California embezzlement law hinges on one specific element that prosecutors have to prove and often can’t — fraudulent intent. Penal Code Section 511 gives defendants a direct path to attack that element head-on, and it’s one of the most underused defenses in white-collar cases.
Key Takeaways
- Penal Code 511 provides a complete defense to embezzlement — if the property was taken openly and under a genuine, good-faith belief that it belonged to the defendant.
- The belief doesn’t have to be legally correct or even reasonable — it just has to be honestly held.
- The defense doesn’t apply if someone is retaining property to offset or pay off a debt owed to them.
Most people searching for how to get out of embezzlement charges assume that the only real defense is proving they never took the money. That’s one path, sure. But there’s another one that gets far less attention, and it works completely differently. It doesn’t argue that nothing happened. It argues that what happened wasn’t a crime — because the person genuinely believed the property was theirs to take. That’s the claim of right defense under Penal Code Section 511.
When the defense fits the facts of a case, it can be devastating to a prosecutor’s theory. Keep reading to learn how to use Penal Code 511 to defeat an intent to defraud.
What PC 511 Actually Says
Here’s the statute, straight from California’s official legislative text:
“Upon any indictment for embezzlement, it is a sufficient defense that the property was appropriated openly and avowedly, and under a claim of title preferred in good faith, even though such claim is untenable. But this provision does not excuse the unlawful retention of the property of another to offset or pay demands held against him.”
Two things jump out from that language immediately.
First, the belief doesn’t need to hold up legally. The statute literally says “even though such claim is untenable.” A defendant can be wrong about their legal right to the property and still walk away from the charge, as long as the belief was genuine.
Second, there’s a hard carve-out. This defense doesn’t cover someone who takes or holds onto property specifically to settle a debt they’re owed. That’s a separate legal question entirely, and Penal Code 511 was never designed to touch it.
Why This Defense Works the Way It Does
Under California Penal Code Section 503, Embezzlement is defined as the fraudulent appropriation of property by someone to whom it was entrusted. Notice the word doing all the work there — fraudulent.
Fraudulent intent isn’t optional. It’s a required element the prosecution has to prove beyond a reasonable doubt. If a defendant genuinely believed the property belonged to them, or that they had a legitimate right to take it, then the fraudulent intent piece falls apart. Without it, there’s no embezzlement conviction.
A civil dispute can arise over who actually owns what. But that’s a completely different courtroom. This is precisely why claim of right cases can turn what looked like a slam-dunk criminal charges for embezzlement case into something far less certain for the prosecution.
What “Openly and Avowedly” Actually Means
The statute doesn’t just require good faith belief. It requires the property to have been taken openly and avowedly. That phrase matters enormously in how these cases actually play out.
Someone who quietly moves funds, hides transactions, or covers their tracks doesn’t fit this defense well — even if they genuinely believed the money was theirs. The concealment itself undercuts the “openly” requirement and gives prosecutors an easy argument that the secrecy proves consciousness of guilt.
By contrast, someone who took property in full view of others, made no attempt to hide it, and can point to some basis for believing they had a right to it, has a much stronger foundation for this defense.
Real Cases Show How Courts Apply This
California courts have wrestled with claims of right in ways that show exactly how fact-dependent this defense really is.
In People v. Selivanov, the court upheld a good faith defense where the defendants genuinely believed they were entitled to the property in question — even though the underlying legal situation was complicated. The case underscores something important: subjective belief carries real weight here, even when the legal landscape around that belief is messy.
Intent makes or breaks a theft charge. In People v. Stewart, the court ruled that acting under an honest belief of authority to use funds negates the fraudulent intent required for embezzlement.
While an intent to temporarily deprive an owner of property is legally sufficient to sustain an embezzlement charge — and intending to pay back funds later is not a defense under PC 512/513 — a genuine belief of authority defeats the charge entirely under Penal Code 511.
Where This Defense Comes Up Most Often
Claim of right tends to surface in specific, recognizable fact patterns:
- A business partner takes funds believing a prior agreement, even an informal one, entitled them to that money.
- An employee takes property or funds under a genuine, if mistaken, belief that a bonus, commission, or reimbursement was owed to them.
- A family member handling shared assets believes they have an ownership stake that turns out to be legally disputed.
- Someone continues using company resources under an old arrangement they believed was still in effect.
None of these scenarios guarantee the defense will succeed. But they’re exactly the kind of situations where claim of right deserves serious consideration before assuming a guilty plea is the only option.
How an Embezzlement Defense Lawyer Builds This Case
Raising claim of right effectively takes more than just asserting good faith. An experienced embezzlement defense lawyer typically works to:
- Gather documentation, communications, and records that support the defendant’s stated belief about ownership.
- Establish that the property was taken openly, with no attempt at concealment.
- Distinguish the case from situations involving debt offset, which fall outside Penal Code 511’s protection entirely.
- Present the defendant’s belief in a way that’s credible to a jury, even if the underlying legal claim ultimately turns out to be wrong.
This is exactly why first-time embezzlement charges shouldn’t be treated as an automatic conviction. A well-built claim of right defense can change the entire trajectory of a case before it ever reaches trial.
When This Isn’t the Right Strategy
Claim of right won’t fit every case, and it’s important to be honest about that upfront. If the property was taken secretly, if there’s no plausible basis for believing it belonged to the defendant, or if the situation clearly involves debt collection rather than ownership belief, this defense is unlikely to succeed.
In those situations, other strategies become more relevant — whether that’s challenging the value of the property involved, negotiating a reduced charge, or addressing federal embezzlement charges if the case crosses into federal jurisdiction under statutes like 18 U.S.C. Section 641 — which carries penalties of up to ten years in prison for property valued over $1,000.
If you’re facing embezzlement charges in California and believe you had a genuine claim to the property involved, don’t assume the case is unwinnable. Contact DCD LAW for a confidential case review.
Frequently Asked Questions
1. Can Claim Of Right Be Used As A Defense To Federal Embezzlement Charges, Or Is It Strictly A California State Law Defense?
Claim of right, as codified specifically in Penal Code 511, is a California state law defense. Federal embezzlement lawyer strategies rely on federal case law addressing intent, which recognizes similar good-faith belief arguments. But the exact statutory framework differs from California’s.
2. Does It Matter How Much Time Passed Between Taking The Property And Being Charged?
It can. A longer gap between the alleged act and formal charges can work in a defendant’s favor — if it shows the person continued behaving consistently with their claimed belief of ownership, rather than fleeing or altering their conduct once confronted.
3. Can A Business Dispute That Later Gets Resolved Civilly Still Result In Criminal Embezzlement Charges?
Yes, unfortunately, this happens often. A civil resolution or settlement doesn’t automatically end a criminal case, since prosecutors and civil courts operate independently. This is exactly why early criminal defense involvement matters even if a civil case is also underway.
4. Is There A Difference In How Claim Of Right Applies To Cash Versus Physical Property Or Digital Assets?
The statute doesn’t distinguish by asset type. What matters is whether the belief in entitlement was genuine and whether the taking was open. That said, digital assets and cash transfers can be harder to characterize as “open,” since they often leave less visible trail than physical property changes.
5. What Happens If A Defendant Partially Believed They Had A Right To Some, But Not All, Of The Property Taken?
This is where cases get genuinely complicated. Courts and juries may need to separate out which portions of the alleged conduct fall under a good-faith claim and which don’t. This kind of partial-belief scenario usually requires detailed legal analysis specific to the case and facts involved.
