The conversion of legally possessed property, or the illegal transfer of money or property that, although obtained legally by the embezzler, is diverted to the embezzler personally by his or her fraudulent action.
For example, an employee would embezzle money from the employer or a public officer could embezzle money received during the course of their public duties and secretly convert it to their personal use.
As a legal concept, embezzlement has been around since at least the age of Aristotle, who "refers to the embezzlement of funds by road commissioners and other officials".1
In English common law, the offence was initially limited to the conversion of public property, later enlarged to include bank officers, and much assisted by the theoretical development of the Carrier's Case. Later, embezzlement, in many common law jurisdictions, was captured within the offence of theft.
References and Further Reading:
1. Hall, J., Theft, Law and Society, Bobbs-Merrill Company Inc., New York, 1952.