Willie Ann Madison incorporated Cherokee Children & Family Services Inc. (CCFS) as a nonprofit pub- lic...

 

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Willie Ann Madison incorporated Cherokee Children & Family Services Inc. (CCFS) as a nonprofit pub- lic benefit corporation and was its executive director. CCFS was to provide childcare brokerage ser- vices to low-income families. The corporation had no members. Its income was almost exclusively state and federal grants. CCES paid for travel to Hawail, personal travel the next year, and a trip to London-all by Madison and several of her relatives. Madison was regularly paid bonuses of 50 percent of her salary. She bought a building and leased it to CCFS (signing on behalf of CCFS) for five years at an annual rent of $49,932. During the first year, the lease was renegotiated at a retroac- tive annual rent of $72,000. Prior to expiration, the lease was renegotiated again to reflect leasing 20,000 square feet, although the building had only 9,700 square feet, at an annual rent of $210,000. The next year, three members of the board of directors approved the payment of "prorated back rent for the contract period. This was $210,000 rent times five, minus what CCFS had paid in rent to Madison. This amounted to $437,000 and was paid to Madison's company. The state attorney gen- eral sued to dissolve CCFS, saying it had abandoned its public purpose and had become devoted to private gain. Should it be dissolved? Willie Ann Madison incorporated Cherokee Children & Family Services Inc. (CCFS) as a nonprofit pub- lic benefit corporation and was its executive director. CCFS was to provide childcare brokerage ser- vices to low-income families. The corporation had no members. Its income was almost exclusively state and federal grants. CCES paid for travel to Hawail, personal travel the next year, and a trip to London-all by Madison and several of her relatives. Madison was regularly paid bonuses of 50 percent of her salary. She bought a building and leased it to CCFS (signing on behalf of CCFS) for five years at an annual rent of $49,932. During the first year, the lease was renegotiated at a retroac- tive annual rent of $72,000. Prior to expiration, the lease was renegotiated again to reflect leasing 20,000 square feet, although the building had only 9,700 square feet, at an annual rent of $210,000. The next year, three members of the board of directors approved the payment of "prorated back rent for the contract period. This was $210,000 rent times five, minus what CCFS had paid in rent to Madison. This amounted to $437,000 and was paid to Madison's company. The state attorney gen- eral sued to dissolve CCFS, saying it had abandoned its public purpose and had become devoted to private gain. Should it be dissolved?

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The detailed answer for the above question is provided below Yes CCFS should be dissolved The organi... View the full answer