Federal embezzlement and theft charges

What does the law make illegal?

The Supreme Court long ago defined embezzlement as "the fraudulent appropriation of property by a person to whom such property has been intrusted, or into whose hands it has lawfully come" (Moore v. United States, 160 U.S. 268 (1895)). The difference from ordinary theft is that the person first got the property lawfully, then kept or used it as their own. Federal law doesn't have one embezzlement statute. Instead, Chapter 31 of Title 18 has separate laws based on whose property it was (18 U.S.C. ch. 31). The ones charged most often are below.

Government money and property, 18 U.S.C. § 641

It is a crime to embezzle, steal, or knowingly convert (use as your own) any money, record or thing of value of the United States or a federal agency, or property being made under a federal contract. It is also a crime to receive, hide or keep such property, knowing it was stolen, with intent to use it for yourself (18 U.S.C. § 641). Common examples are federal employees taking property from work, contractor employees taking government equipment, and people who keep collecting Social Security, veterans or other federal benefits they know they aren't entitled to. "Value" means the face, market or cost price, whichever is greatest.

The government must prove criminal intent. In Morissette v. United States, 342 U.S. 246 (1952), the Court held that a man who took old bomb casings from a federal range, believing they were abandoned, could not be convicted without proof that he intended to take government property wrongfully.

A related law, 18 U.S.C. § 654, covers a federal officer or employee who embezzles someone else's money or property that came to them through the job.

Bank officers and employees, 18 U.S.C. § 656

Section 656 covers anyone who is an officer, director, agent or employee of, or "connected in any capacity with," a Federal Reserve bank, a member bank, an FDIC-insured bank, or certain bank holding companies and foreign bank branches, and who embezzles, takes, or "willfully misapplies" the bank's money or money entrusted to it (18 U.S.C. § 656). The law reaches more than taking money: it separately covers willfully misapplying the bank's funds.

Credit unions, lenders and insurers, 18 U.S.C. § 657

Section 657 covers the same conduct by people connected with federally insured credit unions and savings institutions, federal lending and insurance agencies, and certain other federally chartered or insured lenders (18 U.S.C. § 657).

Employee benefit plans, 18 U.S.C. § 664

It is a crime to embezzle, steal, or unlawfully and willfully take or convert the money or assets of an employee welfare or pension benefit plan covered by ERISA, such as a 401(k), a union pension, or an employer health plan (18 U.S.C. § 664). This often comes up when an employer withholds employee contributions from paychecks but doesn't send them to the plan.

Organizations and governments that receive federal funds, 18 U.S.C. § 666

Section 666 reaches an agent (including an employee, officer or director) of a state, local or tribal government, or of a private organization, who embezzles, steals, gets by fraud, or intentionally misapplies property worth $5,000 or more that the organization owns or controls (18 U.S.C. § 666). The organization must receive more than $10,000 in federal benefits in a one-year period around the offense. The government doesn't have to prove the stolen money itself was federal (Sabri v. United States, 541 U.S. 600 (2004)), and a hospital that takes Medicare payments receives federal "benefits" (Fischer v. United States, 529 U.S. 667 (2000)). Ordinary salary and expenses paid in the usual course of business are excluded (§ 666(c)).

Section 666 also covers bribery of those agents. In Snyder v. United States, 603 U.S. 1 (2024), the Supreme Court held that it covers bribes, meaning payments agreed to before an official act, but not gratuities given afterward as a thank-you.

Health care benefit programs, 18 U.S.C. § 669

It is a crime to knowingly and willfully embezzle, steal, convert or intentionally misapply the money or assets of a health care benefit program, public or private (18 U.S.C. § 669). For billing fraud against these programs, see our health care fraud page.

Tribal organizations, 18 U.S.C. § 1163

It is a crime to embezzle, steal, knowingly convert or willfully misapply money or property belonging to an Indian tribal organization, or entrusted to its officers, employees or agents, or to knowingly receive or keep such property (18 U.S.C. § 1163).

When it is charged as fraud instead

Prosecutors often add or substitute wire fraud or mail fraud charges (up to 20 years per count, or 30 if a financial institution is affected), and sometimes money laundering when the money was moved or spent. Other Chapter 31 laws cover court officers, public custodians, disbursing officers, bank examiners, interstate shipments, livestock and major artwork.

What are the penalties?

• Mandatory minimum: none. Probation is possible, depending on the guideline range and the facts.
• Fines: for an individual, up to $250,000 per felony count, or twice the gain or loss if that is more (18 U.S.C. § 3571(b), (d)).
• Restitution: for these property offenses, the judge generally must order repayment of the victims' losses (18 U.S.C. § 3663A). The Supreme Court held in Ellingburg v. United States (2026) that this restitution is criminal punishment.
• Forfeiture: the government can seek property that came from the offense (18 U.S.C. § 981(a)(1)(C); 28 U.S.C. § 2461(c)).
• Supervised release: up to 5 years for a 30-year bank offense and up to 3 years for the others (18 U.S.C. §§ 3559(a), 3583(b)).

How long does the government have to charge it?

Generally 5 years (18 U.S.C. § 3282). Bank and credit union embezzlement under §§ 656 and 657 has a 10-year limit (18 U.S.C. § 3293). In a long-running scheme, which acts fall inside the limit can matter.

How does sentencing work for this charge?

Embezzlement and theft are sentenced under USSG §2B1.1, the same guideline used for fraud. The base offense level is 6 for most of these laws, or 7 for §§ 656 and 657 because they carry a maximum of 20 years or more. Then the loss adds levels. The current and scheduled loss tables are on our wire fraud page. For example, a loss over $95,000 adds 8 levels today; from November 1, 2026, the same 8 levels start at over $150,000.

• Credit for money paid back: loss is reduced by money and property returned to the victim before the offense was detected (§2B1.1, Application Note 3(D)). Repayment after detection doesn't reduce loss, but it can matter to the judge under § 3553(a).
• Abuse of trust: +2 when a person in a position of trust, meaning one with real discretion and little supervision, used it to commit or hide the offense (USSG §3B1.3). The commentary says it doesn't apply to an ordinary bank teller or hotel clerk, but it does apply to a benefit plan fiduciary or a union officer who embezzles from the plan or union.
• Sophisticated means: +2, with a floor of level 12, for especially complex or intricate conduct in carrying out or hiding the offense (§2B1.1(b)(10)).
• Financial institutions: +2 if the person got more than $1,000,000 in gross receipts from financial institutions (§2B1.1(b)(17)).
• Victims: increases for 10 or more victims, or for substantial financial hardship to victims (§2B1.1(b)(2)).
• Decreases: up to 3 levels for acceptance of responsibility (USSG §3E1.1), and 2 levels for some people with no criminal history points (USSG §4C1.1).

Bribery under § 666 is sentenced under a different guideline, USSG §2C1.1.

Pending at the Supreme Court. In Beaird v. United States, No. 25-5343, set for argument on October 13, 2026, the Court agreed to decide whether Stinson v. United States (1993) still states the rule for how much weight courts must give the Guidelines’ commentary, the notes that follow each guideline. The answer could affect rules on this page that come from commentary rather than from the guideline text itself.

Guideline numbers on this page are from the Guidelines Manual in effect since November 1, 2025, which no longer uses “departures”: the judge calculates the range, then weighs the factors in 18 U.S.C. § 3553(a). For more depth, see How the federal Sentencing Guidelines work, at Sentencing.net, a Criminal Center site.

How do these cases usually start and move?

Many cases start inside the victim organization: an audit, a new bookkeeper, a bank's internal review, or a benefit plan that notices missing contributions. The employer or bank then reports it. Agents from the FBI, an agency's Office of Inspector General, the Department of Labor (for benefit plans and unions) or the Social Security Administration (for benefits cases) usually investigate.

The person often learns about it when the employer confronts them, fires them, or asks them to sign a statement or a repayment agreement. What is said or signed then can be used later. Lying to a federal agent is its own crime (18 U.S.C. § 1001). It helps to talk with a lawyer before answering questions or signing anything.

When an organization is being investigated, its officers and managers can be pulled in personally even if they think their part was small, so it helps to get separate advice early.

The usual stages of a federal case

1. 1Investigation. Agents gather records and interview witnesses, often using grand jury subpoenas. Someone the prosecutor views as a "target" may get a target letter before an indictment (Justice Manual 9-11.151, 9-11.153).
2. 2Charges. A federal felony is usually charged by indictment: a grand jury decides in private whether there is probable cause (Fed. R. Crim. P. 6, 7). Some cases start with an arrest on a criminal complaint.
3. 3First appearance and detention. After an arrest, the person goes before a magistrate judge without unnecessary delay (Fed. R. Crim. P. 5). The judge decides whether they are released or held until trial (18 U.S.C. § 3142).
4. 4Evidence and motions. The government must turn over certain evidence (Fed. R. Crim. P. 16). The defense can ask the court to suppress evidence or dismiss charges (Fed. R. Crim. P. 12).
5. 5Plea or trial. Many federal cases end in a guilty plea, which the judge must find knowing and voluntary (Fed. R. Crim. P. 11). At trial, the government must prove every element beyond a reasonable doubt, and a jury verdict must be unanimous (Fed. R. Crim. P. 31(a)).
6. 6Sentencing. A probation officer writes a presentence report, and each side can object in writing within 14 days of receiving it (Fed. R. Crim. P. 32). The judge then decides the sentence under 18 U.S.C. § 3553(a).

More on what to do at each stage: Facing federal charges? What to do now.

What defense issues come up in these cases?

• Intent. Did the person believe they were allowed to use the money, for example as a loan, an advance or approved pay? Honest belief bears on intent (Morissette).
• The federal connection. Was the property really federal, was the bank or credit union federally insured, was the plan covered by ERISA, and did the organization get more than $10,000 in federal benefits in the right one-year period?
• The $5,000 and $1,000 lines. Under § 666 the property must be worth $5,000 or more; under § 641 and others, $1,000 or less is a misdemeanor. How the counts add up can decide which applies.
• Bona fide pay. Under § 666(c), ordinary salary, wages and expenses paid in the usual course of business aren't covered.
• Loss amount. Is the loss figure supported by records, not estimates? Were repayments before detection credited? Were the victim's own accounting errors counted as loss?
• Abuse of trust. Did the person really have discretion and little supervision, or was the job mostly clerical?
• Time limits. Which acts fall within the 5- or 10-year limit?
• Benefits cases. In a § 641 benefits case, did the person know they weren't entitled, and did the agency's own notices make that clear?

Every case turns on its own facts. These are issues to look at, not predictions about how any case will turn out.

What happens after a conviction?

• Appeal. A notice of appeal is usually due within 14 days after the judgment is entered (Fed. R. App. P. 4(b)(1)(A)). Many plea agreements waive the right to appeal, but in Hunter v. United States (2026) the Supreme Court held that a waiver can’t be enforced when doing so would cause a miscarriage of justice, a high bar. See federal appeals at Sentencing.net.
• A § 2255 motion. A motion asking the sentencing court to vacate, set aside or correct the sentence, for example for ineffective assistance of counsel. It is usually due within one year after the conviction becomes final (28 U.S.C. § 2255(f)). See 2255motion.com.
• Compassionate release. A motion asking the judge to reduce a prison sentence for extraordinary and compelling reasons, filed after the person asks the warden and either exhausts BOP appeals or waits 30 days (18 U.S.C. § 3582(c)(1)(A)). It can’t be used to attack the validity of the conviction itself (Fernandez v. United States (2026)). See CompassionateRelease.com.
• Clemency. The President can pardon a federal offense or commute (shorten) a federal sentence (U.S. Const. art. II, § 2). See Clemency.com.