Either way, in a fraud case it seems likely that—until these technical distinctions about control and source of funds are worked out in court—the court would have frozen the assets of the charity, given that it was explicitly created to hand out FTX funds, either at the request of the government, or of the civil litigants, depending on the case.
I think there are circumstances in which the identity of the board members would make a difference as to the availability of this relief. However, in the event there is strong evidence of fraud and reason to think the funds could be clawed back, there’s a good chance you could get the injunction either way.
The other possible relief—which might be more of a state-law thing—would be a requirement that the nonprofit replace its board members, at least on an interim basis. The NY AG’s office obtained relief of that nature in a well-publicized 2019 case against a very well-known public figure’s foundation.
Either way, in a fraud case it seems likely that—until these technical distinctions about control and source of funds are worked out in court—the court would have frozen the assets of the charity, given that it was explicitly created to hand out FTX funds, either at the request of the government, or of the civil litigants, depending on the case.
Is that correct?
I think there are circumstances in which the identity of the board members would make a difference as to the availability of this relief. However, in the event there is strong evidence of fraud and reason to think the funds could be clawed back, there’s a good chance you could get the injunction either way.
The other possible relief—which might be more of a state-law thing—would be a requirement that the nonprofit replace its board members, at least on an interim basis. The NY AG’s office obtained relief of that nature in a well-publicized 2019 case against a very well-known public figure’s foundation.