My wife is the president/treasurer of the board of our governmentally subsidized low-income housing coop. Recently she confessed to me that she spent $25,000 from the building reserve funds. Will she face legal charges if and when the governmental agency finds out through its annual audits that the funds are missing?
I can’t tell you if she will face charges. But if she spent the money for her personal benefit and not for some other use for the building, as I interpret your question to say, there is certainly a chance that she will. There would definitely be a civil liability, even if not a criminal violation.
She may be able to reduce the likelihood of a severe penalty if she returns the money immediately, confesses to the rest of the board, and resigns from her positions. If she can’t repay immediately, she should see if she can borrow it from some other source, or enter into a repayment agreement with the coop. With a misappropriation like this, she will have to make restitution when the loss is ultimately discovered (which you have to assume that it will), so she might as well get started now. If she never did anything like this before and it is a one-time event, she may be treated more leniently if she comes forward now to correct the situation before the loss is discovered by someone else.
I know it won’t help you, but readers should look at this case as another example of why it is not a good idea to have the same person serve as president and treasurer of a nonprofit organization. Organizations need checks and balances and fiscal controls over their finances. Even good people may be tempted to misuse funds if they think that no one else is watching.