Is it Bank Fraud or Not?

You be the judge.

The case is about bank fraud. Is it fraud or not?

A South Carolina non-profit corporation has $1,000,000+ in financial institutions. A recent, past Treasurer opened the largest accounts with a large, national, financial services firm. The current Treasurer maintains accounts. 

The Board of Directors may or may not have followed proper business protocol in documenting decisions and authority. In the absence of action at monthly, open, board meetings, I'll say they have not.

The Treasurer is a nice person and means no harm.

However, the Treasurer is not the legitimate Treasurer of the non-profit corporation. This is because she was not duly-elected by the Board, and that is because all of the members of the board are themselves not legitimate members of the board.

This is because all the current directors were elected by persons who were not eligible to vote for them (except one in the November 12, 2024 election (which itself should not have been held)). 

Past boards of directors began allowing persons to attend the Annual Meeting of Voting Members who were not eligible to attend. They were not eligible because their Neighborhoods had not held Neighborhood Meetings. Many (most?) of the attendees are "recognized" as "Voting Members", even though they were not elected by their Neighborhoods. And then they were allowed to vote. When they voted every November, they voted for three or four directors, depending on the number of director-terms expiring that year.

Except the Meeting of Voting Members should not have been convened (and no election should have taken place), because those attending were not legitimate Voting Members. 

To be a legitimate Voting Member, a process described in the By-Laws (Art. V, §3) must be followed.

It hasn't been followed.

Without the compliance with the By-Laws, without legitimate Voting Members, without any election by legitimate Voting Members, there are no legitimate Directors. Without legitimate directors, there are no legitimate officers. There is no legitimate President or Treasurer. In fact, there is no legitimate Board of Directors, which is required of non-profit corporations in South Carolina.

If a person claims to be Treasurer (but is not) and initiates and maintains financial transactions, is that bank fraud?

According to at least one financial services manager in Columbia, it is. What would the Compliance Departments at Edward Jones, South Carolina Federal Credit Union, First Citizens Bank/CIT, and First Community Bank say?

Would they freeze the accounts of the HOA until they could figure out who the lawful parties are? Would they just close the accounts and mail checks to the HOA? Would the HOA be able to open new accounts?

OK, "Judge". What's the verdict? Fraud or not?

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