Can one commit the crime of embezzlement by using one’s own car? As counterintuitive as it may seem: yes! Provided, of course, that certain circumstances are fulfilled, on which we shall cast some light in this article.
In order to give our reader a proper sense of the seemingly paradoxical case, we ought to clarify what exactly the elements of the criminal offense of embezzlement are under Czech law. Pursuant to Sec. 206 of the Criminal Code, someone who “takes possession of a thing with which they were entrusted and which belongs to someone else, and in so doing cause non-negligible damage to third-party property,” commits embezzlement. At first glance, it may thus seem nonsensical to be charged with embezzlement for the use of one’s own car – and yet, this is exactly what happened to a certain Ms. J.S., who was eventually punished for her crime by the Czech judiciary.
J.S. had acquired a car made by Volkswagen, and had financed her purchase by taking out a loan from a financing company. She agreed to secure the receivable of the latter towards her by way of a security transfer of the ownership title to the car (within the meaning of Sec. 2040 of the Czech Civil Code).
Sadly, J.S. eventually got into serious financial trouble, to the extent that she had to declare personal bankruptcy. Within the insolvency procedure that ensued, the car was entered in the list of assets forming J.S.’s personal estate, whereas the insolvency trustee planned to turn the car into cash and use the proceeds to repay the debts of J.S. However, the latter went back on her initial promises and refused to surrender the car to the insolvency trustee. Instead, she and her son both continued to use the car for their own purposes for another year and a half or so, after which the car was seized by the police. Of course, during that time, the value of the car deteriorated, causing damage to the creditors of J.S.
This takes us back to the above-mentioned security transfer of ownership to the financing company. If a debtor temporarily transfers a thing to their creditor in order to provide security for their debt, then they are no longer the owner of said thing unless and until they fulfill the condition subsequent as per Sec. 2040 (2) of the Civil Code. Commercial lenders make very frequent use of this statutory arrangement, and borrowers should keep this fact in mind when taking out debt financing.
In the case of J.S., this all meant that she would not in fact be the owner of the car until she repaid her debt towards the financing company; in legal terms, that car was third-party property within the meaning of Sec. 206 of the Criminal Code, and J.S. was thus guilty of embezzlement when she failed to surrender the car to the insolvency trustee.
Supreme Court resolution 5 Tdo 1253/2019 of 30 October 2019