Misapplication of fiduciary property under Texas Penal Code § 32.45 is the fraud charge for handling money or property you hold for someone else contrary to an agreement or law, in a way that creates a substantial risk of loss. Grading runs from a Class C misdemeanor to a first-degree felony based on value. Below: the statute, penalties, defenses, and DFW county practice.
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Texas Penal Code § 32.45(b) states the offense in one sentence: a person commits a crime if he “intentionally, knowingly, or recklessly misapplies property he holds as a fiduciary or property of a financial institution in a manner that involves substantial risk of loss to the owner of the property or to a person for whose benefit the property is held.” The statute sits in Chapter 32 of the Penal Code — the fraud chapter — next to securing execution of a document by deception (§ 32.46) and credit card abuse (§ 32.31).
“Misapply” carries a precise statutory definition at § 32.45(a)(2): to deal with property contrary to (A) an agreement under which the fiduciary holds the property, or (B) a law prescribing the custody or disposition of the property. That definition is the engine of the whole offense. The State is not prosecuting a taking, the way a theft case does — it is prosecuting a dealing: a transfer, an investment, a loan, a withdrawal, a commingling, any handling of the property that breaks the rules the fiduciary was bound by.
Two features make § 32.45 broader than most people expect. First, the mental-state floor is recklessness. Most fraud offenses require intent or knowledge; this one reaches a fiduciary who consciously disregards a substantial and unjustifiable risk about how the property is being handled (Penal Code § 6.03(c)). Sloppy trust administration can be indicted without any proof the fiduciary meant to hurt anyone. Second, the statute has a parallel branch for “property of a financial institution” — bank, credit-union, and similar institutional property — which is how bank officers and employees end up charged under the same section as executors and trustees.
The “law prescribing the custody or disposition” prong deserves more respect than it gets. In Casillas v. State, 733 S.W.2d 158 (Tex. Crim. App. 1986), the Court of Criminal Appeals held that a federal Small Business Administration conflict-of-interest regulation qualified as a “law” under § 32.45(a)(2)(B) — so dealing with funds contrary to a regulation, not just a contract, can complete the offense. Probate, guardianship, and trust statutes work the same way: an executor who deviates from the Estates Code’s distribution rules is dealing with property “contrary to a law” even if no written agreement exists at all.
Section 32.45(a)(1) defines “fiduciary” in four sweeps: (A) a trustee, guardian, administrator, executor, conservator, or receiver; (B) an attorney in fact or agent appointed under a durable power of attorney; (C) any other person acting in a fiduciary capacity — with a carve-out excluding a commercial bailee; and (D) an officer, manager, employee, or agent carrying on fiduciary functions on behalf of a fiduciary. The list reaches far past the probate courthouse: bookkeepers, escrow officers, property managers, business partners, and nonprofit treasurers all live inside subsections (C) and (D).
Employment alone can do it. In Garcia v. State, No. 14-22-00382-CR (Tex. App.—Houston [14th Dist.] Nov. 9, 2023), the accounts-payable employee who controlled the company’s vendor checks and bookkeeping software was held to act in a fiduciary capacity — her duties obligated her to act for the company’s benefit, not her own. Contractors holding construction payments face a related but distinct regime: Property Code Chapter 162 declares certain construction payments to be trust funds and carries its own criminal penalties, and prosecutors sometimes choose between that chapter and § 32.45 on the same facts.
The limit — and the most important defense authority on this page — is Berry v. State, 424 S.W.3d 579 (Tex. Crim. App. 2014). The Court of Criminal Appeals rendered an acquittal on a § 32.45 conviction, observing that everyday arm’s-length business transactions, including contracts to sell goods and services, do not give rise to a fiduciary relationship, because the parties deal for their mutual benefit. A customer’s subjective trust that a seller will perform is not enough, and — critically — the seller’s later dishonesty in failing to perform “ha[s] no bearing on the question of whether he was acting in a fiduciary capacity in the first instance.” One acts in a fiduciary capacity only when the relationship rests on trust, confidence, good faith, and a justifiable expectation that he will place the other party’s interests before his own. Berry, 424 S.W.3d at 585.
That line is where many DFW cases are won or lost, because a large share of § 32.45 referrals start life as civil disputes — a partnership unwinding, an estate fight among siblings, a construction draw disagreement, an investor demanding records — that someone walks into a police department or district attorney’s office. The first question defense counsel asks is not “did the money move?” but “was this relationship fiduciary at all, or just a contract?”
Grading follows the standard Texas value ladder under § 32.45(c) — the same seven tiers the theft statute uses, set by the 84th Legislature’s 2015 recalibration of property-offense thresholds (HB 1396). The value of the property misapplied, not the loss ultimately suffered, sets the tier.
| Value misapplied | Classification | Confinement | Fine cap |
|---|---|---|---|
| Under $100 | Class C misdemeanor | None | $500 |
| $100–$749 | Class B misdemeanor | Up to 180 days, county jail | $2,000 |
| $750–$2,499 | Class A misdemeanor | Up to 1 year, county jail | $4,000 |
| $2,500–$29,999 | State jail felony | 180 days–2 years, state jail facility | $10,000 |
| $30,000–$149,999 | Third-degree felony | 2–10 years, TDCJ | $10,000 |
| $150,000–$299,999 | Second-degree felony | 2–20 years, TDCJ | $10,000 |
| $300,000 or more | First-degree felony | 5–99 years or life, TDCJ | $10,000 |
| Victim is an elderly individual — § 32.45(d) | Offense graded under (c)(1)–(c)(6) increases to the next higher category | ||
Two grading mechanics drive these cases harder than the ladder itself. First, aggregation: when property is misapplied pursuant to one scheme or continuing course of conduct, Texas law allows the amounts to be aggregated into a single count to set the grade (Penal Code § 32.03). The indictment in Garcia did exactly that — dozens of transactions across nearly two years, charged as one second-degree count of $150,000 to $300,000. Attacking the aggregation, transaction by transaction, can drop a case a full grade or more. Second, the elderly bump: in estate and power-of-attorney cases the alleged owner is very often 65 or older, so § 32.45(d) is quietly in play from the first interview.
For state jail felony tiers, Penal Code § 12.44 matters: the judge can impose Class A misdemeanor punishment while the conviction stays a felony (§ 12.44(a)), or — with the prosecutor’s consent — the case can be prosecuted as a Class A misdemeanor outright (§ 12.44(b)). Community supervision and deferred adjudication under Code of Criminal Procedure Chapter 42A are available across the ladder, usually with restitution as the centerpiece condition. The full state ladder is mapped in our Texas Punishment Ranges guide.
To convict under § 32.45, the State must prove every element beyond a reasonable doubt:
The risk element is where § 32.45 trials are actually fought, and the controlling standard comes from Casillas v. State, 733 S.W.2d 158 (Tex. Crim. App. 1986). The Court of Criminal Appeals defined a substantial risk of loss as a “real possibility” of loss — one that need not rise to a substantial certainty, but must be a positive possibility, “at least, more likely than not.” The State does not have to show the property is unrecoverable; it has to show that the way the fiduciary dealt with it made loss more probable than not at the time of the dealing.
The facts of Casillas show what satisfies the test: directors of a minority-enterprise lending fund loaned its money to themselves and their own businesses on unsecured, self-enforced notes that they alone controlled. The jury was entitled to find a real possibility of loss in lending with no outside enforcement mechanism — even though the borrowers considered themselves honest and creditworthy. The lesson cuts both ways. For the defense, evidence that funds were secured, segregated, documented, and recoverable attacks the probability math directly; a transfer the owner could unwind at any time is hard to call a more-likely-than-not loss. For the State, self-dealing plus missing paperwork usually carries the element.
Note what the State does not have to prove: that anyone ended up poorer. Risk is measured at the dealing, not at the final accounting. That is why “the estate was eventually made whole” is mitigation and negotiating leverage rather than an element-level answer — and why early, well-documented restoration of funds is still one of the most productive moves a defendant can make before indictment.
L and L Law Group builds § 32.45 defenses around the statute’s own pressure points:
Pre-indictment is the highest-value window. Because most of these cases arrive as referrals from civil lawyers, probate judges, or Adult Protective Services rather than from a street arrest, there is usually time to assemble the instrument, the accounting, and the authority documents and present them before a grand jury votes. A no-bill ends the case. Where the proof is solid but the equities are good, prosecutors across the DFW counties weigh restitution heavily in charge-bargaining — a state jail tier resolved under § 12.44(b) as a Class A misdemeanor, or a reduction in the alleged aggregate value, changes the defendant’s record permanently. No outcome can be promised in any particular case; these are the levers that exist.
Deferred adjudication under Code of Criminal Procedure art. 42A.101 is available for § 32.45 and matters enormously here: a successfully completed felony deferred can support an order of nondisclosure under Government Code § 411.0725 after the five-year felony waiting period. A conviction, by contrast, can never be expunged, and a felony conviction cannot be sealed. Acquittals and dismissals support expunction under Code of Criminal Procedure Chapter 55A. Our expunction and record-sealing practice handles that second phase.
One timing note: limitations is a live issue in fiduciary cases because the dealing often surfaces years later — in an audit, a death, or an estate contest. The computation depends on the charging theory the State selects, and Code of Criminal Procedure Chapter 12 sets different periods for different property offenses, so counsel should run the limitations math against every count in the indictment as a threshold check.
Grade controls the building and the docket. Class A and B misdemeanor tiers are filed by information in the county courts at law; every felony tier requires a grand jury indictment and lands in a district court.
Collin County. Felony district courts and the county courts at law sit at the Collin County Courthouse — the Russell A. Steindam Courts Building — at 2100 Bloomdale Road in McKinney. Collin’s probate and guardianship growth means a steady stream of executor, trustee, and power-of-attorney referrals; document-heavy cases here commonly develop through a grand jury presentation rather than an arrest-first filing.
Dallas County. Felony and misdemeanor criminal courts operate out of the Frank Crowley Courts Building at 133 N. Riverfront Boulevard. Dallas sees the full spread of § 32.45 work — estate and POA cases, employee and bookkeeper cases, and the financial-institution branch — and white-collar counts are frequently indicted alongside theft counts on the same facts, leaving the jury two routes to the same value ladder.
Denton County. Cases are heard at the Denton County Courts Building, 1450 E. McKinney Street in Denton. As in Collin, fiduciary referrals often originate in probate or family litigation, and pre-indictment advocacy has real room to work.
Tarrant County. Criminal cases run through the Tim Curry Criminal Justice Center at 401 W. Belknap Street in Fort Worth. Tarrant prosecutors regularly receive elder-financial referrals from Adult Protective Services; expect the § 32.45(d) enhancement question to be asked early whenever the owner of the property is 65 or older.
These cases rarely begin with handcuffs. The usual sequence: a beneficiary, business partner, or successor fiduciary discovers transactions and demands an accounting; a civil lawyer or APS makes a referral; a financial-crimes detective gathers bank records by subpoena or warrant; and the file goes to the district attorney for grand jury presentation. The first sign a client sees is often a detective’s phone call or a records request — the moment to retain counsel, not to give an interview. Anything said to “clear things up” becomes the State’s roadmap.
If a warrant issues, the path runs through magistration under Code of Criminal Procedure art. 15.17 (probable-cause and rights warnings, bond set), release on bond, and — for felony tiers — indictment. Bond amounts in non-violent fraud cases are typically manageable, and conditions tend to focus on contact with the complaining witness and preservation of assets; our bond conditions guide and bond estimator cover the mechanics. After indictment the case becomes a records war: the State must open its file under the Michael Morton Act, CCP art. 39.14, and the defense builds its own forensic accounting — tracing every challenged transaction to authority in the instrument, a legitimate estate purpose, or a documented loan. Resolution comes by dismissal, no-bill, negotiated plea (often with restitution and a § 12.44 reduction in play), or trial.
A § 32.45 outcome echoes through every system that screens for financial trustworthiness. Licensing boards treat fiduciary-dishonesty findings harshly: real estate licensees, insurance adjusters and agents, CPAs, securities professionals, and attorneys all face discipline or disqualification on conviction — and often on deferred adjudication, which most boards may consider even when the criminal record is later sealed. Banking and financial-institution employment is effectively closed by a conviction involving dishonesty or breach of trust under federal banking law (12 U.S.C. § 1829 for insured institutions). Probate courts can and do remove fiduciaries and refuse future appointments; a charged executor should expect a parallel removal-and-surcharge fight in the estate case.
A felony conviction also carries the standard package: firearm disqualification under Penal Code § 46.04 and 18 U.S.C. § 922(g), immigration exposure for non-citizens (offenses involving fraud or breach of trust raise crime-involving-moral-turpitude issues that require case-specific immigration advice), bonding and employment screening problems, and — unique to this offense — a civil shadow docket: breach-of-fiduciary-duty suits, surcharge actions, and constructive-trust claims that proceed regardless of the criminal outcome. Where the alleged victim is elderly, an Adult Protective Services finding can land the defendant in the state’s APS registry with its own employment consequences in care-related fields.
Theft (§ 31.03) requires an unlawful appropriation with intent to deprive the owner. Misapplication requires neither a taking nor an intent to deprive — risky dealing is enough, and recklessness suffices. Prosecutors often charge both and let the jury pick the theory that fits; the defense answer is that the more specific fiduciary statute frames the real dispute. “Embezzlement” is not a separate Texas offense at all — conduct labeled embezzlement is charged as theft or as § 32.45.
Securing execution of a document by deception (§ 32.46) punishes tricking someone into signing — the fraud happens at the signature. Misapplication punishes what a properly appointed fiduciary later does with the property. Money laundering (§ 34.02) reaches transactions in the proceeds of criminal activity and frequently appears as a companion count when misapplied funds move through multiple accounts. Exploitation of a child, elderly individual, or disabled individual (§ 32.53) overlaps heavily in caretaker cases — it punishes the improper use of a vulnerable person’s resources for personal benefit and is a third-degree felony regardless of amount, so prosecutors sometimes prefer it in low-dollar elder cases while § 32.45 controls where the value is high. Construction-payment cases have their own trust-fund statute in Property Code Chapter 162, and bank-officer cases can draw parallel federal exposure for embezzlement from a federally insured institution (18 U.S.C. § 656).
Both examples are hypothetical illustrations, not client matters or predictions.
The executor’s bridge loan. An executor managing her late father’s estate moves $40,000 of estate funds into her personal account to cover a short-term business shortfall, planning to restore it before distribution and noting it in her own ledger as a loan. No instrument authorized self-dealing. Even if she repays every dollar, the State can argue an unsecured, self-enforced loan to herself was a dealing contrary to the Estates Code involving a substantial risk of loss — the Casillas fact pattern in miniature — at a third-degree value tier, bumped to second-degree if a surviving parent over 65 holds an interest. Her strongest facts: documentation, segregation, prompt restoration, and the absence of concealment, all aimed at mental state and the probability of loss.
The remodel that cratered. A homeowner pays a contractor $30,000 up front; the contractor finishes half the job, runs out of money, and walks. Infuriating — but under Berry, a one-time arm’s-length construction contract does not make the contractor the homeowner’s fiduciary, and his failure to perform cannot retroactively create the duty. The criminal exposure, if any, runs through theft-by-deception or the Property Code Chapter 162 construction-trust-fund rules, each with different elements the State must actually prove. The right defense move is to force the State to name its fiduciary theory — and hold it to Berry.
Co-Founding Partner · Texas Bar No. 24043514
Reggie London co-founded L and L Law Group with a focus on federal criminal defense, complex felony defense, and TEA/SBEC matters. Licensed in Texas, admitted to TXND and TXED.
Co-Founding Partner · Texas Bar No. 24043266
Njeri London co-founded L and L Law Group with a focus on DWI defense, family violence cases, and juvenile defense. Licensed in Texas, admitted to TXND and TXED.
Co-founding partners Reggie London and Njeri London personally handle every case. Free consultation. Frisco, Texas.
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