/dee'fal kay"sheuhn, -fawl-/ , n. Law.
1. misappropriation of money or funds held by an official, trustee, or other fiduciary.
2. the sum misappropriated.
[ 1425-75; late ME: deduction from wages ( defalcation- (s. of defalcatio ) a taking away, equiv. to defalcat ( us ) (see DEFALCATE) + -ion- -ION ]