Embezzlement vs. Misappropriation — What's the Difference?

Embezzlement is a form of financial fraud involving someone entrusted with funds or assets intentionally using them for personal gain. Misappropriation, while similar, refers more broadly to the unauthorized use of funds or property, regardless of the perpetrator's relationship to the assets.

Both terms imply an unauthorized handling of assets, but embezzlement specifically requires a fiduciary relationship between the perpetrator and the assets. This means that for embezzlement to occur, the individual must have legal access to the money or property but uses it in a way that violates the terms of their trust. Misappropriation, on the other hand, does not necessitate a fiduciary relationship and can involve any unauthorized use of another's resources.

Legal consequences for embezzlement often hinge on the breach of trust, with penalties potentially more severe due to the violation of a fiduciary duty. Misappropriation, while still illegal, might be prosecuted differently depending on the context and nature of the unauthorized use, with penalties varying widely.

In the context of corporate settings, embezzlement might involve an employee diverting company funds into personal accounts, whereas misappropriation could occur in broader scenarios, such as someone unlawfully taking company property for personal use without any form of fiduciary relationship.

The detection and investigation of embezzlement typically require a detailed examination of financial records and transactions, especially those that the accused had access to. Misappropriation investigations might not always be as financially focused, depending on what was taken and how.