Little Big Crime: The Multimillion Dollar Little League Fraud Crisis

For 25 years, Jerry Benisch and Stephen Verhage were friends. They were the only officers of Kennedy Little League in Madison, Wisconsin, serving as vice president and president, respectively. For 15 of those years, the two ran the Little League like any other, collecting registration fees, organizing sponsorships, and paying umpires.

Verhage always insisted that he was more than happy to take care of the money. Considering Verhage had been affiliated with Kennedy Little League for 30 years, Benisch figured he had nothing to worry about. Besides, they were friends.

Like all Little Leagues, Kennedy Little League had an account with a local bank in which to keep its money and finance projects such as field improvements or, in Kennedy's case, upgrading the concession stands. In October 2012, Benisch noticed some discrepancies in the account. Namely, Verhage had made some abnormal withdrawals. When Benisch spoke to someone at the bank, he learned Verhage hadn't been paying down the principal on a loan the league had taken out. Benisch didn't know where the money was going. When Benisch obtained bank statements on November 1, 2012, he quickly realized that someone was embezzling funds. All he had to do was look.

The next day, Benisch confronted Verhage at a local pizza joint. Verhage confessed to stealing over the previous 18 months, estimating he took around $10,000 or $12,000. He told his longtime friend that he needed the money, that he would have lost his house if he didn't steal from the league.

In fact, over a six year period, Verhage stole more than $200,000 from Kennedy Little League in order to "live beyond his means," as Benisch put it in a statement to the court; funding family vacations, personal trips, a home remodeling, and a motorcycle. (Benisch declined to comment for this story and Verhage could not be reached. All information related to the case comes from Dane County court documents.) Factoring in the interest payments on unnecessary loans Verhage took out in the league's name, the theft will ultimately cost the league somewhere around $270,000.

Since Verhage handled all the money and controlled the bookkeeping, he was able to make personal purchases and mark them down as legitimate expenses, such as uniforms or grounds crew expenses. Nobody was checking his work or looking at bank statements. As Verhage told his friend and league partner at the pizza parlor, "it got to be too easy."

Verhage is not alone. Since 2009, almost $2 million has been reported stolen or embezzled from 37 Little Leagues. Nineteen of those cases have been in the last two years. Still, exact dollar amounts are hard to ascertain, as the thieves often altered the records as well. In a testament to the mysterious nature of Little League finances, when I asked one league president how much money was stolen, he told me the reported six figure total was "probably close."

37 Little Leagues across the U.S. have reported theft by league officials or their relatives.

When parents volunteer for one of the 6,500 Little Leagues in the U.S., they usually think about coaching baseball fundamentals, working a snack stand, buying orange slices or, if they're cool, fruit snacks. Few imagine becoming an accountant.

A local Little League doesn't quite have the cash flow of Goldman Sachs, but there's more money moving around than many realize. Most Little Leagues deal with tens of thousands of dollars a year, and even medium-sized leagues push into the six figures on an annual basis. Registration fees alone account for much of the revenue; a few hundred kids registering for around $100 per season can quickly add up. Plus, many leagues orchestrate sponsorship deals, order uniforms, maintain fields, and pay umpires. A look through dozens of Little League 990 forms reveals that candy drives and concession sales alone can add tens of thousands of dollars to league coffers.

As Little Leagues are all-volunteer nonprofits, it is sometimes up to one person to manage the money. In 2012, New City, New York native Joyce Bidnick pled guilty to stealing over $400,000 from her Little League. Like Verhage, she made checks out to herself and then falsified league documents to even the books. Two years prior, Stony Point Little League Treasurer Karen Ramos, who had her own children go through the Little League system, took $157,000 over five years. In 2004, Barbara Davidson was named Volunteer of the Year in Torrance, California and had a son in the Torrance Little League system. In 2010, she was charged with embezzling more than $111,000 from the league.

Little League International (LLI), the organization that oversees the Little League World Series—and reported revenues of $25 million in 2012—provides little oversight at the local level. In fact, there's a clear distance between LLI and its local affiliates, with the Little League districts acting as a bridge between the two. "Local organizations become Little League programs by an annual chartering process and are separate corporations or unincorporated associations," LLI spokesman Brian McClintock told me via email. "Each league is their own organization, responsible for things like their finances."

As such, there are plenty of examples of disconnect between LLI's guidelines and actual practice. LLI "strongly discourages" paying umpires, according to its website, yet many Little Leagues do so. Further, it offers a credo of economic purity reminiscent of the NCAA's infamous student-athlete moral high ground: "Those who work with children at the local league level should be interested only in volunteering their time to make their community a better place." Although LLI offers online resources and handbooks for operating a league, several league presidents told me they're mostly "on their own," as one put it, in regards to operations.

With such sporadic input from headquarters, it's up to each league to figure out how to function. Some leagues, like Kennedy Little League prior to the theft, don't have a designated position for treasurer, despite the LLI handbook clearly noting the position is not optional. Others, like North Central Little League, have a treasurer but no system to keep them in check.

When Bob Fyrer joined the North Central Little League's board in October 2012, he told me the financial records "didn't seem right." He spent three or four months pursuing the league's treasurer, Amy Pollack, who continuously dodged his requests to see documentation. Finally fed up with the runaround, the board called her to a meeting, mandating she provide financial statements. She didn't show up. A week later, the power was turned off to the snack stand; North Central Little League owed the power company almost $600.

As Fyrer tells it, Pollack came clean soon thereafter. The police report states that for 20 months, Pollack brought Little League cash home at which point her husband, Christopher Pollack, used it to fund his oxycodone addiction. Fyrer found $27,000 unaccounted for plus $10,000 in debt that should have been paid.

"There truly wasn't any system of checks and balances. The snack stands are primarily a cash business," Fyrer, who is now treasurer of the league, told me over the phone. "I can see how this happened before."

Given LLI's organizational distance from its chartered affiliates, it's difficult to know for sure how most leagues handle their money. LLI has no process for obtaining this kind of information and when I reached out to 40 Little Leagues at random to survey how they handle their finances, only two responded.

The combination of limited structure and haphazard oversight means the door is wide open for malfeasance. As the Kennedy crime report alludes to, these are typically crimes of opportunity. Volunteers get into their positions for the right reasons, but soon discover that the league bank account is just as easy to access as their own. They get all the bank statements in the mail, have control over the accounts, receive the money, write the checks, and control the records. Most of the crimes start with small amounts and eventually escalate. Some embezzlers, such as Bidnick and Davidson, are able to give most of the money back because they haven't spent it.

In 1992, LLI began offering an optional crime insurance, which is separate from the general liability insurance that insures leagues against on-field injuries. According to McClintock, about 70 percent of U.S. leagues are enrolled in the crime insurance policy, but he declined to comment on the policy's returns. The LLI website says the policy protects leagues "against a monetary loss caused by dishonesty, disappearance of money, securities, or other property, and destruction of money and securities." However, several local league officials I spoke to were unaware this insurance existed or whether they were even enrolled.

North Central was enrolled in the crime insurance policy, but Fyrer told me that he never received a copy of the policy. When they submitted the paperwork after the case was closed, they were informed the window to apply had expired; they were required to notify the insurance company 180 days after the incident, not 180 days after the trial. When I asked if the crime insurance was helpful, Fyrer replied unequivocally: "no it was not." He still has never seen a copy of the policy.

These unfortunate cases have led some leagues to revisit their policies. One Little League president, who took over after a case of embezzlement in a West Coast Little League, spoke to me under the condition of anonymity. His case, like the Kennedy and North Central leagues, had a single person controlling the money while also reporting on spending, which makes misappropriation easy. When this president took over the league, he made sure the mail—including bank statements—were received by someone other than the person who controlled the money.

Many leagues have debit cards linked to their main bank accounts, which have been a frequent tool for fraud. This president has mandated that the league set up a debit card in a separate vendor account that never has more than $500. Further, bank statements must now be presented to the board on a regular basis, and annual 990s are filed by a tax professional, which serves as a de facto audit. Fyrer has installed similar measures, requiring two signatures for every expenditure and daily receipts from the snack stand. These regulations are about as exciting as an HR Meeting, but they're necessary steps to make sure theft isn't too tempting.

At Verhage's sentencing hearing, Benisch and local Little League parent Mike Mikalsen read victim impact statements. Benisch pointed out the long-term impact of Verhage's crime: if the current 14 year-olds signing up for Kennedy Little League Fall Ball decide to stay in Madison and one day have children of their own, those childrens' Little League registration fees will likely still be going towards paying off the lost money.

To counter this narrative, Verhage's lawyer, in a statement to the Capital Times, argued it was a victimless crime. "Notwithstanding the fact that there wasn't as much money because of the theft, I think the experience of the league and the facilities are great. They run great tournaments. Nobody suffered any personal harm other than the financials." Mikalsen took issue with that, calling it a "distortion of facts and in no way represents the realities on the ground or in the damages done to the experiences of players past and present." When I asked Fyrer if he considered Pollack's theft a victimless crime, he replied, "All that money had a purpose."

Mikalsen asked the judge for a "reasonably harsh" jail sentence. Verhage received a sentence of 11 months in jail and nine years probation, but he was released after 30 days as part of an electronic monitoring program. Christopher Pollack is currently serving eight to sixteen months in prison, but the District Attorney's office declined to file charges against Amy Pollack, the treasurer who took the money home every night for 20 months, looking the other way from her husband's crime.

Such leniency has become the norm. Even the most extreme perpetrators of Little League embezzlement rarely receive jail time. Joyce Bidnick, who stole over $400,000, received no jail time at all. Karen Ramos was ordered to pay restitution, a $5,000 fine, and serve six months on a work release program.

After confessing to his crime in the pizza parlor, Verhage offered to "teach" Benisch the sly skill of writing checks with someone else's money. Taken aback, Benisch asked if that's what he expected him to do. "Hell yeah," Verhage replied. "I don't want to go to jail."

For his part, Fyrer and other volunteers worked around the clock to keep the league afloat. They made repairs themselves in the middle of the night rather than paying others and deferred capital improvements as long as possible. "I'd rather be down at the field from nine at night to one in the morning six nights a week than let the kids see what that gutless prick did."