Misappropriation of Funds Laws, Charges and Statute of Limitations

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Misappropriation of funds is a serious crime and means the illegal and intentional use of the funds of another party for one’s own use. Misappropriation of funds can be done by a trustee, a public official, an executor of a deceased person’s estate, or any other individual with the responsibility to care for and protect the assets of another person.

This is a punishable offense in all US states. For instance, in Connecticut, a lawyer who knowingly misappropriated funds or property in a trust can be disbarred. The crime also carries jail or prison sentences in most states, depending upon whether it is charged as a misdemeanor or felony.

You Tube Special Feature

A recent misappropriation of funds case in Orange County, California involved a woman who befriended several small business owners and then stole their money, while pretending to be a CPA. See the video below for more.


Misappropriation of Funds Laws

Laws on this crime very, but generally, state prosecutors must prove certain elements when proving misappropriation of funds has occurred. When a state prosecutor brings charges of misappropriation, the following elements must be proven to the judge or jury:

  • Control but not ownership: The state must show that the property owner entrusted or gave the money to the accused or otherwise allowed the accused to have control over it. The bottom line is the defendant had possession of the funds but not ownership of it.
  • Intent: The accused must have knowingly misappropriated the money and cannot have committed the crime by mistake. A person who has misappropriated funds does not have to intend to take the money. It can be enough for the state to show that the accused intended to take action that would result in the misappropriation of funds. In some states, the accused needs to know the action was against the law. But in others, the accused only has to act in an intentional manner and does not have to know the conduct was illegal.
  • Conversion: The person must have not just taken the money but used it for his own purposes. But this does not require the accused person to take the funds and use it to purchase something. Courts have decided that it is enough to just take the money and place it in a bank account or even refuse to hand over the money when the person demands it.
  • Return: The person who misappropriated funds with the intent to give it back later has still misappropriated funds. It also does not matter if the funds were only taken for a short period of time.

Misappropriation of Funds Crimes and Charges

Misappropriation of funds under most state laws simply means any act that results in funds being used in a manner in which it was not intended. It can result in an embezzlement charge in many states, as well as a larceny charge. Embezzlement is taking the property that belongs to your employer, while larceny means taking something from another person that you have no right to possess.

Misappropriation of Funds Punishment

Depending upon the state and how the crime is charged, misappropriation of funds charges can lead to serious jail time. States have laws that consider this crime to be both a felony and misdemeanor; which it is typically depends upon the amount of funds involved. However, some states will also specify certain types of misappropriation to be felonies. For example, a public employee who steals public funds will likely be charged with a felony in most states.

Possible punishments include:

  • Prison: A misdemeanor conviction for misappropriation of funds can get you up to a year in jail. A felony conviction can get you more than a year in prison. A felony conviction on these charges in some states can result in a sentence of 10 years or more.
  • Fines: Fines can range from $1,000 for misdemeanors to more than $10,000 for felonies.
  • Probation: Probation also is common for misappropriation of funds charges. But the possibility of getting probation depends upon the circumstances of the crime as well as the specific state laws. If you fail to meet conditions of probation, you can be sentenced to prison.
  • Restitution: Most people convicted of misappropriation of funds must pay restitution to the victim. This is separate from any fine you get.

Some of the specific punishments for misappropriation of funds in some states are:

Texas

This state charges misappropriation of funds under embezzlement and theft laws. Embezzlement is financial theft by an employee or person of trust. Punishment depends upon the value of the money stolen. For amounts up to $1500, it is charged as a misdemeanor and can result in up to a year in jail. For amounts above $200,000, it is a first degree felony and can be punished by five to 99 years in prison.

California

California Penal Code 424 establishes criminal penalties for the misappropriation of funds, which is very similar under state laws for embezzlement. Misappropriation of funds is frequently charged against state and local officials, but also may be charged against any person who has control of taxpayer money.

This crime is always a felony under California law. You can receive anywhere from two to four years in prison and fine up to $10,000.

Massachusetts

Sentencing for misappropriation of funds in this state is governed by the laws for larceny. If the value of what was embezzled was under $250 it can bring a year in jail sentence. If the value is above $250 and/or involves a gun, you can receive up to five years in state prison and fine up to $25,000.

Misappropriation of Funds Defenses

Defenses for misappropriation of funds are similar to those for embezzlement, which include:

  • Insufficient evidence: Any criminal charge must be dismissed if there is insufficient evidence. The jury must have enough evidence of the misappropriation of funds to convict you beyond a reasonable doubt.
  • Duress: This occurs when a person thinks they will be in some danger if they do not commit the crime. It will not work to argue duress because you took the money to satisfy a family difficulty or hardship. A duress defense can be effective where you could lose your job if you do not engage in misappropriation of funds.
  • Entrapment: This occurs when the state or federal government compels you to commit a crime that you would not have done. Setting up a ‘bait’ to get you to commit misappropriation of funds could be entrapment in some cases. The prosecution will likely argue that you would have committed the crime anyway.
  • Absence of intent: This is probably the most effective line of defense for these crimes. A financial crime cannot occur unless you had the intent to take it. You might have thought you were the true owner of the property that you were accused of misappropriating, for example.

Misappropriation of Funds Statute of Limitations

The statute of limitations for financial crimes such as misappropriation of funds can range from two to five years in most states.

Misappropriation of Funds Cases

  • Winchester, IL Clerk Investigated for Misappropriation of Funds – A deputy clerk is being investigated for misappropriation of funds. Deputy Clerk Barb Hoots was put on paid administrative leave in January 2018, and the case has been handed over to the Scott County State’s Attorney.
  • Florida Union Chief Under Investigation – A VP for a local union for a firefighters and paramedics union has admitted that he misappropriated funds, according to an internal investigation. Troy Mesick told command staff last month that he was guilty of misappropriation of funds through his work at Local 1826 in Ft. Myers.

References

  • Misappropriation of Funds Overview. (n.d.). Retrieved from https://www.criminaldefenselawyer.com/resources/criminal-defense/white-collar-crime/misappropriation-of-funds.htm
  • Misappropriation of Funds Definition. (n.d.). Retrieved from https://definitions.uslegal.com/m/misappropriation-of-funds/
Geoffrey Nathan, Esq.

About Geoffrey Nathan, Esq.

Geoffrey G Nathan is a top federal crimes lawyer and Chief Editor of FederalCharges.com. He is a licensed attorney in the Commonwealth of Massachusetts since 1988, admitted to practice in both Federal and State courts. If you have questions about your federal case he can help by calling 877.472.5775.