Can a breach of fiduciary duties lead to criminal charges?
Asked by: Arely Kiehn MD | Last update: March 13, 2026Score: 5/5 (1 votes)
Yes, a breach of fiduciary duty can absolutely lead to criminal charges, especially when the breach involves intentional misconduct like fraud, theft, embezzlement, or insider trading, rather than just negligence, crossing from civil liability into criminal prosecution with potential fines and imprisonment. While many breaches are handled in civil court, egregious actions that violate specific criminal statutes, such as falsifying financial reports or misusing client funds, can result in serious criminal penalties.
Can breach of fiduciary duty be a criminal offense?
A breach of fiduciary duty is not a criminal act but can be tied to one.
What are the consequences of breaching fiduciary duties?
Among other penalties, the DOL may assess a civil penalty equal to 20% of the amounts recovered for the plan through litigation or settlement. Upon a conviction for a willful violation of ERISA's reporting and disclosure requirements, a fiduciary may be subject to fines and/or imprisonment for not more than ten years.
Do people normally get jail time for breach of trust charges?
When those breaches involve deceit, theft, or abuse of power, prosecutors may pursue criminal charges. In 2025, state and federal authorities are showing greater willingness to treat certain financial misconduct and betrayals of trust not just as civil disputes, but as crimes worthy of jail time.
Can a trustee go to jail for stealing from trust?
Under California law, embezzling trust funds or property valued at $950 or less is a misdemeanor offense and is punishable by up to 6 months in county jail. If a trustee embezzles more than $950 from the trust, they can be charged with felony embezzlement, which carries a sentence of up to 3 years in jail.
What Is a Breach of Fiduciary Duty Lawsuit? | RMO Lawyers
What is the punishment for breach of trust?
Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
What happens if a trustee breaches their duty?
Trustees who breach their fiduciary duties can be held personally liable for resulting damages. This means their assets can be at risk to satisfy judgments. The liability isn't limited to trust assets under their control—trustees can be required to pay damages from their resources.
What are the legal consequences of breach of trust?
If a trustee's breach of trust was committed in bad faith, they may be held personally liable for any resulting harm to the trust. In such cases, the court may impose a financial penalty known as a surcharge, which requires the trustee to compensate the trust using their personal funds.
Is breach of trust a felony or misdemeanor?
Under California law, embezzlement of trust property worth $950 or less is a misdemeanor with a maximum sentence of 6 months imprisonment. Stealing trust assets valued at over $950 is a felony offense, which can carry a jail sentence of up to 3 years.
Which crime is essentially a theft in violation of trust?
Fraud is one such type of theft where an individual who has possession of property or money misuses it. Unless it is simple theft, embezzlement consists of a betrayal of trust.
What is a serious breach of fiduciary duty?
Examples of breach of fiduciary duty often involve misuse of power or self-dealing. Common examples include misappropriating company funds, failing to disclose conflicts of interest, or taking business opportunities for personal gain. Legal remedies are available when a fiduciary duty is violated.
Is it hard to prove breach of fiduciary duty?
Breach of fiduciary duty claims are complex, and the proof necessary to win a lawsuit is often not readily apparent or available. These claims can take a lot of time and investigative work to prove. If your claim does not settle, the litigation that ensues can be lengthy and convoluted.
What are the damages for breach of fiduciary duty?
Types of Damages in Fiduciary Duty Breach Cases
This can include lost profits, diminished asset value, and other measurable economic impacts. Double damages are when you may be ordered to pay double the amount of compensatory damages. Punitive damages may be awarded in cases of particularly egregious misconduct.
How serious is a breach of fiduciary duty?
In the case of an executor or trustee, a breach of fiduciary duty may result in their suspension, removal and/or a surcharge – a court order requiring them to pay money damages for the harm caused by the breach.
What is the legal remedy for breach of fiduciary duty?
Monetary compensation: One of the most common remedies in breach of fiduciary duty cases is monetary compensation. The court may order the fiduciary to pay compensatory damages to the plaintiff for the losses they experienced due to the breach.
What are the four types of breaches?
In this comprehensive guide, we'll explore all four main types of breach of contract: minor, material, fundamental, and anticipatory. We'll break down their key characteristics, illustrate them with practical examples, and provide insights into the potential consequences of each.
Can a trustee be criminally charged?
There is nothing in the California Probate Code that imposes criminal liability against a Trustee. Think about that for a moment. If a Trustee refuses to distribute your Trust assets to you, there's a remedy for that. The court will compel the Trustee to make a distribution.
Is breach of trust easy to prove in court?
Breach of fiduciary duty cases is very fact-intensive. To gather the evidence that you need to win your case, you should hire an experienced business attorney immediately. You do not want to risk other parties destroying or misplacing key evidence you will need to prove your claim.
What is a felony involving dishonesty or breach of trust?
A crime involving dishonesty includes, but is not limited to, an offense constituting or involving perjury, bribery, forgery, counterfeiting, false or misleading oral or written statements, deception, fraud, theft, schemes or artifices to deceive or defraud, material misrepresentations and the failure to disclose ...
What are the three types of breaches?
There are three major types of contract breaches: a material breach, a partial breach, and a total breach. A material breach is when one of the parties has done something that results in illegal action against another party's property rights. A partial breach occurs when a contract has not been completed.
What does it mean to be charged with breach of trust?
336 Every one who, being a trustee of anything for the use or benefit, whether in whole or in part, of another person, or for a public or charitable purpose, converts, with intent to defraud and in contravention of his trust, that thing or any part of it to a use that is not authorized by the trust is guilty of an ...
What is a breach of fiduciary duty in a trust?
Breaches a fiduciary duty such as the duty not to profit from the trust, for example, by selling one of their own assets to the trust (see Practice note, Self-dealing by trustees).
Is breach of fiduciary duty a crime?
A breach of fiduciary duty is not a criminal offense, although there can be criminal charges pressed in relation to the same incident.
What are fiduciaries not allowed to do?
Fiduciaries are not allowed to act in their own self-interest, engage in conflicts of interest, or misappropriate assets; they must always prioritize the beneficiary's best interest, meaning they cannot self-deal, steal, misuse confidential information, comingle funds, favor one beneficiary over another, or fail to provide transparent accounting and information. Actions like embezzlement, fraud, negligence, and failing to act prudently are major breaches of fiduciary duty, potentially leading to legal action, removal, and even criminal charges.
How is a fiduciary held accountable?
As a fiduciary, an attorney must act with fairness, loyalty, care, and within the law on behalf of the client. Attorneys can be sued by clients for breaches of their fiduciary duties. They're accountable to the court in which a client is represented when a breach occurs.