Case Summary:
Debtor did not “embezzle” loan proceeds used to purchase truck. Embezzlement under 11 U.S.C. § 523(a)(4) is the fraudulent appropriation of property by a person to whom the property has been entrusted, and creditor must prove that debtor used property for a purpose other than that for which it was intended. Debtor used loan proceeds to purchase truck, as contemplated by the parties. Thereafter, when parties discovered truck was actually stolen property, debtor’s use of the refund to purchase another truck, rather than return the refund to the bank, did not constitute embezzlement because the truck was the debtor’s property, not the creditor’s. The creditor held merely a security interest in the property. Further, there was no injury within the meaning of 11 U.S.C. § 523(a)(6) because the debtor had an honest belief that the bank’s lien no longer existed.
Statue/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Embezzlement
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Key Terms:
Embezzlement
Willful and Malicious