Federal Embezzlement Charges: What The Government Hopes You Never Figure Out
Welcome to Spodek Law Group. Our goal is to give you the reality of federal embezzlement charges - not the sanitized version other law firms present, not the legal textbook fiction, but the actual truth about what happens when the federal government decides to prosecute you for taking money from an employer or institution. If you found this page at 2am because you suspect an investigation is coming, or because you just learned that one already started months ago, this is the information that could determine whether you spend the next decade in prison or not.
Here is what nobody explains about federal embezzlement prosecution: the amount you allegedly took matters far less than who you were when you took it. A bank employee faces up to 30 years in federal prison for embezzlement under 18 U.S.C. Section 656. The exact same dollar amount stolen from federal property by someone who is not a bank employee carries a maximum of 10 years under Section 641. Same money. Triple the punishment. The system does not care primarily about the theft - it cares about the betrayal of institutional position.
This is the hidden architecture of federal embezzlement prosecution, and it explains why two people who took identical amounts can receive sentences that differ by decades. The federal system punishes position of trust more severely than it punishes financial loss. And if you do not understand this fundamental reality, you will make decisions during your investigation and prosecution that guarantee the worst possible outcome.
Why Your Position Matters More Than The Amount
Most people facing embezzlement charges focus obsessively on the dollar figure. They think a smaller amount means less time. They are wrong. Heres the thing about federal sentencing that prosecutors dont advertise: the base offense level under the sentencing guidelines increases with loss amount, yes, but the statutory maximum - the ceiling on how long you can serve - is determined by which embezzlement statute applies to your case.
If you were a bank officer, employee, or anyone "connected in any capacity" with an FDIC-insured bank or Federal Reserve bank, you fall under Section 656. Thirty years maximum. One million dollars in fines. If you embezzled from a program recieving federal funds - which includes hospitals, universities, state agencies, nonprofits with federal grants - you fall under Section 666. Ten years maximum, but with broader application than most people realize.
Look at what happened to Robert Kowalski in 2024. He was an attorney who processed loan disbursements at Washington Federal Bank for Savings in Chicago. His scheme contributed to the bank's failure with $66 million in nonperforming loans. The sentence? Twenty-five years in federal prison. Not because sixty-six million is some magic threshold - but becuase his position as a bank-connected attorney placed him under the harshest embezzlement statute.
Compare that to Michelle Wilshire from Hickory, North Carolina. She was a bookkeeper at a family-owned business, not a bank. She embezzled over $900,000 through a Comdata payment processing account over five years. Her sentence? Forty-six months. Less than four years for nearly a million dollars. The difference wasnt the money. It was the statutory framework her position triggered.
This is why the very first question a federal embezzlement defense attorney asks isnt "how much did you take." Its "who were you when you took it."
And it gets worse when you understand how these positions stack. A bank employee who also had fiduciary responsibilities - meaning they were specificaly entrusted to manage accounts or make financial decisions - faces enhanced sentencing under the guidelines on top of the higher statutory maximum. The position of trust enhancement adds 2 more levels to the base offense. So your not just looking at a higher ceiling for punishment. Your looking at a higher floor too.
People who worked at credit unions, mortgage companies, investment firms, or any institution with FDIC insurance often dont realize they fall under the bank embezzlement statute until its too late. They assumed they were "just" an account manager or "just" a loan processor. But "connected in any capacity" is expansive language. Prosecutors use it aggressively. If your employer touched federally insured money, the 30-year statute may apply to you.
The Investigation Running Without Your Knowledge
Heres were people get destroyed in federal embezzlement cases - they dont realize the investigation started months or even years before anyone contacted them. The federal government does not knock on your door the day they suspect something. They watch. They document. They build.
A 2024 case reported by FinCEN illustrates the pattern perfectly. A Suspicious Activity Report - called a SAR - filed by a bank led to the arrest and conviction of a federal government employee for embezzlement. Notice what triggered that investigation. Not the employer calling the FBI. Not a victim complaint. The bank filed a report because transaction patterns looked suspicious. The investigation ran its course before the defendant had any idea it existed.
Your bank files SARs without notifying you. Thats the law. If your financial activity triggers certain patterns - unusual deposits, withdrawals that dont match your income, transfers to accounts you dont normaly use - the bank files a report with FinCEN, and that report can end up on an FBI agent's desk.
Think about that. Your employer hasnt accused you of anything yet. Nobody from law enforcement has contacted you. But the investigation is already running. Federal agents are already pulling your financial records. Forensic accountants are already mapping your transactions. And every day that passes while your unaware, your building a longer and longer trail of behavior that can be used against you.
The typical federal white-collar investigation takes twelve to eighteen months before any arrest or indictment. During that time you might be called into HR for a "routine conversation." You might answer questions from your supervisor about paperwork inconsistancies. You might offer explanations that seem innocent in the moment. Every word you say becomes evidence.
What makes this particuarly devastating is the coordination that happens behind the scenes. The FBI talks to IRS Criminal Investigation. IRS-CI talks to the United States Attorneys office. The AUSA talks to the FBI again. Subpoenas go out to banks, employers, accountants. Grand jury subpoenas compel testimony from coworkers who have no idea what the questions are really about. By the time you learn an investigation exists, the government has often already assembled enough evidence to indict - they're just deciding whether they want to.
And heres something else most people dont realize: once a federal grand jury is convened, you have no right to know about it. No right to present evidence. No right to cross-examine witnesses. Grand jury proceedings are secret by law. The first time many defendants learn about the investigation against them is when they are arrested or recieve a target letter indicating indictment is imminent.
What Your Employers Internal Investigation Really Is
If your employer has called you into a meeting about financial discrepancies, you need to understand something immediately: there is no confidentiality in that conversation.
People beleive that what they tell HR stays with HR. That the "internal investigation" is somehow seperate from criminal prosecution. That explaining yourself to your employer, apologizing, or offering to pay money back will resolve the situation privately. This is not how it works.
Your statements to your employer are not privileged. There is no attorney-client protection. There is no Fifth Amendment shield. When you sit down in that HR conference room and explain what happened, you are creating a documented confession that your employer will hand directly to federal investigators.
Heres the kicker - your employer often has strong incentives to pursue criminal prosecution. If they filed an insurance claim for the losses you caused, the insurance company wants documentation of criminal wrongdoing. If your employer is a public company, they may have reporting obligations. If they recieve federal funds, they may be required to report to agency inspectors general.
That sympathetic HR director who says "lets see if we can work this out" is often building the prosecutions case. The "chance to explain yourself" is an interrogation without Miranda warnings, without a lawyer present, and without any of the protections you would have if you were sitting in an FBI interview room.
What Todd Spodek tells clients facing this situation: say nothing to your employer until you have spoken with a federal criminal defense attorney. The instinct to explain, apologize, and offer to make it right is understandable. Its also legally catastrophic. Every word you say becomes a weapon that will be used against you.
The Restitution Order That Follows You Forever
Even if you survive prosecution - even if you plead to reduced charges or somehow beat the case entirely - the restitution issue follows federal embezzlement defendants like a shadow that never lifts. And what most people dont understand about federal restitution will shock you.
Read that again. One hundred billion dollars. Thats the current amount of outstanding federal restitution that the Government Accountability Office has classified as uncollectable. The defendants ordered to pay it simply cannot. They dont have the money. They will never have the money. And the courts knew this when they ordered it anyway.
Under the Mandatory Victims Restitution Act, federal judges must order full restitution in embezzlement cases. There is no discretion. If the government proves you embezzled $500,000, the judge must order you to pay back $500,000 - even if you have no assets, no income, and no realistic possibility of ever earning that amount.
The law explicitly says restitution cannot be discharged in bankruptcy. Congress made sure of that. So while regular debts can be wiped clean through Chapter 7 or Chapter 13, your restitution obligation survives bankruptcy intact.
And heres the part that keeps defendants awake at night: restitution orders are enforceable for twenty years. Two decades. If you recieve any "substantial resources" during that period - an inheritance, a lawsuit settlement, a lucky lottery ticket - the government can seize it. If your wages are garnished at 25%, they stay garnished. You cannot escape this debt through any legal mechanism available to ordinary creditors.
So what does $100 billion in uncollectable restitution actually mean? It means the system is not designed to make victims whole. Its designed to ensure that convicted defendants never recover financially. The court orders restitution knowing it wont be collected because the restitution order itself is the punishment. Twenty years of financial destruction. Thats the real sentence for federal embezzlement - not just prison time, but a lifetime of economic devastation that follows you out of prison and into whatever remains of your future.
The National Association of Criminal Defense Lawyers has called for reform of federal restitution for exactly this reason. The current system, they argue, "becomes a life sentence that burdens a defendant and their family for years, even after prison and supervised release terms end." It harms peoples ability to earn money, obtain credit, secure housing, and take care of their families. The system knows this. The system does not care. Restitution exists to punish, not to compensate - and understanding that distinction is essential to understanding what your actually facing.
The 40% Statistic Prosecutors Hope You Never Hear
In the research literature on federal embezzlement cases, theres a statistic that defense attorneys know but defendants rarely discover: nearly 40% of federal embezzlement cases are dropped due to insufficient evidence. Four out of ten.
Think about what that number means. The federal government, with its unlimited resources and 93% conviction rate at trial, declines to prosecute almost half of embezzlement investigations. Not because prosecutors are being merciful - federal prosecutors are not known for mercy. Because the evidence wasnt strong enough to guarantee conviction.
This is the window most defendants dont realize exists. Between the start of investigation and the filing of formal charges, there is a period where skilled defense intervention can make the difference between prison and freedom.
What happens during this window? An experienced federal defense attorney can communicate with prosecutors before charges are filed. They can present exculpatory evidence - documentation that contradicts the governments theory. They can challenge forensic accounting conclusions. They can negotiate restitution arrangements that satisfy victims and remove prosecutorial incentive.
The people who end up in federal prison for embezzlement often had opportunities to intervene that they missed because they didnt know they existed. They thought the investigation was secret. They thought nothing could be done until charges were filed. They thought hiring a lawyer early would make them look guilty. By the time they realized they needed help, the 40% window had closed and they were among the 97% who plea or convict.
At Spodek Law Group, we've seen this pattern repeat hundreds of times. The defendants who call us early - sometimes before they even know for certain they're under investigation - have dramatically better outcomes than those who wait until marshals show up at their door.
There is a critical distinction here between state and federal prosecution that most people dont appreciate. In state court, prosecutors have crowded dockets and limited resources. Cases get dismissed for practical reasons. Federal prosecutors are different. They have FBI agents, forensic accountants, unlimited subpoena power, and time. When they decline a case, its not becuase they couldnt win it with more effort. Its becuase the case had genuine weaknesses that a skilled defense attorney could exploit.
The question isnt whether the government will investigate you thoroughly. They will. The question is whether you have representation that can find those weaknesses and exploit them before indictment - or whether youll be facing them alone after charges are filed, when its already too late.
How Sentencing Actually Works In Federal Embezzlement Cases
Lets be honest about what your facing if charges proceed. The federal sentencing guidelines create a point system that determines a recommended sentence range. For embezzlement, the base offense level is 6. Then enhancements get added.
Loss amount is the biggest driver of enhancements. The guidelines table adds offense levels based on loss: 2 levels for more than $6,500, scaling up to 30 additional levels for losses exceeding $550 million. A $500,000 loss adds 14 levels. A $1.5 million loss adds 16 levels.
But loss isnt the only enhancer. Did the offense involve more than ten victims? Add 2 levels. Did it involve sophisticated means? Add 2 levels. Were you in a position of trust that facilitated the crime? Add 2 levels. Did you obstruct justice? Add 2 levels.
Each level matters enormously. The difference between offense level 20 and offense level 26 can be the difference between two years and six years - even with identical criminal histories. And becuase of the way federal sentencing zones work, someone at level 20 might qualify for alternatives to incarceration while someone at level 26 is guarenteed to serve their entire sentence in prison.
The 2024 USSC data shows that 89% of all federal criminal cases result in prison sentences. In fraud and embezzlement specifically, 79% of defendants recieved restitution orders. The average sentence in economic crime cases depends heavily on loss amount and defendant history, but anyone imagining probation for a six-figure embezzlement is usually imagining wrong.
What actualy helps at sentencing? Acceptance of responsibility - genuinely accepting responsibility, not just pleading guilty - can reduce your offense level by 2 or 3 points. Cooperation with the government, if you have information about other crimes or participants, can earn a substantial assistance motion that goes below the guidelines. And critically, making restitution before sentencing - or at least demonstrating ability and willingness to pay - can influence the judge's decision within the guidelines range.
The Path Forward When You Face These Charges
If your reading this because federal embezzlement charges are a real possibility in your life, here is what you need to understand about the path forward.
First: the timeline matters more than almost anything else. If you suspect your under investigation but havent been charged, you have options that dissapear the moment an indictment drops. If your employer is asking questions but hasnt involved law enforcement, you have options that dissapear the moment they make that call. If the FBI has contacted you but formal charges havent been filed, you still have options - but they are narrowing by the day.
Second: what you say matters more than you think. Every conversation with your employer is potentially a prosecution exhibit. Every explanation you offer to investigators without counsel present is a statement they will use against you. The Fifth Amendment exists for a reason, and exercising it is not an admission of guilt - its an assertion of your constitutional rights.
Third: evidence preservation is critical. If you have documentation that contradicts the governments theory - emails showing authorization, accounting records demonstrating legitimate purposes, communications proving someone else had access - you need to preserve that evidence before it dissappears. Companies delete email archives. Systems get upgraded. Memories fade. The evidence that proves your innocent today may not exist six months from now.
The team at Spodek Law Group has handled federal embezzlement cases ranging from five-figure amounts to multi-million dollar prosecutions. We've seen cases dismissed before indictment becuase early intervention made the difference. We've seen sentences dramatically reduced because strategic plea negotiation protected our clients from the worst enhancements. We've seen clients avoid prison entirely through restitution arrangements and cooperation agreements that prosecutors found acceptable.
Your case has its own facts, its own complexities, its own opportunities. But the fundamental reality of federal embezzlement prosecution remains: the sooner you understand the system working against you, the more options you have. The longer you wait, the fewer choices remain.
They've been building their case for months. You have days to start building yours. 212-300-5196.
