Fraud and defermation of character

Asked about 6 years ago - Atlanta, GA

A lady's two sons drowned recently. My friend, heard about what happened to the lady's sons and contacted the lady to find out if she had insurance to cover the funeral costs. The lady said no. So my friend went and opened 2 memorial funds at 2 different banks.

My friend had to put the memorial accounts in her business name since they wouldn't allow her to put it in the lady's name or dead sons' names. My friend also contacted the public (news) and informed them that the lady didn't have any insurance and if anyone wanted to donate money to deposit it in the memorial fund. At one point, there wasn't very much money and my friend was worried because the lady still didn't have enough money to cover the funeral costs. My friend then calls the local radio stations. The radio stations inform the public and do what they can to help raise the funds.

During a conversation my friend has with the lady concerning funeral costs, and as my friend was expressing her worry, the lady tells my friend not to worry about the funeral costs because she was going to use money from her grandmother's insurance to cover the costs. My friend says, to the lady, well then you don't need any of the public's money and as such, we need to inform the public. The lady doesn't want to do so. Also in addition to this new discovery, my friend finds out from the IRS that she has to pay tax money on all of the donations which got up to $29k.. The taxes due are $4k.. My friend 3-ways the IRS and the lady concerning this matter. My friend tells the lady she doesn't have $4k to pay for the taxes, she was just trying to help out and that the money that was raised could cover the costs of $4k. The lady not only disagrees, but contacted the bank that the memorial account was opened, tells the bank that my friend doesn't want to give her the money. The lady also contacted local radio stations and told them the same thing.

My friend gets a call from one of the local radio stations hosts and that host's accountant and they tell my friend to donate all the money to a church to avoid paying taxes. My friend refused to do that. The host argues with my friend for over an hour concerning the situation. Later on my friend finds out the radio show hosts is receiving an honorary award from B.E.T.


My friend also receives a call from the bank as they are now considering this to be a fraud, even though the Lady received her money and my friend has none and is left with the $4k in taxes bill. None of these individuals have researched or looked into the lady who lost her sons and the fact that she lied about not having a way to pay for the funeral costs.

My friend, is a motivational speaker, a social advocate against child prostitution, and a mother of 5 and also a married woman. She has recently been on television and will be doing more work on t.v.

Can anyone offer any solutions, advice, suggestions? She has plenty of people that can vouch as to her character and her work. I am so sad right now, I didn't know what to do, but ask a question here.

Are there any laws governing anything that happened here?

Attorney answers (1)

  1. Kevin M. Veler

    Contributor Level 15

    1

    Lawyer agrees

    1

    Answered . Your question is not clear from the information presented.

    If you are asking about the tax consequences of asking for public support and accepting the funds into a bank account in the name of an individual or business who is not to be the actual recipient of the funds and where the funds were not donated to a 501(c)(3) charity, there are definitely rules and laws that govern. The people involved should consult with a qualified tax advisor regarding their current circumstances and tax implications and consequences. It seems that someone has received some advise from an accountant and does not like that advice. I cannot tell you that the advice was incorrect or based on an erroneous understanding.

    If you are asking about the purported basis for the fundraising - that is, to cover "funeral costs because there was no insurance to cover the costs of burying 2 sons", it is unclear that there has been any fraud or misrepresentation. The ability to use money from another source, that is, the "grandmother's insurance" does not necessarily mean fraud or that there is a legal limitation on the use of the money donated. However assuming that the initial collection efforts were lawful, if your "friend" collected the money for one purpose and feels that it is improper to turn over the funds for the purpose collected, then she needs to contact an attorney to discuss the legal position. It is possible that the failure to use the money for the purpose collected could be a criminal act or create civil liability. The state Attorney General's office may be able to provide you with additional information regarding the use of these funds.

    If your question regarding the initial collection efforts were lawful, again your friend needs to consult with legal counsel to determine what documents were initially executed from the bank and in connection with the solicitations.

    As for any claim of defamation, there is insufficient information to address this issue.

    Please be aware that, although I am a Georgia attorney, none of the above should be construed as providing legal advice. The information and answers sought are well beyond what may be answered on a general website such as this. You need specific legal advice and should seek a qualified Georgia attorney who focuses on these types of tax, defamation and charitable issues as promptly as possible.

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