What is Embezzlement?
Embezzlement is a type of financial fraud where a person entrusted with someone else’s money or property steals or misappropriates it for their own use. It involves a breach of trust and often occurs in a corporate or organizational setting.
Types of Embezzlement
There are various forms of embezzlement, including skimming, larceny, billing schemes, and payroll schemes. Skimming involves taking money before it is recorded, while larceny involves stealing money after it is recorded. Billing schemes and payroll schemes involve manipulating invoices or payroll records.
Examples of Embezzlement
One famous example of embezzlement is the case of Bernie Madoff, who orchestrated a massive Ponzi scheme that defrauded investors of billions of dollars. Another example is the case of Enron, where executives engaged in accounting fraud to hide losses and inflate profits.
Case Studies
- Company A: An employee at Company A siphoned off funds from the company’s accounts over several years by creating fake vendors and invoices.
- Organization B: The treasurer of Organization B diverted donations meant for a charity to his personal bank account.
Statistics on Embezzlement
According to a report by the Association of Certified Fraud Examiners, embezzlement accounts for over 10% of fraud cases reported, with an average loss of $1.2 million per case. Small businesses are particularly vulnerable to embezzlement due to limited resources for internal controls.
