Litigation has commenced against the estate of Sandy Elder – the former treasurer accused of misappropriating $315,650 from the Penticton Minor Hockey Association from 2010 to 2013.
However, lawyer Erik Lund told a crowd of around 200 agitated parents and officials at the PMHA’s annual general meeting Wednesday at the Day’s Inn conference centre in Penticton that recovering the funds will be difficult.
“If we can recover a portion of the $315,000 I would say it’s a great success,” said Lund, noting the suit that commenced in B.C. Supreme Court is in its very early stages. “There aren’t any significant executable assets that we can lay claim too … there are no properties, vehicles or other valuables registered in her name.
“If a person is going to steal that amount of money, they’re not going to register assets in their name.”
After PMHA president Bruce Judd – who still has one year left on his term – discovered signs of what appeared to be fraudulent activity, Lund’s services were retained from Boyle and Co., and subsequently a full forensic investigation by Chartered Accountant and Certified Fraud Examiner Cheryl Shearer of the firm Blair Mackay Mynett was carried out.
It was revealed at the meeting that the cost of the forensic audit was $29,000.
Shearer reported that Elder used altered cheques and falsified receipts and financial records, along with cash transactions involving referee payments and concession revenue to carry out the scheme.
Lund said the PMHA suspected since late 2013 that Elder had embezzled funds from the society, however the board of directors decided to conduct a full investigation prior to making “public allegations of such a serious nature.”
Lund has advised the board not discuss the case with the public or the media.
That didn’t preclude Lund from facing a barrage of questions from hockey parents mystified as to how such a large amount of money could go missing.
Asked who is accountable to monitor the activity of the accountants on behalf of the PMHA members, Lund said the liability of the accountants is something that is being looked into.
Lund again defended the board members who appear to have been deceived by Elder, who was a popular member of the hockey community and served as treasurer from 2001 until passing away of cancer in July of 2013.
“This was a sophisticated act of fraud and it was carried out by an individual entrusted with the management of the association’s finances,” said Lund.
Some members demanded to know why the audit was only conducted over a three-year period despite the fact Elder was in office for 12 years.
“It was an economic-based decision,” said Lund. “We didn’t feel it would be financially prudent since it would cost around $10,000 more to go back each year.
“Pending what success we have recovering (the $315,000), the decision can still be re-evaluated. The door is still open … it doesn’t foreclose us from going back further.”
Brian Hutcheson, who was later named the PMHA’s Volunteer of the Year, said he is concerned about the future and the damage that has been done by the financial scandal.
“We put a lot of time and effort into gaining sponsors to help subsidize minor hockey,” said Hutcheson. “For those individuals and businesses that invest in minor hockey, something has to be done to restore confidence in the organization.”
Lund said while he understands those concerns, he believes the people in the community will understand the PMHA had been betrayed and fell victim to a sophisticated embezzlement scheme. He said steps are being taken to ensure nothing similar could ever happen again.
Parent Neil Jamieson, also a governor with the Penticton Vees, asked Lund if he or the board have explored the possibility of Hockey Canada insurance coverage to recoup some or all of the lost funds.
Lund noted he has been hired primarily to attempt to recoup the missing funds from Elder’s estate, and it would be up to the board to make a claim for compensation from HC.
Lund also pointed out the RCMP has decided to launch a parallel investigation into the criminal component of the alleged fraud.
Later in the evening, elections were held for several positions on the 2014-15 executive.
While Judd still has a year to go, the members voted out incumbent vice-president Paul DeShane in favour of Val Fulton. Chad DeLeeuw also accepted a nomination for VP and was later voted in as one of five new directors.
DeShane declined a nomination as a director.
DeShane’s wife, Jo Ann, appeared to be acclaimed as secretary but then announced she did not wish to continue in the role. Carla Burns was nominated and was named secretary by acclamation.
Frank Darin decided to step down as director after 20 years, leaving six nominees for five positions. DeLeeuw, Stacy Gagno, Rod Kenney, Ted Van Troyen and Barb Main were voted in, with incumbent Johnny Aantjes the odd man out.
Judd, treasurer John Cote and directors Randy Craig, Rob McLaughlin and Mike Ouellette all have one year to go on their terms.
Fulton also had a year left, but surrendered that position after being named vice-president.