Rumors are swirling around our town about misappropriation of trust funds and the ongoing investigation of a prominent attorney who happens to be an executive officer of our nonprofit board. The attorney has emailed friends saying that "mistakes were made" and spoke of a long Federal process winding down. The attorney mentioned plans to leave the profession. Nothing has appeared in the press yet. What, if anything, should we do now before the news is public or after it appears in the papers to protect our organization? This officer has check signing authority (with a second signature) but no access to our checks.
You could start by talking to your officer to ask, not necessarily what is going on, but whether there is anything going on that could bring discredit to your organization that might make him/her want to resign now before things become public. If the attorney won’t talk to you directly, you may want to try to find out by talking to others who might know. Until you know what is going on, at the least, you should assure that the attorney has no access to your checks (and perhaps no check signing authority) until after the issue is clarified.
If your organization is a nonprofit corporation, your bylaws would normally have procedures by which to remove an officer. Most state nonprofit corporation laws allow removal with or without cause whenever it appears to be in the best interests of the organization. You may want to take action now to remove the attorney from office (and perhaps from the board) if you are sure that the rumors are true. If your own funds have not been misappropriated (and you should check to confirm that), it doesn’t sound as though you will necessarily be significantly damaged by your association with the lawyer if you wait until the situation is more clear. But you should be ready to remove the attorney from office promptly if the attorney is charged or admits wrongdoing.
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