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California Penal Code § (Section) 503 – Embezzlement

California Penal Code § (Section) 503 – Embezzlement

California Penal Code (CPC) §503Embezzlement –Embezzlement occurs in California when a person commits a fraud in order to take property that has been entrusted to him or her.

Embezzlement is actually charged as either Grand or Petty Theft. Felony Embezzlement, a form of Grand Theft, may be punished in California with three years in prison, a fine of up to $10,000, and/or jail time, depending on the facts of the case.

What Does California Penal Code §503 (Embezzlement) Prohibit?

In sum, to be guilty of Embezzlement under California Penal Code §503:

  • You had a property owner entrust property to you; AND,
  • You had the owner do so because he or she trusted you; AND,
  • You fraudulently used the property for your own benefit; AND,
  • You intended to deprive the owner, when you used it.

Defining “Embezzlement” Under California Penal Code §503

To convict you under CPC §503, the prosecutor must prove the following beyond a reasonable doubt:

  • Owner/Agent Entrusted Property: An owner (or the owner's agent[1]) entrusted his or her property to you; AND,
  • Trusted You: The owner or agent did so because he or she trusted you; AND,
  • Fraudulently Converted or Used: You fraudulently[2] converted[3] or used that property for your

own benefit; AND,

  • Intent: When you converted or used the property, you intended to deprive the owner of the property or its use.[4]

Note: “Intent to restore the property to its owner is not a defense.”[5]

Example: Defendant Donald is concerned that his stock in His Company is losing value, so he uses his authority as CEO to transfer tens of millions of dollars from his employees' pension fund into personal accounts. Then he uses the money to purchase shares of His Company, driving up the share price.[6] He's soon caught and charged under §503. He insists he only created value for shareholders. Is Donald guilty?

Conclusion: As CEO of His Company, Donald was entrusted with managing the money in the employees' pension fund. He could use the money for the employees' benefit. But Donald took money from the fund and put it in personal accounts to increase the value of his shares of stock. This defrauded the fund and abused his employees' trust, no matter whether shareholders benefitted. He is guilty under §503.

Penalties For Embezzlement Under CPC §503

Since Embezzlement is punished as Grand Theft or Petty Theft, you can be charged with a felony or a misdemeanor form of the crime, depending on the unique facts of your case. This makes Embezzlement a “wobbler”[7] under California criminal law. If you are convicted of the felony form – involving property worth more than $950, a firearm, or an automobile - the penalty may be:

  • A term of up to three (3) years in a state prison;[8] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[9]

If you're convicted of the misdemeanor form of Embezzlement, the penalty may be:

  • A term of up to six (6) months in a county jail; OR,
  • A fine of up to $1,000 (one-thousand dollars); OR,
  • Both a fine and imprisonment.[10]

As stated previously, if you're convicted of Felony Embezzlement, the penalty may be up to three (3) years in a state prison,[11] a fine of up to $10,000 (ten-thousand dollars), or both a fine and imprisonment.[12] Conviction of the misdemeanor form can result in six (6) months in a county jail, a fine of not more than $1,000 (one-thousand dollars), or both a fine and imprisonment.[13]

Defenses Against California Penal Code §503 – Embezzlement

Three common defenses against a charge of Embezzlement under CPC §503 are:

You Had A Good Faith Belief In Your Right To The Property

Example: Defendant Donna watched over Friend's jewelry in exchange for a valuable ring. Friend gave Donna the ring. Friend also promised to change her will to reflect the arrangement. But she didn't. Friend died soon after and Donna returned the jewelry to Friend's relatives. This is when Victim Vera, Friend's daughter, realized Donna had the ring and charged Donna under CPC §503. Is Donna guilty?  

Conclusion: Donna took a ring that was part of property Friend had entrusted to Donna. We can assume Friend trusted Donna. Donna also wanted to keep the “valuable” ring as a form of payment. These are elements of the charge. But Donna honestly believed Friend was paying Donna with the ring, and that she'd tell Vera this in her will. Donna is innocent. She had a good faith belief in her right to the property.

You Did Nothing Fraudulent

Example: Defendant David is a successful financial manager who works for Elderly Client. After Elderly Client dies, David learns Elderly Client willed David money in thanks for David's years of excellent work. Elderly Client never mentioned this to David. Nonetheless, after David collects the bequest, Victim Vic, Elderly Client's relative, charges David under CPC §503 for defrauding Elderly Client. Is David guilty?     

Conclusion: The facts make it clear that David took money he had no part in securing. He didn't pressure Elderly Client into giving him money, which could qualify as a form of fraud through undue influence. He did nothing to trick his client into leaving him money. He stole nothing. David apparently did nothing but make Elderly Client happy by earning money. Therefore, David is innocent. He did nothing fraudulent.

You Lacked The Intent To Embezzle

Example: Victim Veronica leaves her coin collection in her house. It's being protected by her brother, Defendant Dickie, whose friend, Appraiser, then offers to determine the value of the coins. Dickie takes the coins to Appraiser without telling her. When Veronica returns and finds the coins missing, she calls police and has Dickie charged under §503. He's arrested when he returns from Appraiser. Is he guilty?

Conclusion: Dickie only took the coins long enough to have them appraised. He didn't tell Veronica he'd done it. But Dickie was arrested after returning with the coins. Had he stolen them only to think twice and return them, the crime would still be complete. Dickie didn't. He never intended on depriving Veronica of the coins' value or use at any point. Dickie is innocent. He lacked the intent to embezzle.

Related Offenses

Note: The crimes below are described generally as “related” because they're frequently charged with CPC §503 and/or have common elements the prosecutor must prove beyond a reasonable doubt.

The California Penal Code includes several offenses related to Embezzlement, such as: Burglary (CPC §459), Forgery (CPC §479), Misappropriation of Public Funds (CPC §424), Embezzlement By A Public Officer (CPC §504), Receiving Stolen Property (CPC §496(a)), Extortion (CPC §518), and Bribery Of   Executive Officer (CPC §67).

Burglary

Penal Code §459 creates the crime of Burglary, which occurs any time someone enters a building with the intent to commit Theft or a felony inside the structure. You must form the intent commit Burglary at or before the time of entering the structure. The crime is related to Embezzlement because Burglary can involve taking that amounts to embezzlement. This permits the prosecution to charge you with both in the same trial. 

Burglaries inside homes, vessels, floating homes or trailers are first-degree burglaries. All other forms are in the second degree. This makes Burglary a “wobbler”[14] offense. If you're convicted of Burglary in the first degree, the penalty may be:

  • A term of up to six (6) years in a state prison;[15] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[16]

More information can be found in the California Burglary Defense Lawyer section of the Kann California Law Group's website. If you have questions, contact any of the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County.  An attorney takes your call. Guaranteed.

California Jury Instructions – Burglary

To convict you under CPC §459, the prosecution must prove the following beyond a reasonable doubt:

You entered a building, a locked vehicle, or a structure while intending to commit a theft or a felony involving property worth more than $950, or you entered a noncommercial establishment, or you entered a commercial establishment outside business hours with the same intent.

Example: Defendant Deke admits he took a laptop computer worth $2000 from Victim Verne's car, which he found unlocked outside Verne's business. Deke admits he was going to keep the computer. Deke admits he had no right to do these things. Still, Deke insists he can't be guilty of a charge under CPC §459. Is Deke correct or should he be convicted on these facts?

Conclusion: Deke stole property worth well over $950. These are elements of the charge. But Deke took the computer from an unlocked vehicle. Section 459 applies, in part, to entering locked vehicles without the vehicle owner's permission. Short of this, Deke can be convicted only of Grand Theft.[17] Deke, therefore, is correct. Although he can be convicted of another charge, Deke is innocent of Burglary.

Forgery

Forgery (CPC §470(a)) occurs whenever anyone signs the name of another person or a fictitious person to any of the items listed in subdivision (d) of the statute. The crime is related to Embezzlement because Forgery can be used to acquire property or services entrusted to you, permitting the prosecution to charge you with both in the same trial.

Since you can be charged with a misdemeanor or a felony count, depending on the facts of your case, Forgery is a “wobbler” offense.[18] If you're convicted of felonious Forgery, the penalty may be:

  • A term of up to three (3) years in a state prison;[19] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[20]

More information can be found in the California Forgery Crime Lawyers section of the Kann California Law Group's website. If you have questions, contact any of the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County.  An attorney will take your call. That is always guaranteed.

California Jury Instructions – Forgery

To convict you under CPC §470(a), the prosecution must prove the following beyond a reasonable doubt:

You signed someone else's name or a false name to one of the documents listed in CPC §470(d). You did not have authority to sign that name. You knew that you did not have that authority. Finally, when you signed the document, you intended to defraud.

Example: Defendant Dale works for Goods Seller. Dale has been authorized to select items to sell to Buyer. Goods Seller gives Dale a letter stating their relationship. Dale presents the letter to Buyer. But, seeing that the letter has been accidentally left unsigned, Dale affixes Good Seller's signature to the letter. Buyer sees this and reports Dale to Goods Seller for violating §470(a). Did Dale violate the law?

Conclusion: Dale signed Goods Seller's name to the sales authorization letter, a form of document listed in the statute. Good Seller didn't direct him to do so at the time he signed it. These are elements of the crime. But Dale didn't sign the document to defraud Goods Seller; he was only making Goods Seller's wishes complete by signing the letter. Goods Seller simply forgot to do this. Dale didn't violate the law.

Misappropriation Of Public Funds

Misappropriation Of Public Funds (CPC §424(a)) involves taking public money for your own use or another person's use without legal authority. It's also illegal to loan or profit from public money or to make a false entry in accounting for public money. The statute also makes it a crime to refuse to disburse public money to a legal authority, to fail to transfer public money when required by law, or to fail or refuse to disburse money to a person authorized to receive that money, despite having a legal duty to do so. The crime is related to Embezzlement because it's possible to misappropriate public money with which one has been entrusted.

If you're convicted of Misappropriation Of Public Funds, which is always a felony,[21] the penalty may be:

  • A term of up to four (4) years in a state prison;[22] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment;[23] AND,
  • Disqualification from holding office in California.[24]

California Jury Instructions – Misappropriation Of Public Funds

To convict you under CPC §424(a), the prosecution must prove the following beyond a reasonable doubt:

While responsible for public money, you took some money for your own or someone else's use without legal authority, or you loaned, made a profit from, or used some of that money without legal authority, or you kept a false account or made a false entry in an account of the money, or you changed, falsified, hid or obliterated an accounting of that money, or you refused or failed to disburse public money in response to a draft drawn by competent authority, or you failed to transfer money when required by law, or you failed or refused to disburse money that you'd received to a person legally authorized to receive that money, despite having a legal duty to do so. Additionally, you knew you weren't following the law, or you acted without legal authority, or you were criminally negligent in failing to know legal restrictions on your conduct.

Example: Defendant Dierdre worked as LA City Investments Manager. In this capacity she met many stock and bond traders. After she left the Manager position, she worked in the private sector, where one of the traders she'd met gave her an illegal inside tip. She traded on it and got caught. Prosecutors charge her under §424(a) for taking and using a contact made while working as Manager. Is she guilty?

Conclusion: Diedre appears to have traded illegally on inside information. Whether she made money is unstated. What is known is that she didn't use public funds in her activities; she used a contact made while working in a public capacity, and this only after leaving her managerial position. These acts are   not made illegal under CPC §424(a). For these simple reasons, Dierdre cannot be guilty as charged.

Embezzlement By A Public Officer

Embezzlement By A Public Officer (CPC §504) occurs when any officer of any government or corporate entity fraudulently appropriates property entrusted to him or her in any way inconsistent with lawful execution of that person's position. The same applies if any officer hides property with a fraudulent intent to take it.

Since Embezzlement By A Public Officer is punished as Grand Theft or Petty Theft, you can be charged with a Felony or a Misdemeanor form of the crime, depending on the unique facts of your case. This makes the crime a “wobbler”[25] under California criminal law. If you are convicted of the felony form – involving property worth more than $950, a firearm, or an automobile - the penalty may be:

  • A term of up to three (3) years in a state prison;[26] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[27]

California Jury Instructions – Embezzlement By A Public Officer

To convict you under CPC §504,[28] the prosecution must prove the following beyond a reasonable doubt:

An owner or the owner's agent entrusted property to you, an officer. The owner or owner's agent did so because he or she trusted you. However, you fraudulently converted or used that property for your own benefit, and when you did so, you intended to deprive the owner of the property or its use.

Example: Defendant Derrick is supposed to buy condominiums which he'll sell under the name “New House Company.” Instead, Derrick trademarks the words “new” and “house” and charges his company millions to use them in company ads.[29] He's caught and accused of violating CPC §504. Derrick insists he did nothing more than fairly enhance his salary. Is he correct or should he be convicted on these facts?

Conclusion: Derrick could authorize lawful transactions on behalf of his company - if the spending benefitted the company. But Derrick enriched himself at the expense of the company by paying himself for words he trademarked, knowing the company needed them. He then admitted that this did nothing but enhance his worth. He defrauded the company by paying himself at its expense. Derrick is guilty.

Receiving Stolen Property

California law on Receiving Stolen Property (CPC §496(a)) applies when anyone buys or receives property that's been stolen or extorted, knowing how the property was obtained. The law also applies to concealing, selling, withholding, or aiding someone in concealing, selling, or withholding property from the owner, if you know how it was obtained. 

Receiving Stolen Property can be charged as either a Misdemeanor or a Felony, depending on the facts of your case, which makes CPC §496(a) a “wobbler” crime.[30] The charge is related to Embezzlement because embezzled property may be resold, creating the possibility of Receiving Stolen Property charges in the same trial.

If you're convicted of the Felony form of Receiving Stolen Property, the penalty may be:

  • A term of up to three (3) years in state prison;[31] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[32]

You can find more information in the California Property Crimes Defense Attorneys section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer - guaranteed.

California Criminal Jury Instructions – Receiving Stolen Property

To convict you under CPC §496(a), the prosecution must prove the following beyond a reasonable doubt:

You bought, received, sold, aided in selling, or concealed or withheld property that had been stolen from its owner or obtained by extortion. Additionally, when you were involved with the property, you knew it had been stolen or obtained by extortion.

Example: Defendant Denise gets a watch from Boyfriend. He doesn't explain where it came from. Boyfriend presents her with the watch case as well, all of it tied in a very neat bow. Later, however, she learns that he stole the watch and the case from Victim Vera's store. Vera wants to charge her under CPC §496(a) but Denise insists she shouldn't be convicted under the circumstances. Is Denise correct?

Conclusion: While Denise received property that wasn't hers, she had no explanation where it came from, and, though she might otherwise have had doubts, Boyfriend presented it in a case adorned as a present. On these facts, it's reasonable to doubt whether Denise knew the item was stolen. Since even one missing element of the charge means the defendant must be acquitted, Denise must be innocent.

Extortion

The basic form of Extortion (CPC §518(a)), ‘Extortion By Threat Or Force,' occurs whenever a person obtains valuables or official acts from another, with his or her consent, through wrongful use of force or fear, or under a claim of an official right. The threat may involve harm to be inflicted by you or by someone else. Extortion is connected to Embezzlement because an extortionate threat can be part of an act of embezzlement, which allows the prosecution to charge you with both crimes in the same trial.

If you're convicted of Extortion under §518(a), the penalty may be:

  • A term of up to four (4) years in a state prison;[33] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[34]

You can find more information in the Extortion section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer – and that is always guaranteed.

California Criminal Jury Instructions - Extortion

To convict you under CPC §518(a), the prosecution must prove the following beyond a reasonable doubt:

You threatened another person or that person's property, intending to obtain the person's consent to give you money or property, or to do an official act. As a result, the other person consented. Finally, the other person gave you money or property or did an official act.

Example: Defendant Dave is injured by a low gate in Victim Verne's backyard. He threatens to sue Verne unless Verne gives Niece, Dave's relative, a part in Verne's upcoming TV show. Verne does so. Niece is terrible on the show.[35] Verne fires her. Dave files a lawsuit against Verne. Then Verne reports Dave for violating CPC §518. Is Dave guilty of the charge or did he have the right to insist on Niece's employment?

Conclusion: While Dave had the right to sue Verne for Dave's injuries if Verne didn't help Dave, Dave didn't have the right to insist on Verne's casting Niece. Dave might, for example, ask Verne to pay for Dave's hospitalization, physical therapy, or medication. These wouldn't be extortionate requests. But demanding – and getting – casting for his Niece on a TV show, on these facts, is a crime. Dave is guilty.

Bribery Of Executive Officer

Bribery Of An Executive Officer (CPC §67) occurs when anyone tries to get another person to provide something valuable by offering something of value to the target of the bribe.[36] If you offer to give valuable property or money in exchange for an act or something valuable to which you're not entitled, you can also be accused of Bribery under Section 67. Bribery Of Executive Officer is related to Embezzlement because public property can be the subject of a bribe, permitting the prosecution to charge both in the same trial.

If you're convicted of Bribery Of Executive Officer, the penalty may be:

  • A term of up to four (4) years in state prison;[37] AND,
  • A fine of as much as $10,000 (ten-thousand) dollars; AND,
  • Loss of government employment;[38] AND,
  • Being prohibited from holding public office.[39]

More information can be found in the White Collar Crime Attorney section of the Kann California Law Group's website. If you have questions, contact any of the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. An attorney will answer your call.

California Jury Instructions – Bribery Of Executive Officer

To convict you under CPC §67, the prosecution must prove the following beyond a reasonable doubt:

You gave or offered a bribe to a government officer, a ministerial official, or someone acting on an officer or ministerial official's behalf. They must also show you intended to unlawfully influence that person's conduct.

Example: Defendant Dominic meets with Victim Vicky, Mayor of Reseda, and talks with her about her views on the environment. He makes a donation to her reelection campaign after the meeting because he thinks Vicky's opinions align with his own. But Vicky concludes the money is a form of bribe. She reports Dominic, who now faces charges under CPC §67. Is Dominic guilty, on these facts?

Conclusion: Dominic gave money to a reelection campaign after meeting with Vicky. He did not offer money to Vicky. Nor do the facts say that he offered money to someone acting on her behalf. It can't be said that he wanted to influence Vicky's conduct, furthermore, since Dominic donated the money simply because he agrees with opinions Vicky already has. Dominic, it follows, is innocent on these facts.

What Can I Do If I'm Charged With Embezzlement?

The State of California regards Embezzlement as a serious offense. If you're charged with Embezzlement, it's essential that you retain a skilled, dedicated criminal defense attorney as soon as possible. Your rights, freedom, and livelihood are at stake.

Remember, a professional criminal defense attorney may be able to:

  • Negotiate a lesser charge in a plea bargain;
  • Reduce your sentence;
  • Or even get charges dismissed completely.

The attorneys at the Kann California Law Group have an excellent understanding of the local courts and an extensive knowledge of California's criminal justice system. We can represent you in Ventura, Santa Clarita, Los Angeles, Encino, Pasadena and many other Southern California cities. 

If you or someone you know has been arrested for, or charged with, Embezzlement, our attorneys will analyze the facts of your case and plan a strategy that will help you obtain the best possible outcome.

Contact the Kann California Law Group today to schedule your free and confidential consultation.  

References

[1] “An agent is someone to whom the owner has given complete or partial authority and control over the owner's property.” See California Criminal Jury Instructions 1806 (CALCRIM) (2020).

[2] “A person acts fraudulently when he or she takes undue advantage of another person or causes a loss to that person by breaching a duty, trust or confidence.” See above.

[3] See “Criminal Conversion” at USLegal.com.

[4] “An intent to deprive the owner of property, even temporarily, is enough.” See above.

[5] See California Criminal Jury Instructions 1806 (CALCRIM) (2020).

[6] Fact pattern based on the crimes of the late British publisher Robert Maxwell, father of convicted Jeffrey Epstein's convicted co-conspirator Ghislaine Maxwell. See “Aftermath: discovery of pension funds theft and collapse of a publishing empire,” Robert Maxwell, Wikipedia.org.

[7] See “Wobbler Law and Legal Definition” definition at UsLegal.com

[8] See California Penal Code [CPC] §18 (a).

[9] See CPC §672.

[10] See CPC §19.

[11] See Endnote 8.

[12] See Endnote 9.

[13] See above.

[14] See Endnote 7.

[15] See CPC § 461 (a).

[16] See Endnote 9.

[17] See CPC §§487 (a) – (d).

[18] See Endnote 7.

[19] See CPC §473 (a).

[20] See Endnote 9.

[21] See CPC §425.

[22] See CPC §424 (a).

[23] See Endnote 9.

[24] See Endnote 22.

[25] See Endnote 7. 

[26] See CPC §18 (a).

[27] See Endnote 9.

[28] While the heading refers only to Sections 484 and 503, these instructions apply as well to Embezzlement under Section 504.

[29] Fact pattern inspired by a transaction conducted between Adam Neumann and WeWork, his former company, in which Neumann trademarked the word “we” and charged his company to use it. See “WeWork paid its own CEO $5.9 million to use the name ‘we,' but now it's giving it back after the deal was criticized” by Ben Gilbert. BusinessInsider.com, Sept. 4, 2019.

[30] See Endnote 7.

[31] See CPC §1170 (h).

[32] See Endnote 9.

[33] See CPC §520.

[34] See Endnote 9.

[35] Fact pattern inspired by a prominent storyline in Season 11 of the HBO comedy Curb Your Enthusiasm (2000).

[36] The reverse is addressed in CPC §68.

[37] See CPC §67.

[38] See Endnote 9.

[39] See Endnote 37.

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