Embezzlement or an Accounting Error?
It’s one thing to make an error that leads to the books being off by a few dollars, but the stakes are a lot higher if you’re accused of something that looks like embezzlement.
Typically classified as a white-collar crime, embezzlement is a complicated offense. It describes a situation where a person had lawful possession of something, but engaged in unlawful acts. The timing, intent, and nature of the alleged misconduct are key issues, which is you should rely on an embezzlement lawyer for help in fighting the charges.
Generally, embezzlement encompasses elements of theft crimes and fraud. The specific definition of embezzlement is misappropriation of property by someone who initially had proper, legal custody.
There are certain essential elements to secure a conviction, so a prosecutor must prove:
- There was the existence of a fiduciary relationship between the parties, which may be individuals or entities
- One party placed or entrusted property to the other, such that the possession of it was lawful
- Sometime thereafter, the person or entity in possession fraudulently converted the proper for their own use
- The offender converted the property with an intent to permanently deprive the rightful owner of using it.
Embezzlement is most common in the corporate or employment settings, where an employee is entrusted with company property. However, it can occur in the context of any principal/agent or fiduciary relationships, such as the administrator of a trust or estate.
Acts of embezzlement may include:
- Using funds, such as spending petty cash
- Selling property to a third party
- Giving property away
- Destroying or damaging property to the point that it’s unusable
- Permanently withholding property from the rightful owner.
Accounting Mistakes and Proving Intent
While each of the four elements mentioned is essential to the crime of embezzlement, one in particular addresses an accounting mistake: Intent. By definition, a mistake is an inadvertent error in judgment.
When it occurs in the context of accounting, there may be unfortunate consequences that result in the conversion of the principal’s property. However, conversion without intent is not embezzlement. Unless the prosecutor can prove that your purpose in handling the property was to convert it while it was in your lawful possession, you don’t have the required intent.
Defenses to Embezzlement
Besides the lack of intent that may occur due to an accounting mistake, there are other strategies for fighting embezzlement charges. The first is to identify and attack weaknesses in other areas of the case.
For instance, you may contest that there was a fiduciary relationship, or dispute conversion to the extent of depriving the owner. When it’s your turn to defend yourself, your lawyer may also present evidence showing you:
- Converted the property for legitimate business purposes, such as paying a bill
- Were under duress, believing that you were at risk of harm or loss unless you took action
- Converted the property under circumstances indicating entrapment, in which you were coerced into doing something that you wouldn’t through your own free will.
Retain an Embezzlement Attorney Right Away
Simple accounting mistakes present little cause for concern, but you’ll need experienced counsel if you’re facing criminal charges for embezzlement. A conviction could mean incarceration, hefty fines, and other penalties, especially if the circumstances lead officials to charge you with a federal crime.
Even if you have extensive experience in accounting principles, you put your rights at risk if you don’t get legal help to protect your interests.
Contact an embezzlement lawyer with Worgul, Sarna & Ness Criminal Defense Attorneys right away to learn more about potential defense strategies. Call (412) 281-2146 to set up a free and confidential consultation.
What is a White Collar Crime?
The term “white-collar crime” conjures up images of corporate sharks in fancy suits as they empty the bank accounts of unsuspecting victims. While it makes for great TV, there’s little truth to it. Someone accused of a white-collar crime is more likely an average person, usually seeking gain through fraud.
These charges can happen to anyone with access to someone else’s finances. This can mean accountants, bookkeepers, financial planners, or someone in charge of handing out company funds. Whatever the case, allegations are serious and convictions can ruin careers and lives.
Your situation may seem grim if you’ve been arrested on white-collar charges, but it’s important to remember that you have rights and these cases require a lot of technical evidence. The prosecution must prove guilt beyond a reasonable doubt. Plus, there may be defenses and strategies available. Because of the complicated nature of white-collar cases, it’s wise to rely on an experienced criminal fraud defense attorney.
White Collar Crimes – An Overview
White-collar crimes usually focus on financial gain, often through nonviolent, deceitful methods. They typically involve some element of misrepresentation or other misconduct as part of an overall scheme to defraud.
Though the specifics will vary based on the exact offense, the elements that a prosecutor must prove are:
- The accused made a material statement or provided information to another person, knowing it was false;
- Fraudulent statement or information was intended to persuade a victim to give over something of value, such as money, contractual rights, assets, or other items;
- Victim relied on the statement in handing over valuables; and,
- That person would never have done so, knowing the truth of the matter.
Federal White Collar Crimes
By their nature, white-collar offenses often qualify as federal crimes because the misconduct tends to cross state lines through the use of telecommunications networks. By making a phone call, sending an email, faxing documents, or accessing the internet, the accused individual may face federal sentencing for a conviction.
The fines, jail time, and other punishments are much more severe as compared to the laws of most US states. Depending on the specific crime, prior criminal history, number of victims, and other factors listed in the federal sentencing guidelines, punishment may include:
- Fines ranging from $100,000 and up, on a per count basis;
- Imprisonment of up to 30 years or more; and,
- Restitution, which means reimbursing victims for their losses, plus interest.
Types of White Collar Crimes
There are numerous scheme to defraud that would be considered white-collar, usually classified by the type of victim:
Government: Individuals may make false statements in dealing with federal, state, or local government bodies, potentially leading to charges for bankruptcy fraud, tax evasion, health care fraud, and others.
Bank and Financial Institutions: Many crimes in the financial sector include check kiting, money laundering, mortgage fraud, forgery, and counterfeiting.
Insurance Companies: It’s against the law to make false statements to home, auto, business, or other insurers in two contexts:
- Executing documents to purchase a policy; and,
- Making a claim for losses in connection with policy coverage.
Corporations: The most common white-collar crimes in the corporate world are insider trading and embezzlement, where an individual having legal custody of someone else’s property converts it to their own use. An example would be an employer entrusting an employee to deposit some petty cash, but the worker pockets the funds instead.
Private Individuals: Fraud crimes in this category may include identity theft, credit card fraud, bribery, extortion, and Ponzi or pyramid schemes.
Get Legal Help ASAP
White-collar offenses encompass a wide range of activities, and the sentences are harsh. Under the circumstances, you need skilled legal representation to explore all potential strategies for fighting the allegations. With a contact a fraud defense lawyer on your side, it may be possible to obtain a favorable outcome.
At Worgul, Sarna & Ness Criminal Defense Attorneys, we are highly experienced in the technical aspects of these cases and have a long track record of success defending white-collar charges in and around Pittsburgh, PA. Know what you’re up against and how to effectively deal with it.
What Is Income Tax Fraud?
As the income tax deadline quickly approaches this April, it is time to ensure your current taxes are in order. Sloppy mistakes or misunderstandings regarding the income you are required to declare to the Pennsylvania Department of Revenue or U.S. Internal Revenue Service (IRS) can cost you a great deal of trouble down the line. A missing zero, misplaced comma, or unreported wages could lead to an audit, interest, and fines, or worse – criminal charges for income tax fraud. The state and federal government take taxes seriously, and if they believe you are trying to get away without paying, they will seek to punish you to the fullest extent of the law.
If you are currently facing issues regarding your previous tax returns, including accusations of fraud, contact a Pittsburgh fraud attorney immediately. State and federal tax codes are complicated and people often make mistakes on their returns. That does not mean you should face criminal punishments. We can help you correct this error, defend against criminal charges, and get back to your regular life.
Call us today at (412) 281-2146 to schedule an initial consultation.
Common Examples of Income Tax Fraud
There are multiple errors that could lead to tax fraud charges, including:
- Underreporting your income
- Not reporting certain types of taxable income, such as wages from a second job
- Taking deductions you are not entitled to
- Claiming personal or business expenses you did not incur
- Not declaring assets you owned or sold during the relevant fiscal year
- Not reporting or underreporting interest earned on income and assets
In order for an action to be tax fraud, it must have been intentional and for the purposes of retaining or receiving funds to which you did not have a right.
Pennsylvania’s Income Tax Fraud Law
Title 61: Revenue, Chapter 119: Liabilities and Assessment of the Pennsylvania Code addresses your duties in regard to paying taxes. You are required to provide information regarding your taxable income so that the federal and state governments can assess how much you owe. You are then required to pay your tax liability, or if you are lucky and overpaid throughout the year, you may receive a refund. If you are found to have left off reportable income or submitted a fraudulent return in some way, you can be charged an extra 5 percent, 25 percent, or more. According to section 119.22, if you underpay your tax liability for any reason related to fraud, then an amount equal to 50 percent of the underpayment will be added to what you owe.
While these fees are administrative punishments, you can also be charged with misdemeanor or felony offenses under state law for a fraudulent income tax return. Under Title 61, Chapter 35: Tax Examinations and Assessments, willfully filing a fraudulent return can result in a misdemeanor offense, punishable by up to three years in prison and a fine up to $2,000. Other acts of fraud in relation to your tax returns and payments may also be a misdemeanor offense, punishable by up to one year in prison and up to a $1,000 fine. If you are charged with theft from the Pennsylvania government in relation to your fraudulent return, then you can be charged with another misdemeanor or felony.
You Could Face Federal Tax Fraud Charges
If you submitted a tax return with mistakes, you could also face federal charges that would result in harsher punishments. When you file your income tax return, you give your word to the government that it contains accurate information. Under 26 U.S. Code Section 7206, if you provide false or inaccurate information with the intent to defraud the government, then you can be charged with a felony offense, punishable by up to three years in prison and up to a $100,000 fine. You will also face financial penalties up to 75 percent of the underpayment related to fraud.
Fraud is Not the Same as Negligence
There is a significant difference under the law between intentionally trying to defraud the government and making a simple mistake on your taxes. If you made an innocent error, the state and federal governments will want it corrected and you may have to pay interests or fines. However, negligent mistakes on your tax returns do not typically lead to criminal charges – intentional misrepresentations do. For prosecutors to bring and prove tax fraud charges against you, they must show that you had the intent to defraud and took knowing steps toward doing so.
Contact a Pittsburgh Fraud Attorney to Defend You
There are a number of ways to defend against tax fraud or tax evasion charges, including that you had no intent to defraud the government or that you were unaware of the fraudulent activity. For instance, you may have proof that you made an innocent mistake on your returns. You may also have evidence that your accountant, employees, spouse, or business partners knew about the inaccurate information while you did not.
Whatever your situation, our criminal defense attorney are here to help. We will analyze your situation and build the strongest defense available under state and federal law.
Call us today at (412) 281-2146 to schedule a free initial consultation.