2019 New York Laws
MHY - Mental Hygiene
Title E - General Provisions
Article 32 - Regulation and Quality Control of Chemical Dependence Services and Compulsive Gambling Services.
32.33 - Improper Expenditures of Money.

§ 32.33 Improper expenditures of money.
  Improper  expenditures  of money shall include, but not be limited to,
the following:
  (a) No provider of services issued an operating  certificate  pursuant
to  this article shall make any charitable contribution of state moneys,
medical assistance payments or social security or supplemental  security
income  or  any  interest  or  other  income  earned  thereon, except as
authorized by the commissioner. Provided, however, the provision of this
section shall not  apply  to  receipts  or  donations  from  private  or
non-governmental  sources  and  any  interest  or  other  income  earned
thereon,  or  to  monies  advanced  to  employees  in  accordance   with
performance of their official duties as employees.
  (b)  Notwithstanding  the  not-for-profit  corporation  law, no loans,
consisting in whole or in part of funding provided by the office,  shall
be  made by a not-for-profit corporation issued an operating certificate
as a provider of services pursuant to this article to  any  employee  of
such  corporation,  or  to  any  other corporation, firm, association or
other entity in which an employee is a director or officer  or  employee
or  holds  a  direct  or indirect substantial financial interest. A loan
made in violation of this section shall be a violation of  the  duty  to
the  not-for-profit corporation of the directors or officers authorizing
it or participating in it, but  the  obligation  of  the  borrower  with
respect to the loan shall not be affected thereby.
  (c)  1.  No  contract  or  other  transaction between a not-for-profit
corporation issued an operating certificate as a  provider  of  services
pursuant  to this article and one or more of its employees, or between a
not-for-profit corporation and any other corporation, firm,  association
or  other  entity  in which one or more of such persons are directors or
officers of the board or corporation, or employee who receives an annual
salary in excess of thirty thousand dollars,  or  have  an  indirect  or
direct  substantial financial interest, shall be either void or voidable
for this reason alone:
  (i) If the material  facts  as  to  such  person's  interest  in  such
contract  or  transaction  and  as  to  any  such  common  directorship,
officership or financial interest are disclosed in good faith  or  known
to  the  board  or  committee,  the  board  or committee authorizes such
contract or transaction by a vote sufficient for  such  purpose  without
counting the vote or votes of such interested person; or
  (ii)  If  the  material  facts  as  to  such person's interest in such
contract  or  transaction  and  as  to  any  such  common  directorship,
officership  or  financial interest are disclosed in good faith or known
to the members entitled to vote thereon, if any, and  such  contract  or
transaction is authorized by vote of such members.
  2.  If  such  good  faith  disclosure  of the material facts as to the
person's interest in the contract or transaction  and  as  to  any  such
common  directorship,  officership or financial interest, is made to the
directors or member, or known to  the  board  or  committee  or  members
authorizing  such  contract or transaction, as provided in paragraph one
of this subdivision, the contract or transaction may not  be  voided  by
the  corporation  for  the  reasons  set  forth in paragraph one of this
subdivision.  If  there  was  no  such  disclosure  of   knowledge   the
corporation  may  void  the  contract or transaction unless the party or
parties thereto shall  establish  affirmatively  that  the  contract  or
transaction was fair and reasonable as to the corporation at the time it
was authorized by the board, a committee or the members.