Chicago non-profit A Safe Haven accuses former president of misappropriating $2.5 million

A Chicago non-profit is suing its former president, accusing him of illegally diverting millions of dollars in charitable funds and jeopardizing the charity's future in fighting homelessness.

Mark Mulroe resigned from A Safe Haven Foundation in June. A 56-page lawsuit filed earlier this month accuses him of misappropriating more than $2.5 million in charitable funds.

The non-profit, based in North Lawndale, provides housing and behavioral health services for the homeless.

According to the lawsuit, Mulroe served simultaneously as president of the charity and as the owner and controller of A Safe Haven, L.L.C. and LU Partners — the management companies that handled the Foundation's day-to-day operations.

The lawsuit alleges he exploited that dual control for personal benefit by transferring huge sums of money without board approval.

According to the lawsuit, "Mulroe directed the transfer of approximately $1.405 million in restricted grant funds," which could jeopardize future state grant funding.

The lawsuit also points out a similar issue in Mulroe's past. In 2011, the Illinois Supreme Court found that he misused more than $100,000 in escrow funds, resulting in the suspension of his law license.

"It's very unusual for something like this to happen, or for an organization to sue a previous CEO or manager," said Bennett Weiner, President & CEO at BBB Wise Giving Alliance, a charity monitoring organization.

Weiner said the Wise Giving Alliance's own standards caution charities to heavily scrutinize dual roles like the one Mulroe held, and recommend setting up an automatic requirement for board approval on spending above a certain threshold.

"The board of directors is where the buck stops for every charity, and it's so important for them to have that arm's length, relationships with any staff- or board member-related firms to help ensure that objective oversight can take place," he said.

Mulroe did not respond to a request for comment from CBS News Chicago, but the management company Safe Haven LLC, also named in the suit, denied the allegations in the lawsuit.

"A Safe Haven LLC has managed and financially supported A Safe Haven Foundation since its inception, and together, the organizations have made a profound impact on the community. Although the organizations have unfortunately begun to separate due to a breakdown in Foundation leadership, A Safe Haven LLC is working collaboratively with the Foundation toward a thoughtful and orderly transition that will allow each organization's respective operations to successfully move forward independently, while still fulfilling their underlying mission. A Safe Haven LLC is committed to maintaining continuity, minimizing disruption, and supporting the individuals and communities it serves throughout that process. 

Although A Safe Haven LLC continues to engage constructively with the Foundation regarding the transition, the pending litigation remains unresolved, and A Safe Haven LLC and the other defendants strongly dispute the characterization of the events and transactions set forth in the complaint, vehemently deny any improper conduct, and expressly reserve all claims and defenses. A Safe Haven LLC's participation in the ongoing transition efforts should not be construed as an admission or acceptance of any allegation asserted in the litigation. A Safe Haven LLC does not intend to comment further on the specific allegations at this time, and will address them through the appropriate court process."

An attorney for A Safe Haven Foundation said he couldn't comment beyond the details laid out in the lawsuit against Mulroe and their management companies.

"The Foundation looks forward to presenting the facts and evidence in court," the foundation's attorney said.

Mulroe resigned from his position in June.