Misappropriation of Funds

Running an operation is tough work, but it gets even harder when you are non-profit trying to get your business to operate. Getting sued for misappropriated funds that were given to the organization and having them turn around and try to get your company into trouble for a donation is something different. This was the case of Marie.

Marie from Florida writes:

I am the Director of a small nonprofit animal welfare in St. Augustine, FL. A local corporate donor was raided in late March by the FBI for possible fraudulent activities. A Trustee was named to run the company and is now suing our organization through US Bankruptcy Court for the donations we received over a four year period calling them “fraudulent transfers” and “misappropriated funds”. We are a shoe-string operation completely run by volunteers. The donation checks were hand delivered to our bank by an employee and investor in the company. How could we have known that the donations were improper?

Marie, it seems to me, that the company that gave the donations does not have a leg to stand on. This is because of the receipts that you have (hopefully) kept show the exact date when the donation was sent to your account. When you have the right paperwork together, you will be able to have a lot of help from your lawyer and get the issue settled. Believe it or not, this happens to a lot of people in the United States. One company can’t fit the bill for their company and they see that they have been given to a company; they want to point the blame at someone else. There are some steps that you are going to have followed if you are going to get out of this in one piece financially.

• Gather your documents – Be sure to get every donation that you have received from other companies as well as the one donor as well. This not only proves that you received money from the company as a donation; you can also show that you have received money from countless others that have given to your organization. When you have all the documentation together, you are going to want to make sure that everything is good.
• Triple check your information – This is why you are going to triple check the information. When you do this, you are going to be able to know that the right amount has been deposited into your bank account and has been spent and where it has been spent. You will show the judge that you are a legitimate company that doesn’t operate in dishonesty and you need to make sure that your documents are squared away.
• Counter Sue – More often than not, your lawyer is going to want you to do this to help you recoup your legal costs. When you counter sue, you are going to have to file a form that your lawyer is going to give you. It is best to make sure that you counter sue with an amount that is reasonable. Cover your legal fees and put a little extra in there for pain and suffering. When you do this, you will be able to find some closure.

Like I tell everyone, I am not a lawyer and you need to seek out legal council if you have not done so already. But there are many things that you are going to be able to handle on your own without paying a lawyer. It all comes down to documentation. They are going to have paperwork that is going to get you nervous but if you have the same amount and more, the judge is going to find in favor of you. Often people have a problem of standing their ground but this issue is something that is going to require you to get the right information from the companies. After this is done with, be sure to file a complaint with the Federal Business Bureau. There are many things in this incident that don’t add up on the end of the company trying to sue you. Be sure that you have everything you need and you will be able to get out of this without too much pain and suffering. Too many people are sue-happy and you just need to make sure that you have covered yourself from any future problems. Good luck to you!

[podcast]http://www.lawadvicenow.com/wp-content/uploads/2010/08/misappropriation-of-funds.mp3[/podcast]