Understanding Embezzlement: A Must-Read For Small Business Owners

Key Legal Considerations When Facing Embezzlement Accusations in Arizona

If you’re a small business owner, you will have many significant decisions to make to keep your business afloat and successful. One of those decisions might be safeguarding and developing someone else’s property such as an investment. Another might be determining what to do with your business assets as you grow. Or maybe you work for a small business and have access to assets. Each of these situations can be susceptible to embezzlement.

Embezzlement is all too easy to commit and even a small, simple transaction can end your career. If you’re facing an embezzlement accusation, reach out to your Arizona business attorney for a strong defense. If you’re hoping to avoid embezzlement charges, read on for more information. 

What Is Embezzlement In An Arizona Small Business?

Embezzlement is a type of theft that can happen in a business or institution that is legally entrusted with another person’s money or property. A person of trust within the business takes the entrusted property and uses it for their own personal benefit without permission. Common examples of embezzlement include:

• An employee working at a retail store takes small amounts of cash from the register overtime and manipulates sales records to not get caught.
• A business’ bookkeeper alters accounting entries or hides transactions in order to take money for themselves.
• Someone working in HR adds fake employees to payroll, putting the fake employee’s paychecks into their own personal account.

Embezzlement On a Federal Level vs. Arizona Embezzlement

Embezzlement is handled both on a state level as well as a federal level. The state takes care of the charge in most private cases. However, it becomes a federal offense if it involves federal agencies, federal funds, banks, credit unions, interstate commerce, public officials, or federal contractors. 

While the United States Government prosecutes offenders under an embezzlement charge, the state of Arizona does not have this formal charge. Instead it falls under “theft” even though the embezzlement actions are the same. It’s important to note that a person can be charged under both the state of Arizona and the federal government for the same act. Finding an Arizona business lawyer if accused is essential. 

What’s The Legal Difference Between Embezzlement & Larceny?

Embezzlement and larceny may seem similar, but they are different in a key area. In order to embezzle property, the business owner had permission to initially possess the property. The act of embezzlement comes into play when the owner takes that property for their personal use. Almost like a two-step process.

Larceny does not have multiple steps. Instead, it occurs the moment the property is stolen. It is direct theft. In Arizona, both larceny and embezzlement are charged under theft. Arizona Intellectual Property Lawyers can provide valuable guidance when theft involves proprietary information or trade secrets. Federally, both larceny and embezzlement become an offense when it affects interstate commerce, federal institutions, or public trust. However, federally, they each have their own charge.

How Embezzlement Commonly Occurs In Arizona Small Businesses

Small business embezzlement is quite common and Arizona business lawyers have a lot of experience handling these types of cases. Small businesses are especially susceptible because of: 

• A lack of internal controls
• High trust, low supervision
• Limited resources for oversight
• Overworked owners
• Poor or outdated record-keeping
• No formal policies or procedures
• Cash-heavy operations
• No background checks

Penalties For Federal & Arizona Embezzlement

The penalties for embezzlement vary depending on if you’re being charged in Arizona, or on a federal level and how much money you embezzled. In Arizona, because embezzlement is classified under theft, you could face 6 months to 12.5 years in jail, face hefty fines, a permanent record, probation, or restitution to the victim. These penalties will grow if there are aggravating factors such as repeat offenses, vulnerable victims, or an ongoing scheme.

If you’re facing federal charges, your penalties will likely be more severe. You could face up to 30+ years in prison, pay up to $1 million in fines, face restitution to the victim, probation, and more. In either case, an Arizona business lawyer will help you understand the penalties you might face according to the specifics of your case and what defenses are available to you.

Safeguarding Your Small Arizona Business Against Embezzlement

So how can you protect your business against embezzlement? What protections can you put into place to ensure it does not happen, even on a small level? The following are some suggestions you could implement:

• Separate financial duties: Make sure several people are managing different aspects of finances and implement dual approval for large payments or transfers.
• Use accounting software with audit trails: Software such as Quickbooks, Zero, or Wave can record every transaction and track changes.
• Frequently check financial records: Reconcile your records bank statements monthly and perform random spot audits of petty cash, vendor invoices, and payroll.
• Set clear rules about reimbursements and business purchases: Be sure anyone who spends business money provides itemized receipts and set spending limits.

Contacting a Skilled Arizona Business Lawyer If You’re Facing Embezzlement Charges

Embezzlement charges can not only put you in jail, but can end your small business career. If you’re accused of embezzlement or you believe someone in your business is embezzling, you should reach out to our Arizona business attorneys for help. Our lawyers at Denton Peterson Dunn will walk you through all the stages of litigation, working towards the best possible outcome.

Don’t face these charges alone, reach out to our lawyers for help!

Brad Denton – Denton Peterson Dunn

1930 N Arboleda #200
Mesa, AZ 85213
Office: 480-660-3249
Email: brad@dentonpeterson.com
Website: https://arizonabusinesslawyeraz.com

7272 E Indian School Rd #540-132
Scottsdale, AZ 85251
Phone: 480-690-3283
Email: service@dentonpeterson.com