McGuinness, who spent three months working as a communications strategist for the fund, is suing over a story in The People in October 2007 which she said was defamatory.
The front page story, headed: "Woman who cost Maddie fund £51k" was also published on the paper's website.
In her writ, McGuinness said the story suggested she had deliberately ripped off the Find Madeleine Fund by overcharging the McCanns for expenses to which she was not entitled and inflating her overtime.
She said the story claimed that, because of this, she was immediately forced to quit by the fund, although she had persuaded the McCanns to conceal this as the true reason for the end of her employment.
McGuinness, who runs Pineapple Consultants, said the story seriously injured her reputation and caused her considerable hurt, distress and embarrassment.
She said the allegations struck at the heart of her personal and professional reputation, casting serious doubt on her honesty and integrity, and were deeply offensive to her as they accused her of "cheating" a worthwhile and high-profile cause.
The writ claimed that, as a result of the story, the allegations were repeated in other media, and on the internet.
McGuinness said although she had written a letter of complaint to the paper, The People had refused to apologise or provide any correction, which has increased the injury to her feelings.
Now McGuinness is seeking damages and aggravated damages for libel and an injunction banning repetition of the original allegations about her.
SUNDAY PEOPLE: “WOMAN WHO COST MADDIE FUND £51K”
7 October 2007
£51K FOR 89 DAYS WORK ..GERRY HIT THE ROOF!
EXCLUSIVE MISSING MADDIE: McCANNS' FURY AT PR'S HUGE BILL £350-a-day press expert charged £20k for over time, booze and meals Family's outrage over drain on fund to find missing Maddie
By Jeff Pickett
Anguished Gerry McCann sensationally split from the expert masterminding the worldwide hunt for his missing daughter Madeleine after she put in a whopping £20,000 overtime and expenses bill.
Press and PR chief Justine McGuinness charged Gerry and wife Kate £51,000 for 89 days' work.
Her basic fee was £350 a day, making a total of £31,000.
And the rest was made up in overtime payments and expenses - including bar and restaurant bills.
Gerry, 39, lost his rag when he was told the Find Madeleine fund would have to foot the bill.
And McGuinness, 37, parted company with the family after a showdown with Gerry.
A source close to the family said last night: "Everyone at the fund was happy with the way Justine handled herself and the PR. She did a brilliant job.
"But there was a debate over her overtime and expenses bill which came as a surprise to Gerry. He hit the roof.
"He couldn't believe Justine's expenses and overtime were as high as £20,000 for the time she'd been in Portugal.
"She claimed overtime for nights when she had been out drinking and eating with journalists and other people over there.
"Justine was well paid by the fund on a day rate but claimed overtime too along with expenses.
"The family expected her day fee to cover EVERYTHING.
"Then the extra bills came in on top of this and there was a great deal of surprise within the fund."
The source went on: "The fund's managers were completely taken aback when she lodged the claim and immediately phoned Gerry.
"He then spoke to her about it. As part of the agreement to part company he said he would not publicise details of the rift. Kate and Gerry put out a statement thanking her for all her work on the campaign.
"But Gerry was livid because her expenses drained the fighting fund of a chunk of money intended to help find Madeleine."
McGuinness - who stood as a Lib Dem candidate at the 2005 General Election - was headhunted in June to help the McCanns' crusade to find four-year-old Maddie.
She was picked because of her political background.
And she acted as a spokeswoman and organiser of events to keep the campaign in the news.
Her efforts included getting celebrity backers such as England soccer idol David Beckham and Manchester United's Portuguese maestro Cristiano Ronaldo.
She also organised interviews and photocalls with the couple.
McGuinness advised Gerry and GP Kate, 39, on their audience with the Pope.
And she encouraged cardiologist Gerry to go to Washington in July to learn about the latest techniques for tracing missing kids.
But some critics warned she was making the campaign too much of a slick PR operation. And there were new concerns when when Portuguese police made Kate an official suspect.
The source said: "The McCanns hired a campaigns expert rather than someone to defend their reputations if things went awry.
"Once the Portuguese started pointing the finger at Kate things had to change."
McGuinness disputes the amounts involved. Last night she defended the payments and said: "I parted on good terms with Kate and Gerry and I regard them as my friends.
"They made it very clear to me that they were happy with the work I did." She added: "I sincerely hope Madeleine is found and I wish the McCanns well."
McGuinness quit on September 15 and was replaced by ex-Cabinet Office aide Clarence Mitchell, 46.
Foreign Office chiefs had sent Mitchell to Portugal to advise the McCanns after Maddie vanished from a room she was sharing with two-year-old brother Sean and his twin sister Amelie in the resort of Praia da Luz in May.
But the McCann family was split over his switch to join the Find Madeleine campaign.
The source told The People: "Gerry was the only one who wanted Clarence.
"He was determined to get him after building a strong relationship with him in Portugal. But nobody else wanted him because he had given Kate and Gerry - what some of the family thought of as - questionable advice.
"Clarence advised Kate to take the twins swimming and get pictured in her bathing suit shortly after the search for Madeleine had captured the media's attention. Kate was horrified by the suggestion - but Gerry wanted to go along with Clarence's advice.
"It was only when other family members told Gerry it was the wrong thing to do he backed down.
"The feeling was it sent the wrong message if Kate was pictured lounging by the side of the pool when she is distraught about Madeleine's disappearance." The source added: "Finding Madeleine is Kate and Gerry's No1 priority.
"The Portuguese police investigation has left them numb and they know valuable time's been lost.
"Kate is distraught and spends most of her time sitting in Madeleine's room.
"If it wasn't for Sean and Amelie she would have broken down long ago."
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