of Shareholder Funds
Misappropriation of funds and embezzlement are often used interchangeably in California. In either case, someone has been entrusted with someone else’s money or property and then diverts it to a purpose other than what the actual owner intended.
Embezzlement generally refers to the diversion of cash or property to one’s own benefit. Misappropriation of funds can involve goals and uses that do not directly benefit the one entrusted and were not authorized by the owner. A corporate officer, for instance, may transfer property or cash to a use other than for what was intended. Misappropriation can involve inventory and company equipment being diverted to non-corporate or unauthorized purposes.
If an officer in a corporation or other business entity misappropriates or embezzles funds, the board of directors can bring legal action or shareholders may pursue the action derivatively on behalf of the corporation. A victim of embezzlement, whether a business entity or an individual, can also present the evidence of embezzlement to law enforcement authorities, who may be willing to pursue criminal charges against the embezzler.
If you suspect misappropriation or embezzlement by someone to whom you or your business entity has entrusted funds, or if you yourself are being accused, you will need the analysis and advice of an experienced and knowledgeable business litigation attorney.
The Law Offices of David H. Schwartz, Inc. has 45 years of experience in handling corporate litigation and personal financial litigation, including embezzlement claims.
California Law on Misappropriation
Embezzlement is covered under the California Penal Code, which states: “Embezzlement is the fraudulent appropriation of property by a person to whom it has been intrusted.”
The Golden State also has a law on the misappropriation of funds, but it pertains only to public funds and those who work in the government. Thus, embezzlement, coupled with the legal principle of fiduciary duty – the responsibility to manage others’ money and property ethically – and coupled with fraud often comprise a charge of misappropriation.
Embezzlement in its simplest form is merely employee theft writ large. For instance, a night clerk skims money from the cash register at a local convenience store or restaurant. However, in the corporate world, the embezzler or misappropriator can use accounting tricks to hide money or transfer assets.
It could also be the case of a corporate officer who sets up dummy business entities and then bills the corporation for payment for nonexistent services or products. Alternately, the officer could transfer cash or property to the dummy entity.
Trust Reliable Representation
If you or your business entity is dealing with possible embezzlement contact the Law Offices of David H. Schwartz, Inc. The firm represents both plaintiffs and defendants in both Northern and Southern California, and brings a wealth of experience, knowledge, and resources to the task.