Embezzlement
Legally, embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted. A clerk could embezzle from his or her employer; an attorney or accountant could embezzle from his or her client.
Embezzlement is said to differ from larceny in that the embezzler has, not merely temporary custody of the misappropriated assets, but actual lawful possession.
Embezzlements are repetitive, systematic acts that can often go undetected for years. Part of an embezzlement scheme’s longevity stems from the fact that the perpetrator is frequently a knowledgeable and trusted individual. Knowledge enables the embezzler to take the money and to cover his or her tracks. Trust not only allows the embezzler access, but reduces the vigilance that might otherwise have revealed his or her crime sooner.
General Guidance
Forging checks payable to cash, oneself, and/or to personal vendors.
Pocketing cash receipts meant for deposit into institutional accounts.
Issuing extra paychecks and/or bonus checks through payroll to oneself.
Submitting fraudulent expense reports for reimbursement.
Submitting fraudulent invoices from phony or legitimate vendors.
Abusing institutional credit card accounts for personal use.
Electronic transfers of institutional funds to personal accounts and/or vendors.
Pilfering institutional equipment and/or inventory.
Unrestricted access to blank checks, signature plates, and check-signing equipment.
High volume of manually prepared disbursement checks.
Paid invoices not properly canceled, allowing for reprocessing.
FEC's Guidance for Political Committees Regarding Embezzlement/Misappropriation
Do not allow a single individual access to all aspects of institutional finances in any given department. Make sure there are divisions of duties, in the finance department in particular.
Regularly rotate responsibilities for bookkeeping personnel.
Require bookkeeping personnel to take time off. Embezzlers often take few or no vacations to safely perpetrate their schemes.
Do not allow bookkeepers to take work home.
Require two signatories on outgoing checks above a certain nominal amount. The signatories should be different individuals from the check preparer.
Examine cancelled checks regularly. One common method of embezzlement involves the forgery of checks. Another is to have them payable to the embezzler or to personal vendors.