"theft or misappropriation of funds placed in one's trust or belonging to one's employer," 1540s, from embezzle + -ment. An earlier noun was embezzling (early 15c.).
[I]n English law, a peculiar form of theft, which is distinguished from the ordinary crime in two points:— (1) It is committed by a person who is in the position of clerk or servant to the owner of the property stolen; and (2) the property when stolen is in the possession of such clerk or servant. The definition of embezzlement as a special form of theft arose out of the difficulties caused by the legal doctrine that to constitute larceny the property must be taken out of the possession of the owner. Servants and others were thus able to steal with impunity goods entrusted to them by their masters. A statute of Henry VIII. (1529) was passed to meet this case; and it enacted that it should be felony in servants to convert to their own use caskets, jewels, money, goods or chattels delivered to them by their masters. [Encyclopaedia Britannica, 1910]