In order to be convicted of misappropriating public funds, the prosecution must prove that a person was charged with receipt, safekeeping, transfer, or disbursement of public monies, and then appropriated the funds for his own personal use. Money is public money depending on the official character in which the money is held or received, and includes all money belonging to the state or a public agency.
When the state or a public agency pays a business for services, do those funds remain public money, or do they become private property once the business deposits the money into its checking account? A California Court of Appeals recently considered this question in a case where the owners of a private, non-profit foster care group home were charged with misappropriating public funds.
The defendants in question operated T-Town, a group home for foster children located in Riverside. T-Town received payments from the Department of Social Services (“DSS”) to care for foster children. DSS is funded by federal and state programs.
Before a group home can care for foster children, they have to become licensed by DSS. As part of their licensing agreement, group foster homes are required to follow stringent state and federal rules and regulations, which include regulations on how they are to spend any money they receive. Once a group home is licensed, they have to comply with audit requests and submit audit reports. If a group home does not comply with any of these requirements, their license can be revoked. If a group home spends federal funds in an unauthorized way, the state is responsible for repaying the federal government.
During a state audit, it appeared that T-Town operators had spent funds received from DSS on personal expenses that were not authorized by their licensing agreement. They were charged with misappropriating public funds.
The defendants argued that they could not be charged with misappropriating public funds because they were not public officers, T-Town was not a public agency, and once the money was given to T-Town, it was no longer public funds.
The court held that the definition of public money is inclusive, and pertains to any money that the government or the state has title to, possession of, or control over – even if the funds are comingled with nonfederal funds. The court further held that any person could be charged with misappropriating public funds, not just a public agency or public officer.
The court found that the defendants were “unquestionably person[s] charged with the receipt, safekeeping, transfer, or disbursement of public moneys.” The money given to T-Town “remained public funds…even after [the defendants] cashed the checks, because the government maintained an extensive degree of control over the money and it was to be used for a specific purpose: providing for the welfare of designated foster children.” T-Town existed for the public good, was required to submit to audits, and was strictly regulated in order to maintain its license. T-Town’s misuse of the funds caused the state to have to repay the federal government. T-Town was effectively “in charge of public monies.”
If you have been charged with misappropriating public funds, you can be held personally liable. You may be charged criminally or face civil action. It is imperative to have a skilled and knowledgeable attorney represent you. This office handles all criminal matters relating to misappropriation and white-collar crimes.