corporate insiders establish elaborate, process-level schemes like shaving pennies off transactions and ultimately amass millions of dollars.
How organizations try to prevent embezzlement
The first line of defense is proper employee vetting. When onboarding new people, managers try to engage in due diligence. Implementing robust security measures, in addition to a system of checks and balances, is the next step. To that end, organizations try not to consolidate financial authority in one person or department. Also, mandating regular internal audits and comprehensive reporting is meant to deter financial crimes.
To win embezzlement lawsuits, claimants must prove that the perpetrators had a non-personal fiduciary responsibility to their entity and acted intentionally to defraud. If these elements are not proving, the defendant might not be convicted of the charges.