At Little League® International in Williamsport, Pa., and at our Regional Offices, calls and emails come in all year long about situations that are happening at one of our 7,000 local leagues. Many of these calls and emails inform us of some very positive initiatives spearheaded by our millions of volunteers. However, there are also negative situations.
“Don’t Let This Happen to Your League” details a real-world scenario, how it has impacted a league, and how you might learn from it.
The names have been omitted in the following scenario, but the situation is real.
Situation:As is customary at each Board of Directors meeting, a Treasurer's Report is shared with the Board, which provides an update of how much money is in the league account(s), identifies what outstanding bills are to be paid, and how much money is expected to be collected from sponsor agreements, registrations, and fundraising efforts.
During the second-to-last Board meeting of the local league's fiscal year, the Treasurer, whose wife serves as the League President, reported a staggeringly low amount of funds, which prompted Board members to request a detailed explanation and review of the expenditures. Several delays and excuses were followed by unresponsiveness from the Treasurer.
Prior to the next monthly meeting, another Board member called for the league’s Audit Committee to conduct a formal review of the league’s accounting ledger. In going over the bank statements and receipts line by line, which took about a month, the Audit Committee discovered the missing money, and where it had gone. The only two individuals on the Board who had access to the league’s accounts were the League President and Treasurer. The findings were presented during a special session of the Board, which included the League President and Treasurer. When asked, the wife and husband had no answers for why the funds were missing, but the couple admitted culpability by stating that that they had paid the money back. The league however had no evidence that the any amount of the missing funds had been returned to the league’s accounts.
Outcome:With the admission in hand, the Board voted to ask the League President and Treasurer to resign, and subsequently conducted an election to install a new Board of Directors, and President. The new Board then determined that the best course of action would be to contact the local authorities, and let the legal process run its course.
The now former League President and Treasurer, were arraigned and released on their own recognizance pending a trial date.
Note to Leagues: Any time there are concerns about impropriety, especially when concerning missing funds, it is in the best interest of the Board of Directors to be swift and diligent in its investigation. If there is suspicion that a crime has been committed, immediately contact local law enforcement. To limit such temptations, all local leagues are strongly encouraged to establish fiscal policies that require thorough oversight, and do not allow spouses or members of the same family to have independent access to local league checking or savings accounts, credit or debit cards, or the concessions cash box.
In this case, the leadership’s main concern was being fully transparent, while attempting to recover the money so that it could effectively operate the league to the benefit of the players. In do so, the league filed a claim through its crime insurance proved by AIG. The crime insurance premium of $250 covered the loss up $35,000.
The new League President recognized that it was important to publicly acknowledge the embezzlement in order to avoid the perception of a “cover-up” by the Board. Simply recouping the financial loss to the league was secondary to the reputation of the Board and league. The league had to re-establish trust and good faith with it families and volunteers by assuring that this was an isolated incident. For these reasons, simply receiving restitution from the perpetrators was not enough, and calling local authorities was necessary.