From about February 2018, Jerod Vannatter managed a nonprofit veterinary clinic and oversaw its payroll and vendor payments. Between about October 2022 and December 2024 he paid himself $624,599.86 through payroll deposits and false vendor invoices. He pleaded guilty to money laundering on 28 September 2026 (US Attorney's release).
What is embezzlement? The definition courts use
The Supreme Court set the legal meaning of embezzlement in Moore v. United States (1895), and the DOJ's archived Criminal Resource Manual 1005 quotes it: "Embezzlement is the fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come." The possession comes first, unlike in theft or in a fraud built on a lie.
To define the crime under 18 U.S.C. 666 (programs receiving federal funds), the manual adds four elements: trust, possession through the job, conversion to one's own use and intent to deprive. To embezzle is the verb; embezzling is the act. Misappropriation is the wider word; when the property was entrusted, the taking is called embezzlement, or criminal breach of trust in India (Table 4).
How does embezzlement work, and how do embezzlers keep it hidden?
Rita Crundwell, comptroller of Dixon, Illinois, opened a bank account in the city's name in December 1990 that she alone controlled (US Attorney, 14 February 2013). Her case runs in four steps:
- Trust. Comptroller and treasurer from 1983.
- Taking. Two decades of transfers into that account, $53.7 million in all.
- Hiding. She made 159 fictitious State of Illinois invoices for the auditors and picked up the city's mail, the account's bank statements included.
- Discovery. During her 12 weeks of unpaid vacation in 2011, the stand in asked for every bank statement.
From Ufuk Gürdaş, reviewer of this entry: "A national bank has no floor for insider theft: with a substantial basis to identify the insider, the OCC rule requires a suspicious activity report for insider abuse involving any amount, while other crimes need $5,000 with a suspect or $25,000 without one (12 CFR 21.11)."
What are the types of embezzlement?
Table 1. Old type names mapped to ACFE asset misappropriation sub schemes (Occupational Fraud 2026, p. 15 and glossary p. 106).
| Old name | ACFE sub scheme | What the insider does | Share of all cases |
|---|---|---|---|
| Payroll fraud | Payroll scheme | Makes false claims for pay, such as unworked overtime or ghost employees | 10% |
| Cash skimming | Skimming | Takes a payment before it is recorded | 9% |
| Vendor fraud | Billing scheme | Invoices for fictitious goods, inflated amounts or personal purchases | 21% |
| Check kiting | Check and payment tampering (nearest) | Forges or alters a company check, or reroutes a vendor payment to their own account | 10% |
| Asset misappropriation | The whole branch; nearest: cash larceny, cash on hand | Takes receipts after they are recorded, or cash kept on the premises | 8%; 10% |
The ACFE's Occupational Fraud 2026 files all five under asset misappropriation (pp. 12 to 13) and never uses the word embezzlement. Check kiting fits least well: in Williams v. United States (1982) the Supreme Court described drawing a check far beyond the balance at one bank, depositing it at another and reversing the process. Corruption, such as bribery or a conflict of interest, is a separate branch.
What is embezzlement of cash?
The ACFE splits cash theft by timing. Skimming takes a payment before it reaches the books, cash larceny after, and cash on hand schemes take what sits on the premises. Jefry Castro, a Citizens Bank branch manager, took $374,233, mainly from two ATMs, refilled them from cash deposits and shipments, and changed the numbers on the balance sheets (US Attorney, 16 July 2026).
What are real examples of embezzlement, including the largest embezzlement cases?
Crundwell's theft is believed to be the largest of public funds in Illinois history, prosecutors said. She was sentenced to 19 years and 7 months after pleading guilty to wire fraud and agreeing she had also laundered money.
According to the ACFE, the median loss for asset misappropriation is $100,000 (p. 12). Vannatter owes $624,599.86 in restitution.
A Ponzi scheme is a different fraud.
Which industries carry the most embezzlement risk?
These ACFE figures cover all occupational fraud. The 2026 victim table puts banking and financial services first with 431 cases, then government and public administration (215), manufacturing (191) and health care (137), at median losses of $100,000 to $170,000 (p. 51).
Embezzlement vs theft, fraud and money laundering: what are the key differences?
Crundwell's case carried two of these charges; the useful line is how the offender first held the money.
Table 2. Four crimes compared, with examples from this page.
| Crime | How the offender first held the property | The act | Example here |
|---|---|---|---|
| Embezzlement | Lawfully, through trust | Converts entrusted property to own use | Vannatter's false vendor invoices |
| Theft (larceny) | Never; took it without consent | Takes property, intending to deprive the owner | Illustrative: a stranger empties a till |
| Fraud | Obtained it by deception | Deceives for gain | Crundwell's wire fraud plea |
| Money laundering | Already criminal proceeds | Conceals, converts or moves them | Vannatter's laundering plea |
What is the difference between theft and embezzlement?
Moore draws the line: embezzlement "differs from larceny in that the original taking was lawful". In England and Wales, theft is dishonestly appropriating another's property with the intention of permanently depriving them of it (Theft Act 1968 s1). The DOJ manual sets a lower bar for embezzlement: the intent need not be permanent, so "restoration of the property illegally taken is no defense".
Is embezzlement a type of fraud?
Yes in the ACFE's terms: embezzling misuses the employer's resources for personal enrichment, the report's definition of occupational fraud (p. 106). In England, Wales and Northern Ireland, fraud by abuse of position (Fraud Act 2006 s4) covers a person "expected to safeguard" another's financial interests who dishonestly abuses that position.
Can embezzlement lead to money laundering?
Yes. Embezzled money is criminal proceeds, and 18 U.S.C. 1956(c)(7)(D) lists embezzlement under sections 641, 656 and 657 as specified unlawful activity. 18 U.S.C. 1957 punishes a monetary transaction of more than $10,000 in such property with up to 10 years, a fine or both.
Vannatter's release names one transfer: $20,000 from his checking to his savings account. In the United Kingdom, section 327 of the Proceeds of Crime Act 2002 (POCA) makes concealing, disguising, converting, transferring or removing criminal property an offense, with up to 14 years on indictment (s334).
Directive (EU) 2018/1673 requires EU states other than Denmark and Ireland to punish conversion, transfer and concealment by the original offender (Article 3(5)).
Money laundering methods sets out the stages that follow; fraud vs money laundering covers the wider split.
Which red flags point to workplace embezzlement?
Table 3. Red flags, the data that shows them and the control that answers them.
| Red flag | Data that shows it | Control | Case |
|---|---|---|---|
| A vendor is paid into an employee's bank account | Vendor file against payroll bank details | Match the two files before any first payment | Vannatter |
| A payroll name has no HR file | Payroll register against HR records | Reconcile payroll to HR every pay run | ACFE payroll schemes |
| An account in the firm's name is missing from the books | Bank statements against the ledger | Statements go to someone outside the payment chain | Crundwell |
| An ATM or till runs short, then is topped up | Cash counts against deposits and shipments | Surprise counts by a second person | Castro |
| An employee lives beyond known income | Behavior: almost 40% of perpetrators showed it (ACFE, p. 68) | A hotline and a manager who acts on reports | ACFE |
What are the legal consequences and penalties for embezzlement in the US, UK and India?
Table 4. Maximum penalties by jurisdiction (statutes read 20 October 2026; Scottish court limits from the Scottish Government, read 21 October 2026; federal law only for the US).
| Jurisdiction | Law | What it covers | Maximum |
|---|---|---|---|
| US federal | 18 U.S.C. 656 and 657 | Officers and employees of insured banks, credit unions and federal lending institutions | $1,000,000 fine, 30 years or both; one year if $1,000 or less |
| US federal | 18 U.S.C. 641 | Money or property of the United States | 10 years, a fine or both; one year if $1,000 or less |
| England and Wales | Theft Act 1968 s7 | Theft as defined in s1 | 7 years on indictment |
| England, Wales and Northern Ireland | Fraud Act 2006 s4 | Fraud by abuse of position | 10 years, a fine or both on indictment (s1(3)(b)) |
| Scotland | "Breach of trust and embezzlement", named in Criminal Procedure (Scotland) Act 1995 Sch. 3 para 8 | The charge for this conduct | No offense figure in the schedule. Court limits: High Court, life imprisonment, an unlimited fine or both; sheriff on indictment, 5 years, an unlimited fine or both; summary, one year, £10,000 or both in most cases (Scottish Government). Any limit set in law for the offense applies |
| India | Bharatiya Nyaya Sanhita 2023 s316 and s314 | Criminal breach of trust (s316); dishonest misappropriation of movable property (s314) | s316: 5 years; clerk or servant 7; public servant, banker, merchant, factor, broker, attorney or agent, life or 10. s314: 6 months to 2 years and a fine |
Under 18 U.S.C. 3559, the 30 year bank offense is a Class B felony, and a one year maximum for $1,000 or less makes a Class A misdemeanor.
The Theft Act does not extend to Scotland or Northern Ireland (s36(3)). Sections 1 to 9 of the Fraud Act reach only England and Wales and Northern Ireland (s15(2)).
How is embezzlement investigated and reported?
Investigators from IRS Criminal Investigation and the FBI worked Vannatter's case. A national bank files a suspicious activity report within 30 calendar days of detecting the facts, or up to 60 when no suspect has been identified, and management notifies the board (12 CFR 21.11(d), (h)).
How can a firm prevent workplace embezzlement, and who owns it?
Five controls answer these cases:
- Split paying vendors from reconciling the account.
- Send bank statements to someone outside the payment chain; Crundwell collected them with the city's mail.
- Match vendor bank details to staff records. Vannatter's false invoices paid his own account.
- Require leave with cover: a stand in found Crundwell's account (employee fraud sets out the rule).
- Check new vendors and hires as know your customer (KYC) rules check customers.
Finance owns the payment controls. The fraud team owns detection (how fraud detection works), and in a bank the AML team, which works to prevent money laundering, files suspicious activity reports.
complead, formerly Sanction Scanner, keeps one risk score per customer, because onboarding, screening, monitoring, fraud and investigation share a single engine. Its fraud and AML (FRAML) solution puts both teams on the same customer record before a decision.
Vannatter is due for sentencing on 16 February 2027, on a laundering count with a 10 year maximum.
Related terms
- Employee fraud. Fraud by staff against their employer.
- Skimming fraud. Taking payments before they are recorded.
- Tax fraud. Deliberately evading tax.
- Certified Fraud Examiner. The ACFE's credential.
- Ponzi scheme. Paying old investors with new investors' money.
- Insider fraud. Fraud from inside the organization.
