defalcation n
1. the sum of money that is misappropriated
2. the fraudulent appropriation of funds or property entrusted to your care but actually owned by someone else [syn: embezzlement, peculation, misapplication, misappropriation]

Defalcation \De`fal*ca"tion\, n. [LL. defalcatio: cf. F. d['e]falcation.]
1. A lopping off; a diminution; abatement; deficit. Specifically: Reduction of a claim by deducting a counterclaim; set- off. --Abbott.
2. That which is lopped off, diminished, or abated.
3. An abstraction of money, etc., by an officer or agent having it in trust; an embezzlement.

See more meaning on Defalcation...

A defalcation is an amount of funds misappropriated by a person trusted with its charge; also, the act of misappropriation, or an instance thereof. The term is more specifically used by the United States Bankruptcy Code to describe a category of bad acts that taint a particular debt such that it cannot be discharged in bankruptcy.

Defalcation occurs when a debtor commits a bad act while acting in a fiduciary capacity. The classic example of defalcation is when a trustee recklessly invests trust funds and loses the money. If the beneficiary successfully wins a judgment against the trustee, and the trustee files for bankruptcy, the debt (the judgment) cannot be discharged in bankruptcy because the debt was the result of a defalcation.

Defalcation only applies when a debtor is acting in a fiduciary capacity. To constitute a defalcation, the conduct involves a degree of culpability that is greater than negligence, but the act does not need to rise to the level of a "fraud" under common law. Defalcation requires a showing of conscious behavior or extreme recklessness.

• Ex-CEO Valerie Cooper denies fraud allegations in Art Gallery of Calgary lawsuit - calgaryherald.com
  Randall expresses grave concern over the publicly owned gallery’s future. “It is my belief the information as to this defalcation will result in a serious detriment to the ability of ACG to receive government, corporate or individual donations ... Read more on this news related to 'Defalcation'
• Rescued banks defraud investors N106bn - SEC audit - Businessday Online
  “Compensation for specific losses - insolvency and defalcation are the exclusive responsibility of the NSE under ISA 2007 section 195,” she said. She observed that over 2,700 investor complaints lodged with the previous management of the NSE, including ... Read more on this news related to 'Defalcation'
• No good deed goes unpunished-Justin Schwartz - Examiner
  CSU policy states that campuses are required to “notify the chancellor within 24 hours of all cases of actual or suspected theft, defalcation, or fraud.” The chancellor’s office is also required to notify three state agencies if fraud is suspected. Read more on this news related to 'Defalcation'