New York State Private Investigator Practice Exam

Which scenario best exemplifies embezzlement?

1. A person stealing food from a grocery store

2. An employee diverting company funds into their personal account

3. A manager overestimating sales to receive a bonus

4. A business owner defaulting on his loans

The correct answer is: An employee diverting company funds into their personal account

Embezzlement involves the fraudulent appropriation of funds or property entrusted to an individual's care, often in a workplace setting. The scenario in which an employee diverts company funds into their personal account clearly illustrates this concept. In this case, the employee is misusing their position of trust to take money that rightfully belongs to the company for personal gain. This act constitutes a violation of legal and ethical standards, as the employee is taking advantage of their access to company finances to commit theft. In contrast, the other scenarios do not display the characteristics of embezzlement. Stealing food from a grocery store is straightforward theft and does not involve any trust relationship, while a manager overestimating sales for a bonus may imply dishonesty but does not entail the misappropriation of funds already entrusted to them. Finally, a business owner defaulting on loans represents a failure to pay back borrowed money rather than the fraudulent appropriation of funds. Each of these scenarios lacks the key element of trust and the intention to illegally benefit from that trust, which makes the second option the best example of embezzlement.