All you need to know about embezzlement with your criminal lawyer

From small-scale scams to financial market scandals, embezzlement is a real issue. It affects individuals and businesses alike. What is embezzlement? How can you and your lawyer react effectively? What are the penalties? Put all the chances on your side to secure your assets.

What is embezzlement?

Embezzlement is the unauthorised use of funds or property. It can take place in the private or professional sphere. Embezzlement is a criminal offence, even if the perpetrator makes no profit from the misappropriated funds.

There is no specific offence for embezzlement. The nature of the offence depends on the nature of the funds involved and the perpetrator. Depending on the case, the offence may be referred to as breach of trust or, more specifically, misappropriation of corporate assets.

Misappropriation constituting a breach of trust

Article 314-1 of the Criminal Code defines breach of trust as: “the act by a person of embezzling, to the detriment of another person, funds, securities or any property whatsoever that has been handed over to him and that he has accepted on condition that he return them, represent them or make a specific use of them“.

In practice, embezzlement can take various forms:

• Scams ;
• Cyber attacks;
• Hacking carried out by people from outside a company, such as the fake president fraud;
• Bank card hacking.

Embezzlement can target public or company funds. It is therefore a real threat to the financial health of French companies. It is sometimes the result of manoeuvres carried out by people inside the company, such as its directors or partners, or even its employees. In the case of misappropriation of company assets, the classification of the offence depends on the status of the perpetrator. Embezzlement of company funds is a specific category of breach of trust, created for company directors.

Misappropriation of funds constitutes a misuse of company assets

Misuse of corporate assets is defined inarticle L. 241-3 of the French Commercial Code. It is characterised by themisuse by directors of company assets, contrary to the interests of the company and for personal ends.

Misuse of corporate assets differs from breach of trust in that it only concerns misappropriation by the directors of commercial companies. The offence is committed when a company director (chairmen and managing directors of SAs and SASs and managers of SARLs) uses the company’s assets for personal purposes, thereby undermining the company’s interests. However, when the misappropriation occurs within the framework of a non-trading company or an association, it does not constitute misuse of corporate assets. In this case, the offence is breach of trust.

The constituent elements of embezzlement

Breach of trust or misuse of company assets presupposes the prior handing over of assets or funds to the perpetrator, voluntarily, under the terms of a contract (mandate, company contract). The offence is then characterised by the combination of 3 essential elements, which must be proven in order to obtain compensation.

The material element

The perpetrator commits a breach of trust or misappropriation of corporate assets by diverting an asset or a right from its intended use.

The intentional element

The perpetrator is perfectly aware of his actions. He intends to misappropriate an asset or a right to the detriment of the person who has placed his trust in him.

The prejudice

An essential element, along with the previous two, the offence only exists because the victim suffers harm. This harm is the direct consequence of the abuse. The harm may be material, such as the loss of money, or moral, such as the loss of reputation.

Criminal penalties for embezzlement

Anyone who commits or attempts to commit embezzlement is liable to criminal prosecution:

• The perpetrator or accomplice ;
• The actual or attempted misappropriation.

Penalties may vary depending on the circumstances. The main penalties are 3 years’ imprisonment and a fine of €375,000.

In addition, certain aggravating circumstances justify heavier penalties:

• 7 years’ imprisonment and a €750,000 fine for the cases provided for in article 314-2 of the Criminal Code (offence committed by an organised gang, damage to an association collecting funds for humanitarian or social purposes, damage to a vulnerable person, etc.) ;
• 10 years’ imprisonment and a fine of €1,500,000 for breach of trust by a court-appointed agent or a public or ministerial official under article 314-3 of the Criminal Code.

Lastly, the criminal court may also impose the additional penalties set out inarticle 314-10 of the Criminal Code, such as a ban on civic rights, on practising a commercial profession, on managing a commercial company, or the closure of the establishments used to commit the offences.

Criminal penalties can be very severe. If you are implicated in embezzlement, consult your criminal lawyer immediately to ensure your line of defence.

Call on your criminal lawyer for reimbursement of funds

The main objective of victims of embezzlement is toobtain the return of the property or the repayment of the money embezzled. However, it is often the case that the perpetrator of the offence is insolvent, making it impossible to enforce the civil provisions of the judgment. In this case, it’s a race against time.

Call on your lawyer specialising in business criminal law for expert advice and a legal strategy to release the funds as quickly as possible.

⚠️Article 311-12 of the Criminal Code establishes family immunity. This prevents criminal prosecution when the breach of trust is committed by a person in relation to his or her ascendant, descendant or spouse. However, this immunity does not apply when the misappropriation involves objects or documents that are essential to the victim’s daily life, such as an identity document. Similarly, this article does not apply to the perpetrator if he or she is a guardian, curator or special agent appointed under a court protection order.

Call on your lawyer to obtain the dismissal of an employee responsible for embezzlement

An employer who is the victim of embezzlement committed by an employee may use the offence as grounds for dismissal. In 2011, the Court of Cassation ruled that employers may rely on misconduct committed by their employees, such as fraudulent use of assets or sums entrusted to them in the course of their duties.

Thanks to its multidisciplinary team, your law firm will do everything in its power to assert your rights and defend you against an employee, partner or any other unscrupulous person.

Are you a victim of embezzlement, either personally or within your company? Have you been implicated in an embezzlement case? Consult your lawyer now to find out more about criminal law issues!