[silvarilon]

I'm not a lawyer, but to my understanding, the rules with donations are...

... if you don't specify what the money is for when donating, then the site/company/individual should have a policy that specifies what the money is going towards (and that policy could say "anything I want" but probably says "costs of running and developing the mud" and might also say it can go towards wages for the staff running the mud.) - since you didn't specify, the money can be used for anything that the policy mentions and is reasonable. So they could probably buy a new home desktop computer, and count that under "costs of running the mud" if they do dev from home. But they couldn't buy their sister a pony with it.

If they don't have a policy on what the money will be spent on, I'm not sure what happens. I assume the money has to be spent on what they represented themselves as collecting for. So that would probably still mean the money goes towards running the mud.

Finally, if you donate money, you can specify what you want it spent on. So you could say "I want this spent on bandwidth costs" or "I want this spent on staff wages" - and they have to both spend it on what you specify, as well as keep financial records so that, later, it can be proven that they spent it on what you wanted. This generally annoys people, because it creates much more paperwork for them, and they probably already know where the money is most needed. If you specify that the donation should be spent on something, they are free to refuse the donation.

Now, if the mud closes down, they still have an obligation to spend the money on what they said they would. So they can use the money to pay bills that the mud may have incurred, such as ISP costs or remaining payments on the hardware. But they can't legally just pocket the money.

They may be able to legally close down and pocket the money if one of the things they can spend the money on is wages for themselves.

All that said, I'm not a lawyer.

Also, you're talking about hundreds of dollars. Which is a lot for donations and home-run muds, but is really not very significant in terms of "real world" wages. Dealing with something like this in court is going to cost significantly more. Considering the amount of work that goes into building a mud that is good enough to convince players to donate hundreds of dollars... that's a huge amount of work. The hundreds of dollars that they might be pocketing would, essentially, just be a tip.

If it bothers you, maybe send an email asking what they plan to do with the donations. You might get a very reasonable answer.