N.Y. Mental Hygiene Law § 16.32: Improper expenditure of moneys

§ 16.32 Improper expenditure of moneys.

(a) No provider of services certified pursuant to this article shall

make any charitable contribution of any state moneys, medical assistance

payments or social security or supplemental security income or any

interest or other income earned thereon, except as authorized by the

commissioner. Provided, however, the provisions of this section shall

not apply to receipts or donations from private or non-governmental

sources and any interest or other income earned thereon.

(b) No loans, other than through the purchase of bonds, debentures, or

similar obligations of the type customarily sold in public offerings, or

through ordinary deposit of funds in a bank, shall be made by a

not-for-profit corporation which is certified as a provider of services

pursuant to this article to its employee who receives an annual salary

in excess of thirty thousand dollars, or to any other corporation, firm,

association or other entity in which such employee is a director or

officer or employee or holds a direct or indirect substantial financial

interest, except a loan by one corporation incorporated as a charitable

corporation as defined in paragraph (a) of section one hundred two

(Definitions) of the not-for-profit corporation law to another

charitable corporation, or a loan for a temporary or emergency purpose

which will further the health and welfare of the employee so long as the

purpose and amount of such loan are disclosed to and approved by the

board of directors of such agency. Such disclosure shall be filed with

the secretary of the corporation and entered in the minutes of the

meeting, and, if approved by such board, such disclosure shall also be

forwarded in writing to the commissioner and to the director of

community services of each local governmental unit that has, at the time

of such disclosure, a contract with such corporation for the rendition

of services pursuant to article forty-one of this chapter. A loan made

in violation of this section shall be a violation of the duty to the

not-for-profit corporation of the directors or officers authorizing it

or participating in it, but the obligation of the borrower with respect

to the loan shall not be affected thereby.

(c) (1) No contract or other transaction between a not-for-profit

corporation which is certified as a provider of services pursuant to

this article and one or more of its employees who receive an annual

salary in excess of thirty thousand dollars, or between a not-for-profit

corporation and any other corporation, firm, association or other entity

in which one or more of such persons are directors or officers of the

board or corporation, or employee who receives an annual salary in

excess of thirty thousand dollars, or have an indirect or direct

substantial financial interest, shall be either void or voidable for

this reason alone:

a. If the material facts as to such person's interest in such contract

or transaction and as to any such common directorship, officership or

financial interest are disclosed in good faith or known to the board or

committee, and the board or committee authorizes such contract or

transaction by a vote sufficient for such purpose without counting the

vote or votes of such interested person; or

b. If the material facts as to such person's interest in such contract

or transaction and as to any such common directorship, officership or

financial interest are disclosed in good faith or known to the members

entitled to vote thereon, if any, and such contract or transaction is

authorized by vote of such members.

(2) If such good faith disclosure of the material facts as to the

person's interest in the contract or transaction and as to any such

common directorship, officership or financial interest, is made to the

directors or members, or known to the board or committee or members

authorizing such contract or transaction, as provided in paragraph one

of this subdivision, the contract or transaction may not be voided by

the corporation for the reasons set forth in paragraph one of this

subdivision. If there was no such disclosure or knowledge the

corporation may void the contract or transaction unless the party or

parties thereto shall establish affirmatively that the contract or

transaction was fair and reasonable as to the corporation at the time it

was authorized by the board, a committee or the members.