Embezzlement is not a term you will find in the Texas Penal Code. Texas prosecutes what other states call embezzlement under its general theft statute (Penal Code §31.03) along with related offenses covering misapplication of fiduciary property and fraudulent conduct. Understanding which statute applies, what the prosecution must prove, and what the penalty exposure actually is requires working through the current law carefully, because the penalty thresholds were significantly revised in 2015 and the information floating around online is frequently wrong.
If you are facing charges involving alleged theft or misappropriation in a position of trust, this piece explains the legal framework, the current penalties, and where a state case can become a federal one.
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How Texas Prosecutes Embezzlement
Texas Penal Code §31.03 defines theft as unlawfully appropriating property with intent to deprive the owner of it. The statute applies whether the defendant took property that did not belong to them, or appropriated property they had legitimate access to but exceeded their authority in taking.
The trust relationship that characterizes embezzlement (i.e. an employee stealing from an employer, a bookkeeper diverting client funds, a financial officer misappropriating company assets) is captured in Texas law not by a separate embezzlement statute but by the circumstances surrounding how the defendant obtained access to the property. The prosecution must prove that the defendant had lawful possession or access to the property, that they appropriated it for their own benefit, and that they did so with the intent to deprive the owner permanently.
A related but distinct offense is Misapplication of Fiduciary Property under Penal Code §32.45. This statute applies specifically to situations where a person holds property in a fiduciary capacity (i.e. as a trustee, executor, administrator, guardian, or similar role) and intentionally or knowingly misapplies that property in a way that involves substantial risk of loss to the owner. Where general theft requires proof of intent to permanently deprive, misapplication of fiduciary property focuses on the misuse of property held in trust, which can be an easier charge for prosecutors to prove in certain professional and financial contexts.
What the Prosecution Must Prove
In any embezzlement-type prosecution, the prosecution must establish each element beyond a reasonable doubt:
Lawful access to the property. The defendant must have had legitimate access to the funds or property as part of their role. This distinguishes embezzlement-type theft from straightforward theft in that the defendant was authorized to handle the property, not to steal it.
Appropriation. The defendant took, transferred, or exercised control over the property in a way that exceeded their authority. This includes direct theft, unauthorized transfers, falsifying records to conceal diversions, and using funds for personal expenses while reporting them as business expenses.
Intent to deprive. The prosecution must prove the defendant intended to permanently deprive the owner of the property. This is the element most frequently contested. Bookkeeping errors, misunderstandings about authorization, and legitimate business expenditures that were improperly categorized may lack the intent element. The prosecution cannot simply point to missing funds. They must show the defendant meant to take them.
Knowledge. The defendant must have known what they were doing. Accidental misappropriation is not theft.
Current Penalty Tiers Under Texas Law
Texas revised its theft penalty thresholds in 2015. Many online resources (including legal blogs) still reflect the pre-2015 thresholds, which is why defendants and their families frequently have incorrect information about their exposure. The current tiers under Penal Code §31.03 are:
- Class C misdemeanor — value under $100; fine only, up to $500
- Class B misdemeanor — value $100 to under $750; up to 180 days in county jail and $2,000 fine
- Class A misdemeanor — value $750 to under $2,500; up to one year in county jail and $4,000 fine
- State jail felony — value $2,500 to under $30,000; 180 days to two years in state jail and up to $10,000 fine
- Third-degree felony — value $30,000 to under $150,000; 2 to 10 years in state prison and up to $10,000 fine
- Second-degree felony — value $150,000 to under $300,000; 2 to 20 years in state prison and up to $10,000 fine
- First-degree felony — value $300,000 or more; 5 to 99 years or life in state prison and up to $10,000 fine
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The Aggregation Rule — How Small Amounts Become Big Charges
One of the most important and frequently misunderstood aspects of embezzlement prosecutions is the aggregation rule under Penal Code §31.09.
If a defendant commits multiple acts of theft pursuant to the same scheme or continuing course of conduct, the amounts can be aggregated (added together) to reach a single higher penalty tier. This means an employee who took $500 per month over three years has not committed thirty-six Class A misdemeanors. They have committed one first-degree felony. The prosecution charges the total amount taken as a single offense.
Aggregation dramatically changes the exposure in embezzlement cases. A defendant who believes they are facing a misdemeanor because each individual transaction was small may in fact be facing a felony once the prosecution totals the alleged conduct. Understanding this early is essential to evaluating the actual risk and making informed decisions about how to proceed.
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When a State Embezzlement Case Becomes a Federal Case
Texas embezzlement charges can escalate to federal prosecution depending on who was victimized and how the funds flowed. Federal jurisdiction attaches in several common scenarios:
Federally insured financial institutions. Embezzlement from a bank, credit union, or savings institution insured by the FDIC or NCUA is a federal crime under 18 U.S.C. §656 and related statutes, regardless of whether state charges are also filed.
Federal program fraud. Organizations that receive federal funds (including nonprofits, healthcare providers, government contractors, and educational institutions) operate under federal oversight. Misappropriation of funds from these entities can trigger federal theft and fraud charges, including wire fraud (18 U.S.C. §1343) and mail fraud (18 U.S.C. §1341), which carry up to 20 years per count.
Medicare and Medicaid. Healthcare providers who bill government healthcare programs and divert those funds face prosecution under the federal healthcare fraud statute (18 U.S.C. §1347) and the False Claims Act, in addition to potential state charges.
Wire and electronic transfers. Any embezzlement scheme that used electronic transfers, emails, or digital communications crossing state lines may support federal wire fraud charges, which prosecutors favor because each individual transfer can be charged as a separate count.
Federal sentencing for embezzlement cases is governed by the U.S. Sentencing Guidelines §2B1.1, which uses a loss table to calculate the advisory sentencing range. The table escalates significantly with the amount of loss. For example, a case involving over $1.5 million triggers an 18-level enhancement under the Guidelines, which can produce an advisory range of many years in federal prison even for a first-time offender with no criminal history.
At Deandra Grant Law, Of Counsel James Lee Bright is a federal defense attorney with extensive experience in the Northern and Eastern Districts of Texas. Cases that begin as state investigations frequently attract federal attention, particularly when financial institutions, government programs, or large dollar amounts are involved. Having federal defense experience on the team from the beginning (before charges are filed, while the investigation is still active) can be critical.
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Defense Strategies in Embezzlement Cases
Challenging intent. The prosecution must prove the defendant meant to steal. Legitimate business expenses improperly categorized, authorization disputes, and bookkeeping errors may negate intent. The defense examines the full financial record (not just the transactions the prosecution selected) to establish context.
Challenging authorization. If the defendant was authorized to use the funds for the purpose they were used, the appropriation was not unlawful. Authorization disputes require detailed examination of employment agreements, policies, and the scope of the defendant’s financial authority.
Challenging the loss calculation. In cases heading toward federal sentencing or where the dollar amount determines the offense tier, the loss calculation is a critical battleground. Disputed transactions, business expenses that benefit the employer, and amounts that were repaid before charges were filed may reduce the calculated loss which directly affects the offense level and sentencing exposure.
Challenging the aggregation theory. The prosecution’s claim that multiple transactions constitute a single continuing scheme can be contested. If the transactions did not share a common plan or scheme, aggregation may not be appropriate, and the offense level may be significantly lower.
Forensic accounting. Complex embezzlement cases require forensic accounting review of the prosecution’s financial analysis. Government forensic accountants make errors, attribute legitimate expenses to the defendant, and sometimes mischaracterize the financial records. An independent forensic accounting review can expose those errors.
Speak With Deandra Grant Law
Embezzlement charges in Texas involve the intersection of criminal law, financial forensics, and, in many cases, federal exposure that most state criminal defense attorneys are not equipped to evaluate. Deandra Grant Law brings more than 30 years of criminal defense experience to every case. Of Counsel James Lee Bright brings extensive federal defense experience in the Northern and Eastern Districts of Texas for cases that carry federal exposure.
Call (214) 225-7117 or visit texasdwisite.com to schedule a confidential consultation.