State Attorney Scrutinizes Not For Profits Bookkeeping Records

A state attorney general has recently investigated several not-for-profit corporations under suspicion that the organizations’ officers have misappropriated funds, using the companies as fronts to cover for large-scale defrauding and use of donations to fund lavish lifestyles. In one case, the attorney general’s investigation and subsequent trial resulted in a verdict convicting two organization officers of conspiring to steal over $50,000. The not-for-profit ran a lunch program for senior citizens; however, the jury found that the officers routinely submitted false monthly contract and service invoice reports, inflating the costs of the lunches and enabling the officers to skim money. Both officers were charged with several felony accounts and have been sentenced to probation and a combined total of $50,000 in fines. The restaurant owner of the shop from which the organization obtained the lunches previously pleaded guilty to Falsifying Business Records in the First Degree; he was sentenced to conditional discharge and restitution of $25,000.

In another case, an executive director was arraigned for allegedly defrauding Medicaid for services rendered to the organization’s clients, including a developmentally disabled person directly under the director’s care. The complaint alleges that the director, responsible for coordinating and providing care to developmentally disabled individuals, double-billed her work, both submitting false time sheets for compensation through an independent employer and claiming medicaid for services rendered through the not-for-profit. She also allegedly used the money from clients’ bank accounts to cover personal expenses. If convicted, the director can face up to 1 1/3 to 4 years in prison.

If you are running a not-for-profit organization, it is critical that your bookkeeping and legal records be accurate and up to date, ensuring also that any required registrations and annual filings with your state attorney general’s office are maintained.

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