Slenn, Fraudulent Donations to Charity: The Gifts That Keep on Giving

David J. Slenn (Akerman LLP) has published Fraudulent Donations to Charity: The Gifts That Keep on Giving, Business Law Today (November 2023). From the introduction:

This article examines what a charity should know about its exposure to liability as the transferee of a donation that turns out to be a fraudulent transfer by the donor. A charity can perform due diligence to manage most kinds of risk resulting from its receipt of a donated asset (e.g., hard-to-manage/risky assets, the risk of inadvertently participating in a tax shelter,[3] etc.), but a charity—even a large charity with sophisticated general counsel—faces a much more difficult challenge in attempting to mitigate the risk potentially posed by fraudulent transfer law. This article will also address how the law surrounding this intersection has evolved and how the courts have approached the issue of charity liability under fraudulent transfer law.

This article is especially timely given the recent federal bankruptcy court decision ordering a church to repay over $500,000 it had received, even though the church itself had acted in good faith and without knowledge that the funds originated from a fraudulent transfer (and even though the church had apparently already spent the contributed money).

Lloyd Mayer