New Jersey Federal Embezzlement, Theft of Government Funds & Bankruptcy Fraud Lawyer

Embezzlement cases usually involve people who were trusted: a township finance officer, a bookkeeper at a nonprofit, a bank teller, a union official, a contractor on a government project or a business owner going through bankruptcy. When the money involved comes from the federal government, from a federally insured bank or from an organization that receives federal funding, what might otherwise be a state theft case can become a federal felony prosecuted by the U.S. Attorney’s Office in Newark, Trenton or Camden.

Federal embezzlement and theft cases are document-driven. They are built on bank records, accounting entries, emails and forensic audits, and the amount of loss drives the sentence. A New Jersey federal embezzlement lawyer can challenge how the government calculates loss, identify legitimate explanations for transactions and work toward a resolution that limits prison exposure and restitution.

Theft of Public Money or Property – 18 U.S.C. § 641

Section 641 makes it a crime to embezzle, steal, purloin or knowingly convert to your own use, or without authority to sell or dispose of, any money, record or thing of value belonging to the United States or any federal department or agency. It also covers knowingly receiving or keeping such property with intent to convert it.

Common § 641 cases include:

• Continuing to collect a deceased relative’s Social Security or veterans benefits
• Theft of federal property by employees or contractors, including equipment from military bases
• Receiving disability or benefit payments while concealing work or income
• Cashing or depositing U.S. Treasury checks issued to someone else

If the value exceeds $1,000, the offense is a felony punishable by up to 10 years in prison. If the value is $1,000 or less, it is a misdemeanor punishable by up to one year. Benefits fraud cases often overlap with the issues described on our PPP, EIDL and government benefits fraud page.

Theft from Programs Receiving Federal Funds – 18 U.S.C. § 666

Section 666 reaches far beyond federal agencies. It applies to agents of any organization, state or local government, or Indian tribal government, or any agency of one, that receives more than $10,000 in federal benefits in a one-year period under a federal program. In New Jersey, that includes most municipalities, school districts, county agencies, housing authorities, public universities, hospitals and many nonprofits.

An agent of such an organization violates § 666 by embezzling, stealing, obtaining by fraud, or intentionally misapplying property worth $5,000 or more that is owned by or under the care, custody or control of the organization. The money stolen does not have to be federal money itself; it is enough that the organization received the required federal funds. The offense carries up to 10 years in prison.

Section 666 is also used to prosecute bribery of state and local officials. In Snyder v. United States (2024), the Supreme Court held that § 666 covers bribes, meaning payments agreed to before an official act, but not gratuities paid afterward as a token of appreciation. For more on these cases, see our public corruption and bribery page.

Bank Embezzlement – 18 U.S.C. § 656

Officers, directors, agents and employees of federally insured banks and credit unions who embezzle, abstract, purloin or willfully misapply bank funds can be charged under § 656. The maximum penalty is 30 years in prison and a $1 million fine when more than $1,000 is involved, and up to one year when $1,000 or less is involved. These cases often arise from teller drawer shortages, unauthorized loans to friends or relatives and manipulation of dormant accounts, and are frequently charged together with bank fraud.

Employee Benefit Plan and Union Embezzlement

Embezzling or converting money from a pension, health or welfare plan covered by ERISA is charged under 18 U.S.C. § 664 and carries up to five years. Union officers and employees who embezzle union funds can be charged under 29 U.S.C. § 501(c), which also carries up to five years. These cases are commonly investigated by the U.S. Department of Labor’s Employee Benefits Security Administration, the Office of Labor-Management Standards and the Labor Department’s Office of Inspector General.

Bankruptcy Fraud – 18 U.S.C. §§ 152, 157 and 1519

Filing for bankruptcy requires full and truthful disclosure under penalty of perjury. Federal prosecutors, often on referral from the U.S. Trustee Program, charge bankruptcy fraud when debtors or others:

• Conceal assets from the trustee or creditors, such as cash, vehicles, real estate or business interests
• Make false oaths or false statements in schedules, at the meeting of creditors or in testimony
• Transfer property to relatives or friends before filing to keep it from creditors
• File multiple petitions using false names or Social Security numbers

Concealment and false statements under 18 U.S.C. § 152 and a bankruptcy fraud scheme under § 157 each carry up to five years in prison. Destroying, altering or falsifying records in contemplation of a bankruptcy case can be charged under 18 U.S.C. § 1519, which carries up to 20 years.

How Sentences Are Calculated: The Loss Amount

Most federal embezzlement and theft offenses are sentenced under § 2B1.1 of the U.S. Sentencing Guidelines. The guideline begins with a base offense level and then adds levels based on the amount of loss, which is the greater of actual or intended loss. For example, a loss over $40,000 adds 6 levels, over $250,000 adds 12 levels, and over $1.5 million adds 16 levels. Additional increases can apply for abuse of a position of trust, sophisticated means, a large number of victims or substantial financial hardship to victims.

Because loss drives the sentence, the defense often focuses on it. Money that was repaid before the offense was detected, legitimate business expenses, amounts outside the statute of limitations and double counting in the government’s spreadsheet can all reduce the loss figure and the guideline range. Learn more on our page explaining the federal sentencing guidelines.

Restitution, Forfeiture and Other Consequences

In most federal embezzlement cases, restitution is mandatory under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A. Courts must order the full amount of the victim’s loss regardless of the defendant’s ability to pay, although a payment schedule may be set. The government can also seek forfeiture of property traceable to the offense. A conviction may lead to loss of public employment and pension rights, debarment from government contracting, loss of professional licenses and, for non-citizens, immigration consequences.

Defenses to Federal Embezzlement and Theft Charges

Depending on the facts, defenses may include:

• Authorization – the payments, bonuses, loans or expenses were approved or consistent with past practice
• Lack of intent – errors in bookkeeping, sloppy records or a good faith belief that you were entitled to the money
• Jurisdictional elements – the organization did not receive more than $10,000 in federal benefits in the relevant year, or the property was worth less than $5,000 under § 666
• Value and loss – challenging the government’s accounting and the amount attributed to you
• Identity – others had access to the accounts, passwords or checkbook
• Statute of limitations – some transactions may be outside the five-year limit in 18 U.S.C. § 3282

If you have been contacted by an inspector general, received a subpoena or been told an audit has been referred to federal prosecutors, see our guide to federal investigations and target letters and contact us before speaking with investigators.

Related Federal Defense Guides

• Federal bank fraud
• PPP, EIDL and government benefits fraud
• Public corruption and bribery
• Federal wire fraud
• How the federal sentencing guidelines work

Frequently Asked Questions

What is the difference between embezzlement and theft?

Embezzlement involves taking money or property that was lawfully entrusted to you, such as an employer’s funds, while theft generally involves taking property you never had lawful possession of. Federal statutes such as 18 U.S.C. § 641 cover both.

Can I be charged federally for stealing from a town or school district?

Yes. If the town, school district or agency received more than $10,000 in federal funds in a one-year period and the theft involved $5,000 or more, the case can be charged under 18 U.S.C. § 666, which carries up to 10 years in prison.

Will paying the money back make the charges go away?

Repayment does not erase the crime, but it can matter. Money repaid before the offense was detected may reduce the loss amount under the Sentencing Guidelines, and prompt repayment can influence charging decisions and sentencing.

Is receiving a deceased parent’s Social Security payments a crime?

It can be. Knowingly keeping and spending Social Security or other federal benefits paid after a beneficiary’s death can be charged as theft of government funds under 18 U.S.C. § 641. Amounts over $1,000 make it a felony.

What happens if I hide assets in bankruptcy?

Concealing assets or making false statements in a bankruptcy case can be charged under 18 U.S.C. § 152 and carries up to five years in prison. The bankruptcy discharge can also be denied or revoked.