Nonprofit organizations play a critical role in supporting underprivileged children by providing essential services, including meals, education, health care, and social support. Donors and governments allocate billions annually to charities with the expectation that funds will reach intended beneficiaries. When these organizations are used instead as conduits for money laundering or personal enrichment, the harms are profound, affecting children, families, donors, and public confidence in civil society.
Although money laundering is already criminalized at federal and state levels, exploiting nonprofits serving vulnerable children should be treated as an aggravated offense, with specific statutory language and enhanced penalties. The need for such criminalization has become evident through recent investigations and charges in states such as Florida.
Background: Money Laundering and Nonprofits
Money laundering generally involves disguising the origins of unlawfully obtained funds to make them appear legitimate (U.S. Department of Justice [DOJ], 2025). Traditional anti‑money laundering statutes target financial institutions and commercial entities, but nonprofit organizations can be equally vulnerable to abuse. Unethical organizational leaders may use nonprofits’ tax‑exempt status, complex financial networks, and public goodwill to “clean” illicit proceeds.
When a nonprofit purports to serve underprivileged children, the ethical breach is particularly severe: the façade of charity is used to access funds targeted for those who lack financial or political power. As a result, lawmakers, prosecutors, and advocates have increasingly scrutinized these abuses.
Florida Examples of Nonprofit Abuse
Center for Special Needs Trust Administration (CSNT)
A stark illustration of nonprofit exploitation occurred in Florida involving the Center for Special Needs Trust Administration (CSNT). Federal authorities unsealed an indictment charging two Florida men with multiple crimes, including conspiracy to commit money laundering related to the misappropriation of more than $100 million from a nonprofit that managed trust funds for people with special needs (Govoni & Witeck case). The defendants allegedly siphoned funds meant to support disabled beneficiaries and used complex financial transactions to conceal the theft (Department of Justice, 2025; see also Fox 13 News, 2025). Numerous trust accounts, many serving vulnerable children, were partially or fully drained, undermining the very purpose of the nonprofit (Fox 13 News, 2025; DOJ, 2025).
This case underscores how the misuse of nonprofit structures for personal enrichment can devastate populations the charities are meant to protect, especially children and individuals with disabilities.
Rayfield School of Excellence Case
Another example involved a Florida nonprofit participating in a state‑funded program to provide meals for children. The nonprofit’s director was charged with over-billing the State of Florida for summer meals, defrauding state funds of more than $2.8 million and misapplying nonprofit revenue for personal benefit (Office of the Attorney General, 2023). Although not explicitly about laundering money through a children’s charity, this case demonstrates how nonprofit funds intended for underprivileged children can be misdirected for individual gain, a behavior that should be subject to enhanced scrutiny and criminal penalties.
Why Exploiting Nonprofits Serving Children Should Be a Specific Crime
Aggravated Harm to Vulnerable Populations
Fraud and money laundering involving charities already violate existing law, yet the moral and social harms are magnified when children are the ostensible beneficiaries. Children lack the capacity to advocate for themselves, making it easier for unscrupulous actors to conceal abuse. Enhanced statutes that recognize the exploitation of children‑focused nonprofits as an aggravated offense would reflect societal condemnation of this conduct.
Deterrence and Public Trust
Clearer criminal categories with enhanced penalties for laundering money through nonprofits that serve children would send a strong deterrent message. Public trust in charitable institutions is essential for philanthropy and community engagement; repeated abuses risk eroding donor confidence and defunding legitimate services.
Strengthening Accountability for Nonprofit Boards
A nonprofit board of directors holds a legally defined fiduciary duty to exercise oversight, protect organizational integrity, and ensure compliance with applicable laws and ethical standards. When boards are ineffective, tolerate bribery, overlook illegal activity to satisfy leadership, ignore sexual harassment complaints, or fail to safeguard funds intended for mission-related purposes, they jeopardize both the organization and those it serves. Under Florida law, nonprofit directors and officers are generally shielded from civil liability when acting in good faith and in the best interests of the organization (Fla. Stat. § 617.0834, 2024), but this immunity does not extend to actions involving criminal conduct, bad faith, or breaches of duty such as self-dealing and willful disregard of legal obligations (Fla. Stat. § 617.0834, 2024; Fla. Stat. § 617.0830, 2025). Governance failures, including ignoring sexual harassment and mismanagement of funds, can expose boards to lawsuits from employees, beneficiaries, donors, and state regulators, including the state attorney general, for breaches of fiduciary duty or wrongful acts (ASAE-AON, 2025; Nonprofit Risk Management Center, 2025). When board members actively condone illegal conduct or fail to intervene despite clear red flags, they should not only be subject to civil liability but also criminal prosecution where appropriate and barred from serving on any nonprofit board in the future to prevent further harm to vulnerable populations and to uphold public trust in the charitable sector (Nonprofit Risk Management Center, 2025). Enhanced statutory provisions and enforcement mechanisms that explicitly address aggravated misconduct by nonprofit boards would reinforce accountability and ensure that serving on a board reflects a commitment to ethical stewardship and legal compliance.
Facilitating Prosecution and Restitution
Specific criminal provisions can help prosecutors pursue cases more efficiently and secure restitution for victims. In cases like CSNT’s, where complex financial manipulation and concealment are involved, distinct statutory language focused on child‑serving nonprofits would aid in framing charges that align with the public harm caused.
Policy Recommendations
- Enact Enhanced Criminal Statutes: State and federal legislatures should clarify that laundering or misappropriating funds from nonprofits serving underprivileged children constitutes an aggravated crime with significant penalties beyond general fraud or money laundering statutes.
- Strengthen Oversight and Transparency: Require regular public audits and disclosure of financial activities for nonprofits serving children and other vulnerable populations to identify red flags early.
- Promote Whistleblower Protections: Safeguard employees, volunteers, and beneficiaries who raise concerns about financial irregularities in charities.
- Interagency Collaboration: Improve cooperation between charity regulators (e.g., IRS, state attorney general offices) and criminal investigators to detect and act on abuses involving nonprofits.
While existing money laundering and fraud laws provide a framework to prosecute financial abuse and deception, they do not sufficiently address the unique harms caused when nonprofit organizations meant to serve underprivileged children are used for illicit financial gain. Recent cases in Florida, such as the CSNT trust misappropriation and other nonprofit fraud schemes, reveal the need for legal frameworks that specifically criminalize the laundering of money through child‑serving charities. By enacting targeted statutes, strengthening oversight, and enhancing penalties, policymakers can better protect vulnerable populations and uphold the integrity of the nonprofit sector.
References
Associated Press. (2025, April 28). Hope Florida: A timeline of how a DeSantis‑backed state charity was accused of wrongdoing. WESH. (WESH)
Department of Justice. (2025, June 23). Florida nonprofit founder and accountant charged with stealing over $100M from special needs victims. U.S. DOJ Press Release. (Department of Justice)
Fox 13 News. (2025). Pinellas businessman accused of stealing $100M from special needs trusts indicted on federal charges. (fox13news.com)
Office of the Attorney General. (2023, June). Attorney General’s office charges nonprofit director for stealing nearly $3 million. Florida Legal. (myfloridalegal.com)
CWC News 