Embezzlement of Youth Sports Funds

I recently received an email from one of the many organizations that I belong to with an article entitled “Thousands of dollars mishandled with Spartanburg County, SC youth baseball team, officials say.”  Well of course the headline piqued my interest and I read the article.  Apparently, thousands of dollars went missing from a youth baseball travel team and the loss of this money caused the teams parents to have to start a “GoFundMe” page to raise the money that they need to go to the “Cal Ripken Experience” that starts in July.  My question is how did we get here? Could it be possible that the outrageous amounts of money that are being thrown around youth sports has led some people to nefarious acts, and who suffers the most…the children.

            One of my first blog posts was about youth sports being a $19 billion dollar industry with no oversight, both on the national or local levels, meaning that millions of dollars are being pumped into local travel leagues and no one is monitoring where the money is going leading to the theft of thousands, if not millions of dollars.  A quick google search for articles relating to this subject seems to show that this type of theft is quite prevalent.  Examples are as follows:

·      New Jersey man accused of stealing thousands of dollars from youth program

·      New Jersey couple stole $91K from youth soccer club to pay for Disney trip, other splurges: police

·      Clermont County couple accused of stealing from youth sports organization

·      Billions flow through youth sports. And some of it keeps disappearing

The amounts stolen range from $15,000 to over $100K. This is money that usually comes from registration fees, training fees, donations and fundraisers that parents and the children are usually forced to participate in in order to be part of an organization and is used for training, tournaments, equipment purchases and much more so once the money is stolen its gone and organizations have to start from scratch and re-raise money, much like what happened in Spartanburg, South Carolina.

In a June 2018 article entitled “Why Youth Sports Embezzlement Happens, and How Parents Can Help Prevent It” Bob Cook talks about this plague in youth sports.  Mr. Cook states that the NBC local affiliate in New York ran an investigative piece on embezzlement in youth sports and, came to the not-so-shocking conclusion it happens -- a lot. Mr. Cook stated that “The I-Team found [35 cases] in the tri-state area over the past eight years in which adults stole hundreds of thousands of dollars to pay for things like debts, college bills, weddings and vacations.”  He goes on further to state that Erik Carroza, founder of the Center for Fraud Prevention, helps youth leagues to improve their financial integrity and Mr. Carroza says he has been able to document about 250 cases of embezzlement across the country over the last several years. Finally, he states that “The total amount embezzled exceeded over $17 million.” And according to Mr. Cook those are the documented cases and there are likely to be more that have not hit the local or national radar so that $17 million number could be much higher.  This is money that will never be recovered and is lost forever. Finally, Mr. Cook states that if you want to make sure the fees you're paying are going where they're supposed to go, here are a few questions you can ask:

1.     Who is in charge of handling the money?

2.     How many people need to sign off on any financial transactions? (The answer had better be at least two.)

3.     What is the process for determining how money is spent? Is it one person's whim, or is there a board or committee that needs to decide?

If a league doesn't have robust money-handling processes, that doesn't necessarily mean embezzlement is happening. But it does mean the organization is at risk. If you're worried, one helpful thing might be for you to volunteer to help, or if you're not available, help the league find resources to take care of financial issues.

  I will admit that as a board member of our local youth soccer association money and budget discussions were always the touchiest of the discussions that we had.  Some board members and coaches felt that the money was theirs to spend freely and they had no one to answer to when it came to spending; however, the argument against that philosophy was that we did have someone to answer to….the parents and children of the league and we, as board members, did not have the right to spend money however we wanted to and we actually had a fiduciary responsibility to ensure that the money was spent properly and with an accounting as to where all the money was going.  During my time on the board (this was in the pre-internet days) we read a few articles about local youth sports leagues having money embezzled and we went with Mr. Cooks three points listed above to ensure that we had a full accounting of where all our money was going, and they were as follows:

·      The Treasurer was in charge of managing the money and they were responsible for giving a financial report at every meeting that included the money that we took in, what was spent, any big payments that were due in the soon and what our balances were

·      Initially, only the treasurer signed off on the checks; but as time went on the treasurer and League President, and in the President’s absence the League Secretary, signatures were required for any checks over $500, and

·      All spending, short of regular bills (i.e., rent, gas and electric, telephone and internet, etc.) were discussed.  Bigger purchases, such as training for the players and travel, equipment purchases, uniforms, etc. would be discussed by the board and consensus would be reached as to whether the purchase was needed or if the purchase needed to go out to bid in order to get the best bang for our buck.

Now while our system may not have been the best, we never had any issues with money, and we were able to run our league above open and without any money issues.

            My advice to any youth sports leagues out there would be to ensure that everyone, from the board members to the parents, know exactly who is in charge of the money and what procedures are in place for both making a purchase and spending money is and make it as transparent to all the members of the organization so there are no questions as to what the league is doing with the thousands of dollars that changes hands throughout a season.  Following Mr. Cooks three simple points could save many headaches down the road and keep everyone happy and more importantly, ensure that our children have healthy and happy experiences.