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The Differences Between Business Fraud And Embezzlement

On Behalf of | Aug 8, 2018 | Business Law

In the world of business and finance there are a variety of terms that may seem similar but actually describe very different things. Business fraud and embezzlement are two of these seemingly similar terms.

Business fraud and embezzlement, though somewhat alike, are different in their own aspects. Both terms involve illegal activities that take advantages of situations or people. Additionally, both terms involve a specific party benefiting from an illegal activity.

To better understand the difference between the two terms, it is best to learn the definitions and understand what each one is by itself.


The FBI categorizes a many crimes under the umbrella term “business fraud”. With business fraud, illegal business practices are performed under the mask that the practices are completely legal and ordinary.

These illegal practices are beneficial to the people that perform them but fool and harm people who are purchasing from the business. Cases of business fraud usually involve deception, falsifying, and thievery. In business fraud scenarios, an entity usually is expecting to receive a specific thing or outcome.

During the transaction, the business will fail to deliver the proper thing to the expecting entity and may not deliver anything at all.


Embezzlement is thievery and involves withholding assets that do not belong to the embezzler. In embezzlement cases, a party places their trust into another party to hold an asset.

When it comes time for the embezzler to return the asset to the trusting party, they do not deliver the specific asset. Due to its financial nature, embezzlement classifies as a type of financial fraud and is also known as a kind of white collar crime.

Unlike typical forms of thievery, embezzlement does not involve any type of physical harm or intimidation.


The key difference between business fraud and embezzlement is the fact that embezzlement involves a party placing trust in another party to hold a specific asset or group of assets; business fraud is a transaction where something is deliberately not delivered as expected.

Both business fraud and embezzlement are highly illegal theft activities that can be punished under criminal and civil law. Both types of thefts may be handled differently in a court of law due to the type of evidence needed to prove that a crime occurred. Once a crime is proven however, both kinds of theft can lead to a large jail sentence.


Having a Houston business litigation attorney helps to protect your business when you suffer monetary loss. As a business owner, you should know how to seek compensation for the damages to your business as a result of fraud or embezzlement. At Patterson, P.C., we’re here to help.