More than $60,0000 is missing from the cash reserve fund maintained by Downtown Little League (DLL), apparently as a result of unauthorized disbursements by a former league official. “We recently discovered a deficit in the DLL cash reserve,” a statement, which was circulated by the league to parents of players, acknowledged in early February. “The deficit in this reserve occurred due to unauthorized activity within the DLL bank account. This activity occurred without the knowledge or the consent of the DLL board. The person responsible has been identified, has admitted to acting alone, and has been removed from any position of authority related to DLL.”
The name of the DLL official who is believed to have misappropriated the funds is contained in documents reviewed by the Broadsheet, but it is not being published here to avoid stigmatizing his two school-age children, who continue as members of DLL.
The statement circulated to parents said that “DLL is cooperating fully with law enforcement, …is exploring all options to recover funds and has filed a claim under our Crimes Insurance Coverage, [and] …is working with out external accountant to enhance internal practices.”
The misappropriation of DLL money appears to have taken place after the close of the 2014 season, according to two sources familiar with the situation. But it was not discovered for several months, until DLL began collecting registration fees for the 2015 season.
Once the discrepancy was detected, DLL officials appear to have moved swiftly and diligently to remedy the situation, contacting law enforcement, outside financial advisors, and insurers. The DLL’s board also quickly empaneled Internal Finance and Audit committees to oversee the handling of funds, as well as instituting new financial controls.
Staffed entirely by parent volunteers, the organization has long operated on the basis of mutual trust. Such an atmosphere, combined with a favorable history (there is no record of DLL, in nearly a quarter of a century of operation, ever having experienced a similar instance of wrongdoing) may have made it difficult for the group’s leaders to anticipate the predicament they are now faced with. “After this experience,” one source acknowledged, “the league will definitely be more careful and formal about handling money in the future, but this was due to the misconduct of one person, not any collective lapse on the part of the parents who make Little League possible.”
DLL leaders also appear to have strived for maximum transparency through this painful episode. The first statement circulated by the League acknowledged that money was missing, but omitted some key details, such as the amount and the name of the official believed to have absconded with the funds. These specifics were temporarily withheld at the urging of law enforcement, who warned that circulating this information prematurely could compromise their investigation. A few days later, once investigators have approved the release of the information, the name of the alleged perpetrator and the amount he is believed to have taken were circulated to DLL parents in a second e-mail.
The good news appears to be that the missing funds will in no way affect DLL’s operations. The statement sent to parents emphasized that, “none of the money collected since DLL opened registration on December 1, 2014 for the upcoming season has been compromised,” and that the organization, “is completely solvent and will be able to administer organized softball and baseball activities for the spring season as planned.” A second statement, issued a few days later, added, “the League is solvent, and our 2015 season will progress as planned.” (There is also a strong possibility of recovering a significant portion of the missing funds through DLL’s insurance coverage.)
In the days after news of the problem was circulated, DLL fielded more than a dozen calls and e-mails from Lower Manhattan parents offering to make contributions to cover the missing funds. (The league gratefully declined these offers, according to a source familiar with the situation.) The reserve fund from which money is missing is not used for day-to-day operations, but instead is allocated for dealing with emergencies (such as Hurricane Sandy) and long-term reinvestment in baseball and softball programs.
The DLL’s second message to parents concluded with these words: “Finally, we ask that you consider [name omitted by Broadsheet]’s family, who remain members of DLL. We support their continued participation in our program and trust that you will show the same respect and understanding that are hallmarks of our community.”