Criminal Resource Manual 870 Embezzlement against Estate -- 18 U.S.C. 153

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870 Embezzlement against Estate -- 18 U.S.C. § 153

This section prohibits (1) embezzling property and (2) secreting or destroying any document belonging to the estate of the debtor. Unlike 18 U.S.C § 152(8), only documents which are property of the estate are covered by this section. The Bankruptcy Reform Act of 1994 made substantial changes to this section. Section 153 was changed to extend coverage to more individuals who are in a position to embezzle funds from bankruptcy estates. The law now includes anyone who has access to property or documents of the estate by virtue of their participation in the administration of the estate in some official capacity. It also, for the first time, specifically covers employees and agents of those who have this access.

18 U.S.C. § 153 provides:

Whoever knowingly and fraudulently appropriates to his own use, embezzles, spends, or transfers any property or secretes or destroys any document belonging to the estate of a debtor which came into his charge as trustee, custodian, marshal, or other officer of the court, shall be fined... or imprisoned... or both.

The statute reaches all property that a court officer receives by reason of his or her position, regardless of whether it is ultimately determined to be property of the estate. Meagher v. United States, 36 F.2d 156 (9th Cir. 1929).

The statute also prohibits the destruction or concealment of documents belonging to the bankruptcy estate. Thus documents owned by third parties, even though they may relate to debts or assets of the bankruptcy estate, are excluded.

PRACTICE TIP. Where there is little evidence of intent to defraud, a prosecution for violating the general embezzlement statute, 18 U.S.C. § 645, should be considered. Although Section 645 covers only money, it encompasses employees and does not require proof of a fraudulent intent. United States v. Sharpe, 996 F.2d 125 (6th Cir.), cert. denied, 114 S. Ct. 400 (1993).

CAVEAT: Unlike subsection 18 U.S.C. § 152(8) this statute does not use the words "recorded information." Thus a possible argument could be made that information stored on a computer is not covered by this statute.

October 1997	Criminal Resource Manual 870