Fraud and embezzlement in Charlotte, North Carolina

If any person exercising a public trust or holding a public office, or any guardian, administrator, executor, trustee, or any receiver, or any other fiduciary, or any officer or agent of a corporation, or any agent, consignee, clerk, bailee or servant, except persons under the age of 16 years, of any person, shall embezzle or fraudulently or knowingly and willfully misapply or convert to his own use, or shall take, make away with or secrete, with intent to embezzle or fraudulently or knowingly and willfully misapply or convert to his own use any money, goods or other chattels, bank note, check or order for the payment of money issued by or drawn on any bank or other corporation, or any treasury warrant, treasury note, bond or obligation for the payment of money issued by the United States or by any state, or any other valuable security whatsoever belonging to any other person or corporation, unincorporated association or organization which shall have come into his possession or under his care, he shall be guilty of a felony. If the value of the property is one hundred thousand dollars ($ 100,000) or more, the person is guilty of a Class C felony. If the value of the property is less than one hundred thousand dollars ($ 100,000), the person is guilty of a Class H felony.

If any officer, agent, or employee of the State, or other person having or holding in trust for the same any bonds issued by the State, or any security, or other property and effects of the same, shall embezzle or knowingly and willfully misapply or convert the same to his own use, or otherwise willfully or corruptly abuse such trust, such offender and all persons knowingly and willfully aiding and abetting or otherwise assisting therein shall be guilty of a felony. If the value of the property is one hundred thousand dollars ($ 100,000) or more, a violation of this section is a Class C felony. If the value of the property is less than one hundred thousand dollars ($ 100,000), a violation of this section is a Class F felony.

If an officer, agent, or employee of an entity listed below, or a person having or holding money or property in trust for one of the listed entities, shall embezzle or otherwise willfully and corruptly use or misapply the same for any purpose other than that for which such moneys or property is held, such person shall be guilty of a felony. If the value of the money or property is one hundred thousand dollars ($ 100,000) or more, the person is guilty of a Class C felony. If the value of the money or property is less than one hundred thousand dollars ($ 100,000), the person is guilty of a Class F felony. If any clerk of the superior court or any sheriff, treasurer, register of deeds or other public officer of any county, unit or agency of local government, or local board of education shall embezzle or wrongfully convert to his own use, or corruptly use, or shall misapply for any purpose other than that for which the same are held, or shall fail to pay over and deliver to the proper persons entitled to receive the same when lawfully required so to do, any moneys, funds, securities or other property which such officer shall have received by virtue or color of his office in trust for any person or corporation, such officer shall be guilty of a felony. If the value of the money, funds, securities, or other property is one hundred thousand dollars ($ 100,000) or more, the person is guilty of a Class C felony. If the value of the money, funds, securities, or other property is less than one hundred thousand dollars ($ 100,000), the person is guilty of a Class F felony. The provisions of this section shall apply to all persons who shall go out of office and fail or neglect to account to or deliver over to their successors in office or other persons lawfully entitled to receive the same all such moneys, funds and securities or property aforesaid. The following entities are protected by this section: a county, a city or other unit or agency of local government, a local board of education, and a penal, charitable, religious, or educational institution.

If any treasurer or other financial officer of any benevolent or religious institution, society or congregation shall lend any of the moneys coming into his hands to any other person or association without the consent of the institution, association or congregation to whom such moneys belong; or, if he shall fail to account for such moneys when called on, he shall be guilty of a felony. If the violation of this section involves money with a value of one hundred thousand dollars ($ 100,000) or more, the person is guilty of a Class C felony. If the violation of this section involves money with a value of less than one hundred thousand dollars ($ 100,000) or less, a violation of this section is a Class H felony.

If any president, secretary, treasurer, director, engineer, agent or other officer of any railroad company shall embezzle any moneys, bonds or other valuable funds or securities, with which such president, secretary, treasurer, director, engineer, agent or other officer shall be charged by virtue of his office or agency, or shall in any way, directly or indirectly, apply or appropriate the same for the use or benefit of himself or any other person, state or corporation, other than the company of which he is president, secretary, treasurer, director, engineer, agent or other officer, for every such offense the person so offending shall be guilty of a felony, and on conviction in the superior or criminal court of any county through which the railroad of such company shall pass, shall be punished as a felon. If the value of the money, bonds, or other valuable funds or securities is one hundred thousand dollars ($ 100,000) or more, a violation of this section is a Class C felony. If the value of the money, bonds, or other valuable funds or securities is less than one hundred thousand dollars ($ 100,000), a violation of this section is a Class H felony.

Any person engaged in a partnership business in the State of North Carolina who shall, without the knowledge and consent of his copartner or copartners, take funds belonging to the partnership business and appropriate the same to his own personal use with the fraudulent intent of depriving his copartners of the use thereof, shall be guilty of a felony. Appropriation of partnership funds with a value of one hundred thousand dollars ($ 100,000) or more by a partner is a Class C felony. Appropriation of partnership funds with the value of less than one hundred thousand dollars ($ 100,000) by a partner is a Class H felony.

If any surviving partner shall willfully and intentionally convert any of theproperty, money or effects belonging to the partnership to his own use, and refuse to account for the same on settlement, he shall be guilty of a felony. If the property, money, or effects has a value of one hundred thousand dollars ($ 100,000) or more, a violation of this section is a Class C felony. If the property, money, or effects has a value of less than one hundred thousand dollars ($ 100,000), a violation of this section is a Class H felony.

If any officer appropriates to his own use the State, county, school, city or town taxes, he shall be guilty of embezzlement, and shall be punished as a felon. If the value of the taxes is one hundred thousand dollars ($ 100,000) or more, a violation of this section is a Class C felony. If the value of the taxes is less than one hundred thousand dollars ($ 100,000), a violation of this section is a Class F felony.

Embezzlement and false pretenses are different offenses with the same punishment structure

In North Carolina the line between embezzlement and obtaining property by false pretenses is drawn by how the accused came to hold the property in the first place. Embezzlement under G.S. 14-90 presupposes lawful possession, and the statute reaches defined categories of people rather than anyone loosely described as trusted: a person exercising a public trust, a person holding public office, a guardian, administrator, executor, trustee, receiver or other fiduciary, and any officer or agent of a corporation or any agent, consignee, clerk, bailee or servant. The property must be something that has “come into his possession or under his care” by virtue of that position, and the offense is the later conversion or wilful misapplication rather than the taking. Obtaining property by false pretenses under G.S. 14-100 starts from the opposite premise: the property was never lawfully held at all, and it was obtained “knowingly and designedly by means of any kind of false pretense whatsoever” with intent to cheat or defraud.

Both offenses carry the same two-tier grading. Under G.S. 14-100 a violation is a Class C felony where the value of the money, goods, property, services, chose in action or other thing of value is one hundred thousand dollars or more, and a Class H felony where the value is less than that, and G.S. 14-90 grades embezzlement on the identical figures. A third statute, G.S. 14-74, covers larceny by servants and other employees who take employer property with intent to steal it and defraud the employer. It is graded on the same threshold, and by its own terms it does not extend to apprentices or servants under the age of 16.

G.S. 14-100 also contains a limit that matters whenever a prosecution grows out of a commercial relationship: “Evidence of nonfulfillment of a contract obligation standing alone shall not establish the essential element of intent to defraud.” A deal that failed is not by itself a false pretense, and the statute says so expressly. Intent has to be proved with something more, and in a fraud case that something is almost always documentary — the ledger entry, the wire instruction, the invoice that does not match the delivery.

One hundred thousand dollars is the figure that separates two sentencing worlds

In North Carolina the alleged value of the property does more work in a fraud or embezzlement case than any other single fact, because value sets the felony class and the felony class sets the range of authorized sentences. The chart in G.S. 15A-1340.17(c) pairs each offense class with each prior record level, and the statute explains the letters that appear in the disposition cells: “C” indicates that a community punishment is authorized, “I” indicates that an intermediate punishment is authorized, and “A” indicates that an active punishment is authorized. Where a cell carries only an “A”, active punishment is the only disposition the chart authorizes.

A Class C felony carries an “A” disposition at every prior record level, so on the face of the chart there is no cell at which a Class C fraud conviction may be answered with probation. That is not quite the end of the question. G.S. 15A-1340.13(g) permits a court to impose an intermediate punishment for a class of offense and prior record level that would otherwise require an active punishment, provided it finds in writing that extraordinary mitigating factors of a kind significantly greater than in the normal case are present, that those factors substantially outweigh any factors in aggravation, and that it would be a manifest injustice to impose an active punishment in the case. The deviation is discretionary and uncommon, and G.S. 15A-1340.13(h) withholds it altogether where the offense is a Class A or Class B1 felony, where the offense is a drug trafficking offense under G.S. 90-95(h) or a trafficking conspiracy offense under G.S. 90-95(i), or where the defendant has five or more points as determined by G.S. 15A-1340.14. A Class C fraud conviction is not on that excluded list, so the door is narrow rather than shut.

A Class H felony at prior record level I, by contrast, carries a “C” disposition. The same course of conduct, valued on either side of one hundred thousand dollars, therefore produces two entirely different sentencing conversations, and prior record level under G.S. 15A-1340.14 governs the rest of the range. That is why the valuation exercise — what was actually taken, over what period, and what part of the claimed figure is interest, overhead or double counting — is so often where the real work of a defense lies.

Since March 2024 the State can add separate losses together, but only within one offense type

G.S. 15A-1340.16F, which took effect on 1 March 2024, allows the values from two or more convictions of the same financial crime offense to be aggregated for sentencing. The limit built into that sentence is easy to miss and it matters a great deal: the section reaches two or more convictions of the same offense, not an assortment of different ones. An embezzlement count and a false pretenses count cannot be added together under this section, however closely connected the underlying conduct may be.

The statute defines a “financial crime offense” as an act of embezzlement punishable under Article 18 of Chapter 14, an act of false pretenses punishable under G.S. 14-100, or an act of exploitation of an older adult punishable under G.S. 14-112.2. Those three categories identify which offenses are capable of being aggregated; they are not a set that may be mixed with one another. Two further conditions apply. The offenses must have been committed against more than one victim or in more than one county, and they must be “based on the same act or transaction or on a series of acts or transactions connected together or constituting parts of a common scheme or plan”. Where the conditions are met and the convictions are aggregated, the court uses the aggregated value in fixing the level of punishment: more than $1,500 is a Class H felony, more than $20,000 a Class G felony, more than $50,000 a Class F felony, and more than $100,000 a Class C felony.

The section builds in its own procedure. Under G.S. 15A-1340.16F(d) the pleading must allege the facts and identify the financial crime offenses to which the aggregation is to apply, and it is sufficient if it alleges the multiple-victim or multiple-county condition together with the common scheme or plan condition. Under subsection (e) the State must prove those conditions and the value beyond a reasonable doubt in the same trial in which the defendant is tried for the underlying crimes; where a defendant pleads guilty or no contest to those crimes but not guilty to the conditions or the value, “a jury must be impaneled to determine the issues”. The aggregated figure is therefore decided on the criminal standard by a jury, not settled as an accounting exercise after conviction.

Fraud in North Carolina is charged under many separate statutes

There is no single fraud offense in North Carolina. The charge depends on what was taken and from whom, and the statutes carry different classes and different elements.

It is common for one set of facts to support several of these at once. A forged endorsement, the deposit that followed and the concealment afterwards can be charged as forgery, uttering, embezzlement and false pretenses on the same transaction, which is one reason the indictment repays close reading before anything else is done.

• Obtaining property by false pretenses, G.S. 14-100 — a Class H felony, or a Class C felony at $100,000 or more
• Larceny by servants and other employees, G.S. 14-74 — graded on the same value threshold
• Exploitation of an older adult or disabled adult, G.S. 14-112.2 — classes turn on both the value and the defendant’s relationship to the victim
• Identity theft, G.S. 14-113.20 — a Class G felony under G.S. 14-113.22, rising to Class F in the two circumstances that section defines
• Forgery and counterfeiting, G.S. 14-119 — a Class I felony, and a Class G felony where a person transports or possesses five or more counterfeit instruments with the intent to injure or defraud any person, financial institution or governmental unit
• Uttering forged paper, G.S. 14-120 — a Class I felony
• Financial transaction card crimes, Article 19B of Chapter 14 — punishable as a Class I felony or a Class 2 misdemeanor under G.S. 14-113.17, depending on how the Article classifies the particular violation
• Insurance claim fraud, G.S. 58-2-161 — a Class H felony, with each claim considered a separate count
• Medical assistance provider fraud, G.S. 108A-63 — Class I felonies under most subsections, and a Class H felony for the scheme provision in subsection (e)
• Residential mortgage fraud, G.S. 14-118.12 — a Class H felony where a single mortgage loan is involved and a Class E felony where the violation involves a pattern of residential mortgage fraud, under G.S. 14-118.15

Identity theft is punished by circumstance rather than by amount

In North Carolina identity theft under G.S. 14-113.20 does not use a dollar threshold at all. The offense is committed by a person who “knowingly obtains, possesses, or uses identifying information of another person, living or dead” with the intent fraudulently to represent that they are that other person, for the purposes the statute lists. “Identifying information” is defined broadly and includes social security and employer taxpayer identification numbers, driver’s license, State identification and passport numbers, checking, savings, credit and debit card account numbers, personal identification code numbers, electronic identification numbers and email addresses, digital signatures, biometric data, fingerprints, passwords and “any other numbers or information that can be used to access a person’s financial resources”.

Under G.S. 14-113.22(a) a violation is a Class G felony, and a Class F felony where “(i) the victim suffers arrest, detention, or conviction as a proximate result of the offense, or (ii) the person is in possession of the identifying information pertaining to three or more separate persons”. Subsection (a2) of the same section provides that the court may order a person convicted under G.S. 14-113.20 to pay restitution under Article 81C of Chapter 15A for financial loss caused by the violation, and that the loss may include, beyond actual losses, “lost wages, attorneys’ fees, and other costs incurred by the victim in correcting his or her credit history or credit rating”. That is a power the court may exercise, not an addition that follows automatically from the conviction.

A separate statute applies where the alleged victim is an older or disabled adult

G.S. 14-112.2 makes it unlawful to obtain or use, or endeavor to obtain or use, the funds, assets or property of an older adult or disabled adult “knowingly, by deception or intimidation”, with the intent to deprive that person temporarily or permanently of their use, benefit or possession, or to benefit someone other than that person. An “older adult” is a person 65 years of age or older; a “disabled adult” is defined by reference to physical or mental incapacity under G.S. 108A-101(d).

The grading depends on the defendant’s relationship to the person. Where the defendant stands in a position of trust and confidence with the victim, or has a business relationship with the victim, the offense is a Class H felony where the value is under $20,000, a Class G felony from $20,000 to under $100,000, and a Class F felony at $100,000 or more. Where the defendant is any other person, the classes sit one step lower at each tier — Class I, Class H and Class G respectively. The section also gives the State a tool that has no equivalent in the general fraud statutes: under G.S. 14-112.2(f), where the charge involves funds, assets or property valued at more than $5,000, the district attorney may file a petition in the pending criminal proceeding to freeze the defendant’s funds, assets or property in an amount up to one hundred fifty percent of the alleged value, for the purposes of restitution, on clear and convincing evidence. That is a petition the district attorney may choose to bring, subject to the procedure in G.S. 14-112.3; it is not a consequence that follows from the charge itself.

There is no limitation period on a felony fraud prosecution in North Carolina

G.S. 15-1 provides that “the crimes of deceit and malicious mischief, and the crime of petit larceny where the value of the property does not exceed five dollars ($5.00), and all misdemeanors except malicious misdemeanors, shall be charged within two years after the commission of the same, and not afterwards”, with a proviso allowing a further year where a defective pleading has been abandoned, and a ten-year period for a short list of enumerated misdemeanors in subsection (b).

What that statute addresses is misdemeanors. North Carolina sets no general limitation period for felony prosecutions, so an embezzlement or false pretenses allegation can be brought years after the conduct is said to have occurred. In practice the constraint on old allegations is evidentiary rather than statutory: records are destroyed on retention schedules, accounting systems are replaced, signatories retire and witnesses move on. The burden of proving every element, intent included, beyond a reasonable doubt rests with the State throughout, and the passage of time cuts both ways on that burden.

How a felony fraud case moves through the Mecklenburg County courts

Felony fraud and embezzlement allegations in Charlotte are investigated by agencies including the Charlotte-Mecklenburg Police Department and the Mecklenburg County Sheriff’s Office, and in regulated fields by State bodies. G.S. 14-118.14 is an example of how that works: on its own investigation, or on referral by the Office of the Commissioner of Banks, the North Carolina Real Estate Commission, the Attorney General, the North Carolina Appraisal Board or other parties, the proper district attorney may institute criminal proceedings under the residential mortgage fraud Article.

A felony is prosecuted in Superior Court on an indictment returned by the grand jury sitting in Mecklenburg County, unless indictment is waived. Under G.S. 15A-642 indictment “may not be waived in a capital case or in a case in which the defendant is not represented by counsel”, and a waiver “must be in writing and signed by the defendant and his attorney” and must be attached to or executed upon the bill of information.

Discovery in these cases is unusually document-heavy. Under G.S. 15A-903, on the defendant’s motion the court must order the State to make available “the complete files of all law enforcement agencies, investigatory agencies, and prosecutors’ offices involved in the investigation of the crimes committed or the prosecution of the defendant”, and the statute defines the file to include the defendant’s statements, codefendants’ statements, witness statements, investigating officers’ notes, the results of tests and examinations and any other matter or evidence obtained during the investigation. In a fraud case that file is frequently the accounting itself, and the defense work often begins by reconciling it line by line against the client’s own records.

Aggravating and mitigating factors carry particular weight in fraud sentencing

Under G.S. 15A-1340.16(a) the State bears the burden of proving beyond a reasonable doubt that an aggravating factor exists, and under subsection (a1) only a jury may find one unless the defendant admits it. Two factors recur in fraud and embezzlement cases: subdivision (d)(15), that “the defendant took advantage of a position of trust or confidence, including a domestic relationship, to commit the offense”, and subdivision (d)(11), that “the victim was very young, or very old, or mentally or physically infirm, or handicapped”. Neither follows automatically from the elements of the offense, and where an element already carries the same idea it cannot do double duty as an aggravating factor.

Mitigating factors are proved by the defendant by a preponderance of the evidence. Several in subsection (e) are directly relevant here: (5), that “the defendant has made substantial or full restitution to the victim”; (11), that prior to arrest or at an early stage of the criminal process the defendant voluntarily acknowledged wrongdoing in connection with the offense to a law enforcement officer; (12), that the defendant has been a person of good character or has had a good reputation in the community in which the defendant lives; (17), that the defendant supports their family; and (19), that the defendant has a positive employment history or is gainfully employed. Assembling the evidence for those factors is ordinary preparation, not an afterthought, and it usually has to begin long before a sentencing date is set.

Restitution is decided at sentencing, and it does not foreclose a civil claim

Under G.S. 15A-1340.34(a), when sentencing a defendant convicted of a criminal offense the court must determine whether the defendant is to be ordered to make restitution to any victim of the offense in question. What follows from that determination depends on the offense. Under subsection (b), where the defendant is being sentenced for an offense for which the victim is entitled to restitution under Article 46 of Chapter 15A — the Crime Victims’ Rights Act, whose definition of “victim” in G.S. 15A-830 turns on categories of offense, reaching offenses against the person and felony property crimes — the court shall require restitution for injuries or damages “arising directly and proximately out of the offense committed by the defendant”. Under subsection (c), where subsection (b) does not apply, the court may still order restitution on the same measure. The duty is limited to the covered categories; the power is general.

G.S. 15A-1340.36 governs the amount. The court is to take into consideration the resources of the defendant, including all real and personal property owned by the defendant and the income derived from it, the defendant’s ability to earn and the obligation to support dependants, although the statute expressly provides that the court is not required to make findings of fact or conclusions of law on those matters. The amount “must be limited to that supported by the record”. Where the damage or loss caused by the offense is greater than the defendant is able to pay, the court may order partial restitution, and if it does it must state its reasons on the record. It may require full payment by a certain date or, where the circumstances warrant, allow installments over a specified period.

What a restitution order does not do is close off the civil route. G.S. 15A-1340.37(a) states it directly: “An order providing for restitution does not abridge the right of a victim or the victim’s estate to bring a civil action against the defendant for damages arising out of the offense committed by the defendant.” The same subsection provides that any amount paid by the defendant under the terms of a restitution order “shall be credited against any judgment rendered against the defendant in favor of the same victim in a civil action arising out of the criminal offense committed by the defendant”. So the loss figure contested at the sentencing hearing is litigated there first, but it is not necessarily litigated for the last time: the same damages can be put to a civil court, with credit given for whatever has already been paid. Anyone weighing a resolution of the criminal case has to price that in rather than assume the criminal order is the end of the exposure.

Deferral and expunction exist, but only at the lower felony classes

North Carolina has two statutory routes that can avoid a conviction, and both are limited by class. Under G.S. 15A-1341(a1) a prosecutor may defer prosecution by written agreement with the defendant, approved by the court, and under G.S. 15A-1341(a4) a court may place a defendant on probation without entering a judgment of guilt — a conditional discharge — on the joint motion of the defendant and the prosecutor. Both are confined to Class H and Class I felonies and to misdemeanors, and for both the court must find, among other things, that the defendant has not previously been convicted of any felony or of any misdemeanor involving moral turpitude, that the defendant has not previously been placed on probation, stated under oath, and that the defendant is unlikely to commit another offense other than a Class 3 misdemeanor. Neither route is available on a Class C felony.

Expunction is limited in the same direction. G.S. 15A-145.5 defines a “nonviolent felony” by exclusion, and the exclusions begin with any Class A through G felony. That leaves Class H and Class I convictions as the only ones capable of qualifying, and even within those classes the definition carves out further categories, among them offenses that include assault as an essential element, specified sex and stalking offenses, certain drug felonies and impaired driving offenses. For a qualifying conviction the statute sets a ten-year period where the petition covers one nonviolent felony and a twenty-year period where it covers two or three, and in each case the period runs from the date of the conviction — for two or three, the most recent conviction listed in the petition — or from the point at which any active sentence, period of probation or post-release supervision related to a listed conviction has been served, whichever occurs later. The petition must be accompanied by an affidavit that no restitution orders, and no civil judgments representing amounts ordered for restitution, remain outstanding against the petitioner — which ties the long-term record consequence straight back to the sentencing order and to any civil judgment that follows it.

Common questions

Written for North Carolina law and reviewed by David P. Sheehan, attorney, Charlotte. General information, not legal advice — see the disclaimer.