I filed a criminal suit for probable embezzelement along with a civil sutie for conversion. Now the defendant returns with a defamation of character suit. What does this mean and do I need a lawyer to defend myself.

The simple answer: yes, you should get a lawyer.

Judy will likely post this better than I, but defamation is hard to prove as they have to be able to quantify the damages. If they just try to state that you damaged their character it will likely be thrown out.

Absolutely right - this is NOTHING to be attempted without an Attorney.

Defamation goes to the intent and extent of the information.

Oh, good, a chance to quote myself (again):

"Briefly - Generally in law libel refers to permanent/written statements and slander refers to non-permanent/spoken statements. Defamation (of character) covers both categories.

You must be damaged - and prove damages - in order to recover. The statements (either written or spoken) must be false but presented as though they were true and be beyond offensive, derogatory or insulting. Such statement must rise to a level which actually harms a person’s reputation. In general the person making the statement must either know it isn’t true or make the statement without attempting to verify if it is true.

The defense to defamation is that the information was not presented as the truth (which covers gossip), that the information was never secret (privileged) and was always public."