Stealing Government Property
When Can a Government Employee, Contractor, or Health Care Provider Be Charged with Stealing Government Property?
Theft and embezzlement of government property are serious federal offenses. Both crimes carry the potential for up to 10 years of federal imprisonment, plus substantial fines, and it is not unusual for defendants to face multiple counts of theft or embezzlement in a single federal case. For individuals and business organizations alike, executing a strategic defense needs to be their top priority at the first sign of a federal investigation; and, if you are facing a federal grand jury indictment or you have already been charged, you need to speak with a federal defense attorney immediately.
Stealing Government Property: 18 U.S.C. § 641 and 18 U.S.C. § 666
There are two primary federal statutes that prohibit theft and embezzlement of government property: 18 U.S.C. § 641 and 18 U.S.C. § 666. Under 18 U.S.C. § 641:
“Whoever embezzles, steals, purloins, or knowingly converts to his use or the use of another, or without authority, sells, conveys or disposes of any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof . . . [s]hall be fined under this title or imprisoned not more than ten years, or both . . . .”
Section 641 imposes equal penalties for receiving, concealing, or retaining government property, “with intent to convert it to his use or gain,” and with knowledge that it has been obtained from the government illegally. The maximum prison sentence is reduced to one year in cases involving government property worth $1,000 or less.
Under 18 U.S.C. § 666 (Theft or Bribery Concerning Programs Receiving Federal Funds), “agents” of private businesses, and state, local and tribal government employees can be prosecuted for embezzling, stealing, obtaining by fraud, or “otherwise without authority knowingly convert[ing] federal program funds. As explained by the U.S. Department of Justice (DOJ), “Congress created 18 U.S.C. § 666 to ensure the integrity of Federal program funds administered through private organizations and state, local, or Indian tribal government agencies.”
Similar to the penalty provisions in 18 U.S.C. § 641, the prohibitions in 18 U.S.C. § 666 are subject to certain thresholds; however, as a practical matter, these thresholds are low enough that they are unlikely to be a factor in any investigation that federal authorities choose to pursue.
The Federal Definition of Embezzlement
The federal definition of the crime of embezzlement was established by the U.S. Supreme Court in the 1895 case of Moore v. United States, 160 U.S. 269 (“Embezzlement is the fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come.”). Since then, subsequent cases have established six distinct elements that must be proven in order for a person to be convicted of embezzlement under 18 U.S.C. § 641:
- A fiduciary relationship between the defendant and the government or the property owner (in cases of embezzlement of funds legally acquired from the federal government);
- The property at issue qualifies as government property (“any record, voucher, money, or thing of value of the United States or any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof”);
- The property belongs or previously belonged to the United States;
- The defendant acquired the property “by virtue of his or her employment;”
- The defendant engaged in “fraudulent conversion or appropriation of [the government property] to his own use;” and,
- The defendant had the intent to deprive the government or other owner of its use of the property at issue.
As the DOJ explains, “[T]he intent required to violate the law is not an intent to deprive another of his property permanently. Therefore, even if an individual intends to return the property, his actions are still criminal. In short, restitution is no defense to embezzlement.”
The Federal Definition of Steal, Purloin, or Knowingly Convert
Despite appearing in 18 U.S.C. § 641 and 18 U.S.C. § 666, “[t]he terms to steal or to purloin have no established meaning in the common law.” As explained in the DOJ’s Criminal Resource Manual, “these terms refer generally to the crime of larceny and were developed in modern pleading to broaden larceny beyond its strict common law definition . . . . [to] include closely related property offenses, such as theft by false pretenses.” Under federal common law, the crime of larceny consists of four elements: (1) wrongful taking (2) of property belonging to another (3) without the owner’s consent, and (4) with the intent to permanently deprive the owner of its property.
The inclusion of “knowingly convert” in 18 U.S.C. § 641 and 18 U.S.C. § 666 is intended to expand the scope of these statutes beyond even the expanded definition of larceny encompassed by “steal or purloin.” As summarized by the DOJ, this clause, “prohibit[s] all other deliberate wrongful uses of government property.”
When Does a Transaction or Other Act Amount to Stealing Government Property?
The definitions under 18 U.S.C. § 641 and 18 U.S.C. § 666 are as complex as they are broad; and, as a result, many people struggle to understand what exactly these statutes prohibit. In short, obtaining any government property by any unlawful means is likely to trigger the provisions of one or both statutes. Some of the most-common examples of cases prosecuted under 18 U.S.C. § 641 and 18 U.S.C. § 666 include:
- Medicare, Medicaid, Tricare, VA, and DOL health care fraud
- Government contract fraud (including construction and military contract fraud)
- Submitting false information to the government in order to obtain payment from a federal benefit program
Importantly, in addition to pursuing charges under 18 U.S.C. § 641 and/or 18 U.S.C. § 666, federal prosecutors will often pursue charges under other statutes that are more-specific to the specific factual allegation involved. For example, in health care fraud investigations, providers will frequently face prosecution under statutes including the False Claims Act, the Anti-Kickback Statute, the Stark Law, and the federal health care fraud statute (18 U.S.C.§ 1347). Most cases of alleged theft or embezzlement of government property will implicate the broad prohibitions of the federal mail fraud, wire fraud, and money laundering statutes as well.
Defenses to Allegations of Stealing Government Property Under 18 U.S.C. § 641 and 18 U.S.C. § 666
Although 18 U.S.C. § 641 and 18 U.S.C. § 666 are both broad statutes, there are a number of potential defenses to allegations of stealing government property. Under Section 641 in particular, the DOJ has acknowledged that, “In many cases . . . prosecution is impossible because title has passed to the recipient before the property is stolen, or the funds are so commingled that the Federal character of the funds cannot be shown.” Although Section 666 is largely intended to fill this “gap” in the federal government’s law enforcement power, presenting a successful defense under Section 641 can still significantly reduce the risks of prosecution and the DOJ’s leverage in plea deal negotiations.
Other potential defenses to criminal culpability under 18 U.S.C. § 641 and 18 U.S.C. § 666 include:
- Lack of Evidence of Intent – Both statutes require the government to present evidence of the defendant’s “specific intent” to commit the crime alleged. If evidence of intent is lacking, or if the evidence suggests that any improper billings were made accidentally and in good faith, then prosecution is unwarranted.
- Lack of Other Necessary Evidence – In order to obtain a conviction, federal prosecutors must prove each element of the alleged offense. As a defendant, raising a reasonable doubt about even a single element of the government’s case is enough to prevent a guilty verdict at trial (and perhaps prevent a trial altogether).
- Constitutional Violations – Constitutional violations, including conducting searches and seizures in violation of suspects’ Fourth Amendment Rights, can result in probative evidence being deemed inadmissible in federal court. If the evidence that prosecutors need to prove your guilt is inadmissible in court, then you do not deserve to be tried.
In all cases, avoiding the risk of long-term imprisonment requires a proactive and strategic defense. At Oberheiden, P.C., our federal criminal defense lawyers are highly skilled at defending clients accused of embezzlement, theft, and conversion of government property, and several of our attorneys used to prosecute these cases at the DOJ before entering private practice. If you are being accused of stealing government property, you need experienced legal representation, and we encourage you to contact us right away for a confidential consultation.
Speak with a Federal Criminal Defense Lawyer at Oberheiden, P.C.
For more information about what it means to be accused of stealing government property and the defenses that you have available, please call 214-469-9009 or contact us online to speak with one of our federal criminal defense attorneys. Your initial consultation is free and confidential, and our attorneys can take action to defend you immediately if necessary.