If a person is entrusted with someone else’s money, property or assets but uses them for their own benefit, they might be guilty of misappropriation.
Misappropriation refers to the intentional, unlawful use of another party’s property for purposes not authorized by the property’s owner. This includes the misuse of a company’s funds, trade secrets, data or other assets by an individual who has access to those things but does not have ownership of them.
Common types of misappropriation
1. Misappropriation of funds
Misappropriation of funds refers to the illegal use of another person’s money. While the person committing the offense was given lawful access to the money, it is the use for their own purposes or another unauthorized use that makes it a crime.
Misappropriation of funds can be similar to embezzlement, another theft crime, in which a person who is entrusted with another person’s money or property steals it for their own personal use. In some cases, a defendant may be charged with both misappropriation of funds and embezzlement.
For example, a CEO entrusted with funds meant to be used to pay company expenses but uses the money instead to pay their personal credit card bills. The CEO can be charged with both misappropriation of funds and embezzlement. If, on the other hand, the stolen funds were used for unauthorized purposes other than personal gain, the defendant would be charged with misappropriation but not with embezzlement.
2. Trade secret misappropriation
When a person acquires a trade secret through unlawful means, such as theft, bribery or fraud, or publishes a trade secret that was acquired unlawfully, they could be guilty of trade secret misappropriation.
Violating the confidentiality terms of an employment contract may also lead to accusations of misappropriation, for example, if an employee were to bring confidential information belonging to their employer home with them.
Businesses are legally allowed to file civil claims in trade secret appropriation cases, and they may also sue in federal court if they believe that trade secrets related to a product or service involved in interstate or foreign commerce have been misappropriated.
3. Misappropriation of assets
Other assets also can be illegally used by an entrusted person. Common business assets involved in misappropriation of assets cases include inventory and company equipment.
Other Theft-Related Offenses
Misappropriation is a theft crime that is defined by the specific circumstances of unlawfully stealing or misusing funds or other assets with which a person has been entrusted by the owner. In order to better understand misappropriation, it may be helpful to compare it to some other related theft crimes. Below are three of the most common:
When you mention theft, larceny may very well be the first crime that comes to mind. Simply put, larceny takes place when a person steals property that they didn’t already have any type of lawful possession over that belongs to someone else. Shoplifting a DVD from a retail store is an example of larceny.
Many people mistake robbery to mean the same thing as larceny. However, there is a very important distinction between the two crimes. A person commits robbery if they steal another person’s property by force, fear, attack, or restraint.
For example, a person who pins another person to the ground in order to steal their wallet or threatens another person with a knife and demands that they give them their jewelry could be guilty of robbery.
As previously mentioned, embezzlement is similar to misappropriation of funds and it is possible for a defendant to be charged with both offenses. Embezzlement occurs when a person is entrusted with another person’s money or property and uses it unlawfully for their own benefit.
Embezzlement frequently involves money but may pertain to other property as well. An employee who is given access to a company bank account in order to purchase inventory but transfers company funds to their own personal bank account could be guilty of embezzlement.
Penalties for misappropriation
Misappropriation is often charged at the state level. However, there are certain circumstances in which a misappropriation case might be handled by the federal court:
- Federal funds have been misappropriated,
- The internet was used to carry out the crime, or
- State lines were crossed in the commission of the crime.
Regardless of whether the misappropriation offense is handled in state or federal court, the prosecution must prove the following in order to secure a conviction:
- The owner of the property or funds in question had entrusted it to the defendant, therefore affording the defendant some level of possession and control but not ownership.
- The defendant knowingly and intentionally misappropriated the funds or property.
- The defendant used the funds or property for their own personal purposes. In order for this criterion to be met in the eyes of the court, the defendant doesn’t need to have spent the funds. It would be considered sufficient for the defendant to have transferred the funds to their personal bank account or refused to give the owner back the funds or property upon their demand.
On the state level, misappropriation can be charged as either a misdemeanor or a felony. The value of the funds or property as well as the type of misappropriation may determine the level of the offense and the severity of the penalties.
For example, a government employee or official who is convicted of misappropriating a large sum of public funds might receive a particularly harsh sentence compared to a private citizen. Below are potential penalties for misappropriation of funds:
- A prison sentence of up to one year for misdemeanor misappropriation or at least one year (and up to 10 or more) if charged as a felony.
- Fines of up to $1,000 for a misdemeanor offense and up to $10,000 or more for a felony offense.
- Restitution paid to the victim
- Up to 5 years of probation
Legal defenses for misappropriation charges
If you’ve been charged with misappropriation, you might feel intimidated by the legal process and worried about the potential consequences. While your charges can be serious — especially if charged at the federal level — there are a number of strategies that may be available to you.
Your defense attorney will examine the details of your case to determine the strategies that will be most likely to find you the best possible outcome. Below are some common defenses against misappropriation that could be useful against your charges:
- Lack of intent – You did not intend to steal or misappropriate the funds or property.
- Permission – The owner of the funds or property gave you consent to keep or use them for your own purposes.
- Ownership – You had a reasonable and good faith belief that you were the rightful owner of the funds or property.
- You were not the perpetrator – You were wrongfully accused or are the victim of mistaken identity.
- Entrapment – You were coerced by law enforcement into misappropriating the funds.
- Duress – You were forced to misappropriate the funds through use of violence, restraint or threat.
- Inadmissible evidence – The evidence against you was obtained through an illegal search or is otherwise inadmissible in court.
- Insufficient evidence – The prosecution doesn’t have enough evidence to prove beyond a reasonable doubt that you misappropriated the funds or property.
Misappropriation defense attorney
Whether you’ve been formally charged with misappropriation or are currently under investigation, a knowledgeable and credible criminal defense attorney can answer your questions, help you navigate the legal process and fight to defend your rights and protect your future.
As a Los Angeles-based criminal defense attorney who has been representing clients in both California state and federal courts for over three decades, Robert M. Helfend has the experience and expertise to build the strongest possible defense against even the most serious misappropriation charges. You deserve to have a strong and dedicated defense team working on your behalf. Call today to schedule your free consultation – 800-384-6434.