The Fine Line Between Accounting Mistake & Embezzlement in TexasPublished: Nov 15, 2023 in Criminal Defense, Federal Crimes, Theft Crimes
No one goes to work thinking they’ll be accused of embezzlement. However, charges related to embezzling funds happen constantly, even though they frequently stem from mere misunderstandings or internal company disputes.
Embezzlement charges usually come as a shock to the accused. Many people are quick to defend themselves and explain the matter. However, this could easily worsen a situation, even if it was an honest accounting error.
In such crucial moments, an experienced embezzlement lawyer like Houston’s Ned Barnett becomes indispensable. With over 30 years of experience, Ned Barnett provides guidance and defense strategies to protect individuals from unjust convictions, ensuring that your rights and reputation are safeguarded.
Accounting Mistake or Embezzlement?
Here, we explore the difference between simple accounting mistakes and criminal embezzlement charges in Texas and highlight the importance of skilled legal defense if you’re the target of an investigation.
What is Embezzlement in Texas?
In Texas, embezzlement is not a crime on its own. Embezzlement is charged under the broader category of theft. According to Title 7, Chapter 31, Section 31.02, theft occurs when an individual “unlawfully appropriates property with the intent to deprive the owner of the property.”
The elements of embezzlement include:
- The unauthorized taking of money or goods.
- Without the consent of the employer.
- With the intent to deprive the employer of their property.
Common Embezzlement Examples
Typical scenarios leading to embezzlement accusations can range from using petty cash for personal expenses to transferring corporate funds to a personal account. Here are some frequently seen instances that would be considered embezzlement that may result in criminal charges:
Taking Money from Petty Cash for Personal Expenses
This involves an employee accessing the company’s petty cash, often intended for small office-related expenses, and using it for personal needs. For instance, an employee might take money to cover personal travel expenses or groceries, planning to return it but failing to do so promptly.
Using Work Supplies, Materials, Tools, or Equipment for Personal Use
In this scenario, an employee might take items belonging to the business for personal use outside of work. Examples include using company tools for a home renovation project or taking office supplies for personal needs. This action blurs the lines between company resources and personal property, leading to potential embezzlement accusations.
Transferring Funds from a Corporate Account to a Personal Account
This situation arises when an employee transfers money from the business’s account into their own without authorization. It could happen under the guise of reimbursement for expenses or by manipulating financial records. Even if intended as a temporary measure, such actions can be perceived as embezzlement.
Altering Accounting Records to Conceal Income to the Business
It involves manipulating financial records to hide or underreport the business’s income. This could be done by overstating expenses or understating revenues. Such alterations can benefit the individual through reduced tax liabilities or inflated bonuses based on performance metrics.
Accounting Errors vs. Embezzlement Charges
An honest mistake in accounting can sometimes lead to serious embezzlement charges. Here are a few examples:
Disorganized Bookkeeping Can Lead to Misplaced Funds
This can occur when there’s a lack of proper systems to track financial transactions. For example, an employee might record a transaction in the wrong account, leading to unaccounted funds. Over time, these misplacements can accumulate, creating significant discrepancies that might be mistaken for intentional misappropriation.
Clerical Errors Result in Incorrect Financial Reporting
A simple data entry mistake, such as a misplaced decimal point or an added zero, can dramatically alter financial statements. If these errors inflate the company’s profits or hide losses, it could be perceived as an attempt to manipulate financial statements for personal gain.
Inexperienced Staff Make Unintentional Accounting Errors
Employees with inadequate training may apply incorrect accounting principles, leading to substantial financial inaccuracies. Without malice, such an individual might, for instance, fail to follow the principle of matching expenses with revenues, leading to irregular financial reporting that could be misconstrued as embezzlement.
Accounting Mistake Considered Embezzlement
Consider you are an accountant or bookkeeper for a local Houston company. You come into work one day only to be accused of stealing company money. You try to tell your supervisors that you suspect it’s a mistake, but you are ultimately charged with embezzlement and likely terminated.
It’s only after you are arrested that you consult a defense attorney, who investigates and discovers that a clerical error made by one of your employees resulted in a large sum of money being unaccounted for during an audit.
As you can see, it’s very easy to misinterpret something unintentional as embezzlement. This scenario underscores the critical need for precision in accounting practices and proactive legal representation when facing such damaging allegations.
The Consequences of an Embezzlement Conviction
The repercussions of an embezzlement conviction extend far beyond legal penalties. They can impact every facet of your life, including career prospects, social standing, and personal relationships.
A misdemeanor charge for embezzling less than $1,500 could still lead to a year in jail, while amounts exceeding $200,000 could result in a sentence of 5 to 99 years in state prison.
- $1,500 or less: misdemeanor charge, up to one year in jail
- $1,500 to $20,000: state jail felony, up to two years in state jail
- $20,000 to $100,000: 3rd-degree felony, 2 to 10 years in state prison
- $100,000 to $200,000: 2nd-degree felony, 2 to 20 years in state prison
- More than $200,000: 1st-degree felony, 5 to 99 years in state prison
The Role of an Embezzlement Defense Attorney
An embezzlement defense attorney serves a vital function, especially at the onset of an investigation or possible charges. Early intervention is key; a lawyer can dissect the situation, often before charges are formally filed, to find critical evidence that may avert a legal crisis.
Through rigorous investigation, including financial analysis and witness interviews, an attorney can uncover and highlight misunderstandings or accounting errors, which may prove no criminal intent.
A proactive approach to embezzlement allegations is also crucial for safeguarding your professional reputation and ability to earn a living once the accounting mishap is cleared up. A skilled attorney can negotiate with prosecutors to potentially reduce or dismiss charges, using their understanding of legal intricacies to protect their client’s public image and career.
Should the case proceed, your attorney’s strategic presentation of evidence and articulating of your narrative become pivotal. The lawyer’s ability to elucidate the nuances of complex financial transactions can sway the outcome, underscoring their indispensable role in defending against embezzlement charges.
Contact The Law Offices of Ned Barnett
At The Law Offices of Ned Barnett, we understand the gravity of embezzlement charges and their impact on your life. We offer comprehensive legal support, from initial consultation to courtroom representation. If you’re facing embezzlement charges that stem from a bookkeeping error, don’t hesitate to reach out for a free and confidential consultation. Protect your future and let us fight for your rights.