CFO of San Francisco Nonprofit Embezzles $3.6 Million, Loses it all in the Stock Market

The Chief Financial Officer of a San Francisco Nonprofit has admitted to diverting $3.6 million to his own use, investing and then losing it all in the stock market.  According to the San Francisco Chronicle:

The chief financial officer for the nonprofit that runs the recently opened, 800-car underground garage next to the M.H. de Young Memorial Museum in Golden Gate Park has been fired as investigators probe the disappearance of $3.6 million in garage funds – money that may have been flushed on the stock market. The missing millions came to light a couple of weeks back when a vendor called the chairman of the Music Community Concourse Partnership board to complain that he hadn’t been paid for his work on the garage, which opened in 2005, said Sam Singer, a spokesman for the nonprofit. When garage chief financial officer Greg Colley was called in to explain, he asked for a little time to sort things out, Singer said. The next day, Colley turned up with an attorney and said he had borrowed the money to play the stock market, Singer said. Colley said he had fully intended to return the money, but then the market took a nosedive. With that, the nonprofit fired him, Singer said.

You big knucklehead!  Anyway, there is caselaw supporting the notion that embezzlement is not private inurement, but does embezzlement constitute an excess benefit transaction?  I told my class today that IRC 4958 essentially codifies and better articulates the caselaw with respect to the private inurement prohibition but this case probably provides an example of how 4958 expands a bit on the private inurement doctrine.

dkj