Organizational fraud has robbed Canadian youth sports groups of nearly $ 8 million in the past decade

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For the Corner Brook Minor Hockey Association, it was like receiving a body check on free ice.It was at the end of March, near the end of the 2018-19 season in Corner Brook, Newfoundland, that league officials were told they were several thousand dollars behind in payments for ice time.

By the time the officials got to the bottom of it, it was discovered that the organization was in shortfall of approximately $ 80,000.

An RCMP investigation led to the former league treasurer being charged with six fraud-related offenses.

“It was a shock. It was very unfortunate, especially when you have a small community and everyone is involved in hockey, ”said Darren Harvieux, the league’s new treasurer and a member of a group of volunteers who worked to get the hockey game back on track. organization on track. financial base.

Harvieux says the arrest did nothing to repair damage from the alleged thefts.

“The money that went missing was money that came from parents, parents who work hard in the community,” he said. “We’re a small community and the most important thing was really that people’s money was gone – money that they thought was for the enjoyment of their kids playing hockey.

Corner Brook Minor Hockey Association treasurer Darren Harvieux came up with his name a year ago to help the group get out of debt after the money went missing. (Colleen Connors / CBC)

And this is just one example of a situation common across Canada: adults in positions of trust are stealing or allegedly stealing money from a shaken youth sports organization. A CBC Sports investigation reveals that in the past decade alone, nearly $ 8 million has disappeared from dozens of sports leagues and associations across Canada.

The amount of money stolen varies from a few thousand to millions of dollars, but the pattern in almost all cases is similar: a theft is committed by someone within the organization who is responsible for the finances of the league.

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Another example: Around the same time as the Corner Brook incident, but across the country, it appeared that a frightening amount had gone missing from the Ontario Minor Hockey Association.

The OMHA oversees 225 local associations and 28 leagues across the province, involving nearly 300,000 players, coaches, coaches and parents. According to court documents obtained by CBC Sports, the league’s chief financial officer – a 16-year-old employee – stole nearly $ 2.4 million over six months “to support an online gambling and shopping addiction.”

The theft is believed to be the largest amount of money ever stolen from a youth sports organization in North America. This was only revealed when the employee confessed to OMHA’s Executive Director Ian Taylor after realizing the association would not be able to make a large payment.

The woman has subsequently pleaded guilty and is awaiting sentencing.

According to court documents, she had “exclusive access” to one of the league’s secondary bank accounts. On 35 different days, she made 84 transactions from the OMHA main account to the secondary account. She then, according to the documents, used the money to pay personal credit card bills.

Court documents in the OMHA case reveal that three separate $ 1 million transactions went undetected. (CBC)

In most of these cases, the money is stolen over a long period of time and is often used to finance gambling or drug addiction or to purchase luxury items.

For example, the man tasked with organizing athletic competitions for a large number of schools around London, Ont., Stole nearly $ 1 million over nearly a decade in what the judge called a “Flagrant breach of trust”.

At his trial, it was revealed that much of the stolen money was used to pay for home renovations, including “a saltwater pool and hot tub, retaining walls, lock tracks. and related constructions and large costly plantations ”. He received a three-year sentence.

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Flights are usually not a complicated business.

In 2012, the former treasurer of the Richmond Soccer Association in British Columbia was sentenced to two years in prison after being convicted of stealing more than $ 200,000 over five years. She simply wrote over 200 checks for herself and her husband.

In sentencing the woman, the judge wrote: “The Richmond Youth Soccer Association was not a sophisticated business entity with checks and balances designed to protect its financial affairs. It is a voluntary organization and relied heavily on the accused to act honestly with their money. The real victims were the thousands of young people who would have greatly benefited from the money the accused stole. ”

The real victims were the thousands of young people who would have greatly benefited from the money the accused stole.– Sentencing Judge Treasurer who stole $ 200,000 in Richmond, BC

More recently, the treasurer of another small Newfoundland hockey association was sentenced to five months in prison after stealing more than $ 50,000 over two years. The accused wrote more than 35 checks to fuel his addiction to cocaine and gambling.

In a victim impact statement, the association told the court the theft left her “concerned about her ability to continue playing minor hockey in this area.” Parents are asked to raise funds beyond the usual level and there has been a financial burden placed on families and members of the community in general as they are asked to contribute to the association to maintain the viability of the hockey program. ”

In our analysis, CBC Sports only included cases where criminal charges were laid or civil action was taken to recover stolen money.

But experts say the problem is likely much more widespread because many cases, for a number of reasons, never go to the police.

Erik Carrozza is a Philadelphia area accountant who has documented dozens of similar stories across the United States. He has long been treasurer of youth sports and founder of the Center for Fraud Prevention. Carrozza launched the center to help youth sports organizations implement prevention strategies to reduce the risk of theft.

WATCH | Why community sports organizations are vulnerable to fraud:

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Carrozza says that the volunteer boards of directors that run these organizations often try to tackle fraud internally to avoid their own embarrassment, as the boards are responsible for governance and oversight.

“They speak out on themselves and admit their own shortcomings,” he said. “It’s not an easy thing for some people to do. ”

Carrozza also points to the so-called community factor, where the culprit is often a well-known member of the organization, has friends on the board, and has several children playing in the league.

« [The organizations] are a little reluctant to blow someone’s life up and [their] family, ”Carrozza said, adding that the cases that are reported generally follow a familiar script.

“You have a brazen crime in that there is no attempt to cover it up. These are the people who write the checks for themselves and it lasts for years, ”he said. “The reason is the lack of oversight and governance.

“The treasurer is not a sophisticated financial criminal. [They are thinking] I can just write myself a check and no one will notice. ”

Katie Misener says youth sports organizations are vulnerable to fraud for several reasons. (Courtesy of U of Waterloo)

Katie Misener, professor at the University of Waterloo, examines fraud and theft in youth sports.

Misener says that at various times of the year – and particularly around the time of registration – leagues could have hundreds of thousands of dollars in their bank accounts.

She says a number of factors make these largely voluntary organizations vulnerable.

In many cases, a league’s money is managed by a single volunteer with what Misener calls a “vested advantage,” someone who knows how the organization’s finances work and how to handle them.

“We tend to trust parents who occupy these leadership roles within our sports clubs,” Misener said. “They are great people and they dedicate a lot of time and their own resources to these roles, helping the kids be active and running the club.

“We don’t tend to think that Joe down the street, who is the treasurer of a hockey club, could embezzle funds. But the reality is that it’s usually a treasurer or a board member like the president who was the one who committed the fraud. ”

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