What constitutes commingling of funds?

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What constitutes commingling of funds?

I have a residential care facility for the elderly. One of my elderly residents pays his monthly rental/services via check payable to me and not the business name (his preference) because it is easier for him. I cash the rental check (and I always write rental/month on the memo line of the check) at his bank since I take him to his bank often at his request. We do not have a joint account nor share the same bank. Is it considered commingling? He’s no longer at my facility and has filed a complaint that I commingled his account.

Asked on May 3, 2011 under Business Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You would have to read the statute as to commingling of funds in California, but generally speaking, if funds that are earmarked for one thing (the residential care facility here) are deposited and show up somewhere else (your personal bank account and noted on your statement), then technically they are being commingled and you could be charged as such.  You would have to show that the deposit and the check written to the residential care facility were contemporaneous, otherwise you could be guilty of much more than commingling under criminal statutes.  The word "embezzlement" comes to mind here.  I would consult with a criminal attorney in your area on the matter.  Good luck.


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