Embezzlement is the dishonest appropriation or misappropriation of assets or funds entrusted to an individual’s care. Embezzlement often occurs within an organization or entity where the perpetrator holds a position of trust or responsibility through various means, such as unauthorized transfers, falsifying records, or manipulating financial accounts to conceal the theft.. An individual or a corporation will divert funds or property for personal gain. This violates the fiduciary duty owed to the rightful owner.

Legally, embezzlement is considered a form of financial fraud and is punishable under criminal law. Embezzlement cases can vary in scale, from small-scale pilfering to large-scale schemes that involve substantial sums of money, and often involve a breach of professional ethics and trust.

Embezzlement can occur when the defendant keeps the personal property or transfers it to a third party. Methods of embezzlement differ where some individuals will continually acquire small amounts of money while some embezzlers steal a very large amount of money in one instance and then disappear. Sometimes managers of a company will under-report income to their supervisors and keep the difference. An example of a safeguard against embezzlement is a cash register that ensures the gross sales equal the deposit at the end of a given day.

Whistleblowers can expose embezzlement by:

• Identifying Red Flags: Employees might witness suspicious activity like unexplained cash flow discrepancies, unauthorized use of company assets, or lavish spending habits of individuals in positions of trust. Reporting these red flags can trigger an investigation.
• Internal Controls: Whistleblowers working in accounting or finance departments might identify weaknesses in internal controls that make embezzlement easier. This information can help companies strengthen their safeguards.
• Public Awareness: High-profile whistleblower cases involving embezzlement can raise public awareness about this crime and the importance of speaking up.

Benefits of Whistleblowing in Embezzlement Cases:

• Recovery of Stolen Funds: By exposing embezzlement, whistleblowers can help organizations recover stolen money or assets.
• Deterring Future Crimes: Publicity surrounding whistleblower cases can deter potential embezzlers by highlighting the risks of getting caught.
• Promoting Transparency: Whistleblowing can encourage organizations to be more transparent in their financial practices.