Legal Outlook For Potential Misuse Of Hope Florida Foundation Funds

Below is a forward-looking analysis of the main statutes, regulators, and realistic exposure the Foundation – and the individuals who directed the $10 million Medicaid-settlement windfall into political activity – now face.

1. Key Facts Driving Liability

• Source and path of the money. A $10 million slice of a Centene Medicaid settlement (Sept. 27 2024) was wired to the Hope Florida Foundation. Within weeks, Hope Florida sent two $5 million “grants” to Secure Florida’s Future and Save Our Society From Drugs; those groups then moved ≈ $8.5 million to the political committee Keep Florida Clean that opposed Amendment 3 (adult-use cannabis). WUSFTampa Bay Times
• Investigations launched.
  • Federal: On May 16 2025 two U.S. Representatives formally asked DOJ, HHS-OIG, and the IRS to open criminal and civil probes. castor.house.govFlorida Phoenix
  • State: A Florida House inquiry publicized governance lapses (no bylaws, missing minutes); FDACS and the Attorney General’s Charitable Trusts section are reviewing Chapter 496 compliance. Tampa Bay TimesWUSF

These facts matter because the legal exposure hinges on (i) the source of the money (Medicaid), (ii) the charitable vehicle used (a §501(c)(3) corporation), and (iii) the political end use.

2. Federal Exposure

Theory	Statutory Hook	What Prosecutors Must Show	Penalties
Health-care fraud / conversion of federal program funds	18 U.S.C. § 1347; 42 U.S.C. § 1320a-7b	Settlement dollars earmarked for Medicaid purposes were knowingly diverted to a non-Medicaid use	Up to 10 yrs prison + fines; mandatory restitution
Conspiracy & money-laundering	18 U.S.C. § 371; §§ 1956-57	Agreement to disguise the origin/use of funds via layered nonprofits/PAC	5–20 yrs + forfeiture
Wire fraud	18 U.S.C. § 1343	Interstate wires (bank transfers, PAC ads) used to execute the scheme	20 yrs + restitution
Tax-exempt-entity campaign intervention	IRC § 501(c)(3) + excise §§ 4955, 4958	Hope Florida knowingly participated or intervened in a political campaign	Revocation of exemption; 25 % (and up to 200 %) excise taxes on the organization and “disqualified persons” (directors, officers)

Likelihood

• IRS action is almost certain: The public paper trail gives Exempt Organizations a clear basis for a revocation/excise-tax exam.
• Criminal charges are possible but hinge on intent – DOJ will need emails or testimony showing the principals knew the Medicaid money’s restrictions and still routed it to campaign activity.

3. Florida Exposure

Theory	Statutory Hook	Exposure
Misrepresentation & diversion of charitable assets	Fla. Stat. § 496.415(7) (prohibits “unauthorized use of contributions”)	FDACS may levy $5 k per act, seek injunctions, or refer for prosecution. Florida Senate
Campaign-finance conduit violations	Fla. Stat. §§ 106.08, 106.15	Civil fines (3× amount) for PACs and any “person” who “gives money in the name of another.”
Money laundering / grand theft	Fla. Stats. §§ 896.101, 812.014	First-degree felony if ≥ $100 k laundered with intent to conceal source/use.
Breach of fiduciary duty (directors/officers)	Fla. Not-for-Profit Corp. Act § 617.0834	Personal civil liability; AG can seek removal and restitution.

Enforcement Track

• FDACS/AG civil route is quickest: expect subpoenas for bank records, followed by negotiated penalties or a consent judgment requiring governance reform.
• State criminal cases are less common but not unprecedented; prosecutors would rely on § 896.101 if they can trace false documentation or concealment.

4. Governance & IRS Risks For The Board

1. Intermediate-sanctions excise tax (§ 4958). Each board member who approved the grants could owe 25 % of the diverted amount personally; if not corrected, an additional 200 % tax applies.
2. Automatic revocation/“death penalty.” If the Service finds the charity’s primary activity became political, it can retroactively revoke 501(c)(3) status, exposing prior-year donors to back-tax risk.
3. State derivative suits. Donors or Florida’s AG may file to claw back assets and bar current directors.

5. Precedents & Practical Outlook

Precedent	Result	Lesson
United States v. Whitaker (N.D. Ga. 2023) – diversion of opioid-settlement funds through a veterans charity	30-month prison term + $3 m restitution	Court treated charity as mere conduit; intent to influence policy triggered fraud counts.
Trump Foundation (N.Y. 2019 civil case)	Dissolution, $2 m restitution, 10-yr officer ban	State court can dissolve and bar principals without criminal conviction.

How This maps To Hope Florida:

If investigators prove the directors knew the settlement money was Medicaid-restricted, the facts mirror Whitaker and support federal fraud/money-laundering charges.

If intent is murkier, the outcome may resemble the Trump Foundation settlement: civil dissolution, officer bans, and restitution to the state Medicaid fund.

6. Bottom-Line Prognosis

• Civil action is virtually guaranteed – expect IRS revocation or a closing agreement plus an FDACS consent decree within 12–18 months.
• Criminal exposure is plausible but not inevitable. The trigger will be documentary proof (e-mails, board minutes) showing knowing misuse or concealment; recent board-chair resignations and missing governance records increase that risk. Tampa Bay Times
• Political calculus matters: If Casey DeSantis remains a 2026 gubernatorial contender, prosecutorial discretion could delay indictments until after the election cycle, but civil tax and charitable-trust actions are less susceptible to that timing.

Stakeholders (board members, officers, PAC treasurers) should immediately:

1. Retain independent counsel (separate from the Foundation’s lawyer).
2. Preserve all ESI and board records.
3. Conduct a privileged internal review to identify who conceived, approved, and documented the grant-to-PAC pipeline.
4. Consider proactive restitution or corrective payments before IRS exams begin – this can mitigate excise taxes and influence prosecutorial decisions.

The legal stakes are high: from stiff excise taxes and organizational dissolution to felony sentences, and our Tampa, FL criminal defense lawyer can help you make informed decisions every step of the way. Early, transparent corrective steps and skilled counsel at Stechschulte Nell will define whether this case closes as a civil settlement or escalates to criminal court.