Is The Agent Under A Power Of Attorney Who Misappropriates Money "Authorized" To Transfer The Principal’s Assets?

State v. Kennedy, 61 N.J. 509 (1972) explored the issue of “legally authorized” transfers made by an agent under a power of attorney. Kennedy obtained a power of attorney that was assumed to have been executed by the elderly victim, authorizing Kennedy to draw upon the victim’s bank accounts. Kennedy misappropriated most of the money in those accounts. The New Jersey Supreme Court affirmed a conviction of embezzlement. In so doing, it made the following comments regarding the abuse of a power of attorney:

A power of attorney of course is not an instrument of gift. In itself, it is no more than the term, power of attorney, imports—an authorization to the attorney to act for the principal. Although as between the bank and the principal, the bank was relieved [by the terms of the power of attorney] to inquire as to whether any withdrawal was in the agent’s interest rather than the principal’s, the instrument did not authorize the agent to make off with the principal’s money. In short, the instrument was the means whereby the agent was able to get his hands on the moneys, but when the moneys were thus obtained, the agent received them as agent for the principal, and the fraudulent appropriation of the moneys thus obtained to his own use constituted embezzlement. In other words, it is no defense to embezzlement that the moneys reached the agent with the consent of the principal. On the contrary, such entrusting is the necessary setting for the crime…. [I]t is no defense to embezzlement that the victim trusted the culprit. 61 N.J. at 512-513 (emphasis added).