The embezzlement charges process rarely starts with a police officer. It usually starts with a bookkeeper, office manager or other trusted employee being called into a meeting with HR, an outside auditor or the company's lawyer. By then, the employer has often been reviewing records for weeks. What the employee says and signs in that room can shape everything that follows, from whether police are ever called to how much restitution the court orders years later.
The Association of Certified Fraud Examiners' 2026 Report to the Nations studied 2,402 occupational fraud cases across 143 countries. A typical case lasted 12 months before detection. 43% were detected after a tip, and more than half of those tips came from employees. The median loss was $104,000 per case, and 20% of cases involved losses over $1 million. One number matters most for someone facing an accusation: 54% of the cases were referred to law enforcement. That means nearly half were not, and the decisions made in the early weeks are often where those paths split.
This guide walks through each stage, using California, Texas and federal law as examples, and flags the choices that matter at each step.
How does an embezzlement case usually start?
Most embezzlement cases start inside the business, with an internal audit, a tip from a coworker, or an accounting irregularity. The accused employee often learns about it in an HR or audit interview before any police involvement.
According to the ACFE's 2026 key findings, asset misappropriation made up 90% of the cases studied. Duration drives the dollar figure: cases caught within six months had median losses of $40,000, while schemes lasting more than five years had median losses over $1.1 million. That dollar figure later becomes the center of the criminal case.
Do you have to answer questions in an HR interview about missing money?
A private employer is not the government, so the Fifth Amendment and Miranda generally do not apply to an internal workplace interview. There is no warning, and anything said or signed can later become evidence.
As the law firm Simmons Wagner LLP explained in July 2026, "The Fifth Amendment focuses on government compulsion," and "Employees should not expect to receive a Miranda warning before a routine internal workplace interview." The firm adds that "An HR interview, written response, email, or signed investigation summary may later become evidence," and that confidentiality "does not automatically prevent the employer from sharing relevant information with ... police, or prosecutors."
In practice, the employee faces three decisions at this stage:
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Whether to talk. An employer can discipline or fire someone who refuses to cooperate, but a statement made to keep a job can also end up in a prosecutor's file.
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Whether to sign anything. Written admissions, investigation summaries and repayment agreements are documents, and documents travel.
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When to call a lawyer. The earlier a criminal defense attorney is involved, the more of these choices can be made deliberately instead of under pressure in a conference room.
Public employees are in a different position
Government workers have a protection private employees do not. In Garrity v. New Jersey, decided January 16, 1967, the U.S. Supreme Court held that "the protection of the individual under the Fourteenth Amendment against coerced statements prohibits use in subsequent criminal proceedings of statements obtained under threat of removal from office." A city clerk or agency bookkeeper questioned under threat of losing the job stands on different ground than a bookkeeper at a private company. Whether a particular interview qualifies is a question for a lawyer, before the interview if possible.
Can an employer demand repayment in exchange for not calling police?
Employers often push for repayment before deciding whether to involve police. Lawyers, though, face ethics limits on how they apply that pressure.
In California, Rule of Professional Conduct 3.10(a) says: "A lawyer shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute." According to the San Diego County Bar Association's ethics column, a lawyer may still threaten a civil suit, and may state in good faith that continuing conduct will be reported. This is one state's ethics rule for lawyers; other states have their own rules. If an employer's attorney ties criminal referral to a repayment deal, that is worth raising with defense counsel.
What happens when the employer refers the case to police?
Once the employer refers the matter, its audit file, the bank records, the HR notes and any signed statements typically become the backbone of the police investigation. Detectives may call the employee and ask to "hear their side."
The choice here is whether to speak with detectives at all, and if so, whether to do it through counsel. Unlike the HR interview, a police interview is government questioning, so constitutional protections apply. The right to remain silent and the right to a lawyer are both available, and both can be invoked.
How much money makes embezzlement a felony?
State law ties the charge level to the dollar value. The thresholds differ widely by state.
California
California Penal Code 503 defines the offense: "Embezzlement is the fraudulent appropriation of property by a person to whom it has been intrusted." Under PC 514, embezzlement is punished like theft of property of the same value or kind. Embezzlement of public funds is a felony, and a person convicted of it becomes ineligible for any "office of honor, trust, or profit" in California.
Under PC 487, grand theft applies when the value taken exceeds $950. For employees specifically, PC 487(b)(3) makes it grand theft when money or property taken by a servant, agent or employee from an employer "aggregates nine hundred fifty dollars ($950) or more in any 12 consecutive month period." Small transactions can add up to a grand theft charge over a year.
Texas
Texas Penal Code 31.02 merges embezzlement into a single theft offense. The grade depends on value under PC 31.03(e):
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$2,500 to under $30,000: state jail felony
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$30,000 to under $150,000: third-degree felony
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$150,000 to under $300,000: second-degree felony
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$300,000 or more: first-degree felony
Federal cases
Some embezzlement cases are charged in federal court. There, the dollar loss drives the sentencing guideline range. In 2024, the U.S. Sentencing Commission's Amendment 827 (effective November 1, 2024) moved the definitions of "loss" (actual loss, intended loss and reasonably foreseeable pecuniary harm) and the rule that loss is the greater of actual or intended loss from the commentary into the text of guideline §2B1.1. The Commission did this to make loss calculations consistent across circuits after Kisor v. Wilkie.
In every system, the loss figure is usually the main fight. It sets the charge grade, it shapes the sentence, and it becomes the restitution number. Defense attorneys often go line by line through the employer's audit to separate actual losses from transactions that were authorized, repaid or simply undocumented.
Does paying back embezzled money stop charges?
Repayment does not erase the offense, but in California, its timing can matter at sentencing. Repaying, or offering to repay, before formal charges are filed allows the judge to reduce punishment. Intending to repay later does not.
California PC 512 says intent to restore the property is "no ground of defense or mitigation of punishment, if it has not been restored before an information has been laid before a magistrate, or an indictment found." PC 513 adds that if, before an information or indictment, the accused "voluntarily and actually restores or tenders restoration" of the property, "or any part thereof," that is not a defense, "but it authorizes the court to mitigate punishment, in its discretion."
Two practical points follow. First, partial repayment counts under PC 513. Second, the window closes when the formal charging document is filed. This is the biggest choice point in many state cases, and it should be made with a lawyer, since a repayment can also be read as an admission.
Federal law works differently. As discussed below, restitution is mandatory in federal fraud and property cases whether or not anything was paid back early.
How do plea negotiations handle restitution?
In federal court, restitution for property and fraud offenses is mandatory. Under 18 U.S.C. 3663A(a)(1), the court "shall order" restitution for offenses including "an offense against property under this title ... including any offense committed by fraud or deceit." Section 3663A(a)(3) also requires restitution to persons other than the victim "if agreed to by the parties in a plea agreement."
Plea deals can reach past the counts of conviction. 18 U.S.C. 3663(a)(3) provides: "The court may also order restitution in any criminal case to the extent agreed to by the parties in a plea agreement." The DOJ Justice Manual, section 9-16.320, tells federal prosecutors to consider seeking full restitution to all victims of all charged counts, regardless of which count the defendant pleads to.
That means pleading to one count does not necessarily limit restitution to that count's dollar amount. The restitution language in a plea agreement deserves as much attention as the charge itself.
Civil compromise for some California misdemeanors
For lower-value California cases charged as misdemeanors, PC 1377 allows a case to be resolved through a civil compromise with the victim, when the victim has a civil remedy. There are exceptions, including offenses committed "With an intent to commit a felony," offenses against officers of justice, against family or household members, and against elders, among others. This option is only possible at the misdemeanor level.
What sentence do people get for embezzlement in federal court?
The U.S. Sentencing Commission's FY2025 Quick Facts cover 4,804 federal theft, property destruction and fraud cases, out of 66,662 federal cases overall. That category is up 13% since FY2021. Key figures:
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Median loss: $239,730. 7% of cases involved $6,500 or less; 20% involved more than $1.5 million.
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Average sentence: 23 months. 75% were sentenced to prison.
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41% of sentences fell within the guideline range and 58% fell below it.
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40% were downward variances, averaging a 56% reduction. 14% were substantial-assistance departures, averaging a 69% reduction.
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70% of defendants were male, the average age was 42, and 74% had little or no prior criminal record.
Most of these defendants had little or no record, and a majority received sentences below the guideline range. Because loss drives the range, a successful challenge to the loss number can move the sentence significantly.
The restitution figure can come after sentencing
Under 18 U.S.C. 3664, the probation officer's presentence report must include restitution information. If losses are not yet known, the final determination can be set "not to exceed 90 days after sentencing" (3664(d)(5)). California has a similar mechanism: under PC 1202.4(f), "The court shall order full restitution," and if the loss can't be determined at sentencing, the court can fix the amount later.
Is restitution reduced if you can't afford to pay?
No. Both federal law and California law set the restitution amount at the full loss, without regard to the defendant's finances. Federal law does, however, consider finances when setting the payment schedule.
Federal restitution is ordered "in the full amount of each victim's losses ... without consideration of the economic circumstances of the defendant" (18 U.S.C. 3664(f)(1)(A)). The payment schedule, though, does take into account the defendant's resources, projected earnings and other obligations (3664(f)(2)). In California, PC 1202.4(g) says: "A defendant's inability to pay shall not be a consideration in determining the amount of a restitution order."
Can restitution be discharged in bankruptcy?
No. Under 11 U.S.C. 523, debts "for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny" (523(a)(4)) and "any payment of an order of restitution issued under title 18" (523(a)(13)) cannot be discharged.
Federal restitution also lasts a long time. Under 18 U.S.C. 3613, liability ends at the later of 20 years from entry of judgment or 20 years after release from imprisonment, or at death. Even then, the estate remains liable for any remaining balance.
Checklist: the choices at each stage
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The internal interview. Know that a private employer's interview carries no Miranda warning. Public employees should ask whether Garrity applies. Consider getting a lawyer before the meeting, not after.
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Signing documents. Written statements, investigation summaries and repayment agreements can become evidence. Have counsel review them first.
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Repayment pressure. Note whether anyone ties repayment to avoiding a police referral. In California, a lawyer cannot threaten criminal charges to gain an advantage in a civil dispute.
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The police call. Decide with counsel whether to speak to detectives at all.
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Timing of repayment. In California, actual repayment or an offer to repay, even partial, before an information or indictment allows the judge to mitigate punishment.
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The loss figure. Challenge the employer's audit numbers. Loss drives the charge grade, the sentence and the restitution amount.
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Plea terms. Read the restitution language closely. Federal plea deals can include restitution beyond the counts pleaded to.
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The payment schedule. The federal restitution total ignores ability to pay, but the schedule does not. Document income and obligations.
Related reading
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How Families Can Challenge a Gang Label Before It Follows a Teen to Court
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Is Your Old Shoplifting Record About to Be Sealed in Virginia?
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What Happens When the Victim Wants to Drop Domestic Violence Charges?
Sources
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ACFE press release: Occupational Fraud 2026: A Report to the Nations
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San Diego County Bar Association, Ethics in Brief: New Rule of Professional Conduct 3.10
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California Penal Code ch. 6 (Embezzlement), sections 503, 512, 513, 514
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USSC Quick Facts: Theft, Property Destruction & Fraud (FY2025)
Note: This article contains AI-assisted content and has been reviewed by our editorial team.
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