Both embezzlement and theft involve depriving one or more owners of their assets or property unlawfully. Nevertheless, the two offenses are significantly different from one another.
According to the National Paralegal College, only someone whom the owner of the property has entrusted with it can commit embezzlement. Embezzlement involves using or holding the property in a way that is detrimental to the true owner.
Possession versus ownership
The true owner of the property could place it in someone else’s possession for a specific purpose. For example, the owner of a company could put its assets in the possession of an accountant, or the owner of significant funds could place them in the care of a stockbroker. In either case, the understanding is that the accountant or stockbroker is to manage or invest the funds on behalf of the owner for the owner’s benefit. Legal ownership of the assets does not change.
Conversion versus the terms of arrangement
An owner who puts his or her assets in the possession of a second party does so on certain terms to which the second party agrees. If the second party violates the terms of the agreement to his or her own benefit, it is conversion. Conversion is the use of the property by the second party that is to the owner’s detriment.
Embezzlement may involve spending money that belongs to someone else or committing fraud to make it appear that the property belongs to oneself, both examples of conversion.
One situation in which embezzlement cannot take place is if two parties own the property jointly. A lack of mens rea, or knowledge that one is doing something wrong, could be a defense to embezzlement charges if the person charged honestly believed that he or she had a legitimate right to the property.