Is misapplication of funds a criminal charge?

Answer 1

Misapplying funds incorrectly often exposes the fiduciary to civil procedures because of negligence. A person with fiduciary responsibility is expected to demonstrate due diligence in the performing of one's duties. To expose the fiduciary to criminal procedures, the prosecutor must prove the fiduciary intentionally applied the funds towards something those funds were not intended for. The question becomes, "Does the person have a fiduciary obligation?" If one party's relationship to another party normally implies a reasonable level of care, then that fiduciary relationship will most often exist. Examples If a mother spends child support funds on gifts for others, the mother violated her fiduciary obligations to her children. She could face criminal charges. If an investor sends an investment advisor money to be placed in a specific mutual fund, but the advisor uses the money to pay his office rent, the advisor violated his fiduciary obligation. The advisor could face criminal charges. If the same investment advisor placed the money into the wrong mutual fund, the advisor was negligent in his duty of care. A court may award the investor a damage award equivalent to the amount lost compared to what could have been earned had the advisor properly fulfilled his responsibility. Advisory Prosecutors will often threaten to pursue a serious crime so as to coerce the accused party into plea-bargain. If, in fact, one has not intentionally misapplied funds, force the prosecutor into court to prove the unprovable charge. More often than not, prosecutors will keep lessening the charge until they can get an agreement. Prosecutors often have to drop charges just days before trial when they have no substantive proof and they are unable to coerce a bargain.