Accused of Embezzlement by Your Employer: From Internal Investigation to Federal Charges
What happens at each stage, where the risks are and how a former federal prosecutor can intervene before the company’s case lands on a prosecutor’s desk.
Most embezzlement cases do not start with the FBI. They start with a request for a meeting from HR, a sudden stop in logging in, or a company lawyer wanting “a few minutes to look over some numbers.” What you say and sign during the next few days often determines whether this will remain a workplace dispute or become a federal indictment.
When Employee Embezzlement Becomes a Federal Crime
Embezzlement means taking money or property that has been entrusted to you and using it for your own purposes. In Texas, most cases are charged as theft under the Texas Penal Code § 31.03 and are handled in state courts. A case becomes federal when the employer, money, or method gives jurisdiction to the U.S. government.
Banks and credit unions: Employees of federally insured financial institutions may face charges under 18 U.S.C. § 656, which carries a maximum penalty of 30 years in prison.
Federal funds recipients: Organizations that receive federal funding, such as hospitals, universities, local governments, and grant-funded nonprofits, are subject to 18 U.S.C. § 666.
Retirement and health plans: Theft connected to retirement or health benefits is covered by 18 U.S.C. § 664.
Healthcare businesses: Theft related to healthcare benefits is a separate offense under 18 U.S.C. § 669 and often involves healthcare fraud allegations.
Federal money and property: Theft of federal money or property is covered by 18 U.S.C. § 641.
Electronic transfers: Moving funds electronically may support wire fraud charges under 18 U.S.C. § 1343, with a maximum penalty of 20 years or 30 years if a financial institution is involved.
Prosecutors rarely file just one charge. A single scheme can lead to wire fraud, money laundering under 18 U.S.C. § 1957, and tax charges. The embezzled funds are considered taxable income according to James v. United States, so several years of unreported income may result in the IRS getting involved in the case.
How an Embezzlement Accusation Unfolds, Stage by Stage
The Company Finds a Discrepancy
Maybe a new controller ran a reconciliation. Maybe a vendor called about a payment that never arrived. Companies often quietly review records for weeks before anyone talks to an employee. By the time you are called in, they usually have pulled your emails, expense reports, and bank activity.
The Internal Investigation Interview
Before the interview starts, the company’s attorney may say that they represent the company, not you. This is called an Upjohn warning, named after the case of Upjohn Co. v. United States. Take this seriously. The company has control over the conversation. It can share your interview notes with prosecutors, and the federal charging policy rewards companies for identifying the individuals involved.
Private employers don’t give Miranda warnings.
You can decline the interview. You can also be fired for declining, so that choice needs to be thought through.
An explanation that later turns out to be wrong can hurt you more than saying nothing.
Termination, Repayment Demands and “Confessions”
Many employers ask employees to sign a written statement, promissory note, or repayment agreement. Sometimes, this is presented as a way to “keep things out of court.” However, the company cannot actually promise this. Only prosecutors can decide whether to file charges. A signed statement can end up being the government’s first piece of evidence.
Restitution still matters. When handled through counsel, it can affect charging decisions and sentencing without a confession being handed over.
The Referral to Law Enforcement
Employers refer cases for reasons that have little to do with you. Crime and fidelity insurance policies often require proof of loss and cooperation with the police before they pay out a claim. Banks are required to report suspected insider abuse under 31 U.S.C. § 5318(g). Referrals are made to local police, district attorneys, the FBI, the IRS Criminal Investigation Division, or an Inspector General.
The Federal Investigation
Agents subpoena bank records, interview coworkers, and may visit your home. Some people receive a target letter or a grand jury subpoena. Our guide to the stages of a federal investigation goes through this phase in detail.
Keep every record. Deleting files after learning of an investigation may lead to obstruction charges under 18 U.S.C. § 1519, which carries up to 20 years. The government also has time on its side: the general limit is five years under § 3282, and ten years for offences affecting a financial institution under § 3293.
Federal Charges and Sentencing
Charges are brought by indictment or information, followed by an initial appearance, discovery, and either plea negotiations or trial. At sentencing, the U.S. Sentencing Guidelines tie the range mostly to the amount of loss. Employees are also often hit with an “abuse of position of trust” enhancement. Restitution is mandatory under 18 U.S.C. § 3663A.
Mistakes That Make Embezzlement Cases Worse
We see the same mistakes again and again, usually in the first week:
Signing a statement that the company has written for you
Deleting texts, emails, or spreadsheets, even if you think they are personal
Calling coworkers to “get the story straight” – prosecutors may see this as witness tampering
Moving money or selling assets after you learn about the investigation
Talking to agents who appear at your door without a lawyer being present
Assuming repayment will close the matter (it won’t)
How Aaron L. Wiley Defends Employees Accused of Embezzlement
The company’s version of events is not the truth, it is a starting point. Embezzlement requires intent. Internal reconstruction often treats approved bonuses, informal reimbursements, commingled accounts, or plain bookkeeping errors as theft. When numbers are complicated, forensic accountants are brought in early, because government financial analysis is rarely the only reasonable interpretation.
Handling all contact with your employer and its lawyers
Reviewing the company’s findings and testing its loss figures
Negotiating a civil resolution that doesn’t double as a confession
Engaging prosecutors before charges, when the most options are still available
Taking the case to trial if that’s what protects you
Talk to a Former Federal Prosecutor Before You Talk to Anyone Else
The outcome of an embezzlement case usually takes shape in the first few weeks. What gets signed, what is preserved, and whether there is a lawyer in the room for an interview are all factors that shape the outcome. If your employer accuses you or you think there is an investigation coming, call Aaron L. Wiley Law, P.C.
FAQs
Not really. Employers report crimes. Prosecutors file charges. Repayment can influence how a prosecutor views the case, but it doesn’t bind the government.
There is no law that requires you to answer questions from your private employer. However, refusing may result in losing your job. A lawyer can help you consider this trade-off and possibly negotiate the terms of the interview.
That depends on who your employer is and how the funds were transferred. Banks, federally-funded organizations, benefit plans, and interstate wire transfers typically lead to federal court cases.
Generally, it can be five years from the time of the offense. For cases involving a financial institution, it can be ten years. If the scheme involves running for years, these windows can be extended.
The authorization goes straight to the intention, which the government needs to prove. Emails, text messages, and past practices that show approval can be crucial to defense, so it’s important to preserve them.
Yes. Parallel civil and criminal cases are common. If you invoke the Fifth Amendment in a civil case, a court may hold you liable under Baxter v. Palmigiano. Both cases need to be handled as one strategy.
