Former Duluth East hockey booster president under investigation

DULUTH — The former president of the Duluth East varsity hockey booster club is under investigation for alleged embezzlement.

A search warrant approved this week for the Minnesota Bureau of Criminal Apprehension (BCA) seeks the woman's credit card statements and other financial records for a three-year period — between 2019 and 2021 — related to her work as president of the East End Hockey Boosters.

The warrant follows fraud allegations made to Duluth Police by a parent whose child was previously on the hockey team.

The search warrant application references the investigative report that led to the resignation of former East hockey coach Mike Randolph in 2021. The Duluth school district paid for an outside investigation, handled by Terch and Associates, into Randolph following complaints about the longtime coach. Because Randolph resigned and was not terminated by the school district, it was never made public.

According to the warrant application, "the private investigator did uncover possible financial mismanagement that could [possibly] rise to the level of a crime in Minnesota."

An earlier warrant served to the private investigator led to bank statements and copies of checks for the booster club, and showed that the woman transferred $104,000 to her personal credit card. More than $11,000 in withdrawals went from the boosters' credit card account to an unknown credit card, according to the BCA document.

The BCA investigator says it appears the booster club paid the school district for some things, but the lack of receipts and other discrepancies show it's possible the former president "transferred funds from the association account to pay debt owed on her personal Capital One credit card," and funds from the club "were not used for their intended purpose" with the woman "improperly" benefitting from her position with the club.

The Star Tribune typically doesn't name targets of investigations until they are charged.

The club, which isn't linked to the school district, has a history of questionable financial practices. The booster club failed to register with the state and file annual financial reports with the IRS for several years, despite collecting nearly $500,000 during that time frame, records show.

The Minnesota Attorney General's Office notified the club repeatedly it wasn't following protocols for collecting tax-exempt money. The Secretary of State dissolved the entity in 2017 for failing to renew its certification as a nonprofit, and the IRS revoked its tax-exempt status in 2019.

A new nonprofit booster club, Duluth East Hockey Boosters, was registered with the Minnesota Secretary of State in October of 2021.

Other issues go back decades. In 2003, Randolph lost his coaching job (but was later reinstated by the Duluth School Board) after an internal audit, later backed by a state audit, found his hockey program routed funds through the booster account making it difficult for school administrators to keep tabs on money raised and spent. It was a policy violation.

Randolph is now head coach of the St. Thomas Academy boys hockey team.

On Thursday, Duluth Public Schools spokeswoman Adelle Wellens declined to comment on the investigation or answer why the school district failed to report a potential financial crime uncovered in its investigation of Randolph.

Calls made to Randolph, the former booster president and the accountant she used weren't returned. Justin Terch, the investigator hired by the Duluth school district, declined to comment. The former booster president in the past didn't return calls related to the booster club's revoked IRS status. Current booster club leaders didn't respond to messages.

The warrant request details other findings from the school district report: that parents were often left in the dark about booster club finances, with many feeling their children would be denied playing time for asking questions. The report also noted booster club charges for some things that were also paid for by the school district.

When asked about this and other allegations last spring, the school district's chief financial officer said that she would "review best practices" with the club about timely financial reports, and that its expenditures looked similar to the district's because the club pays for costs outside the school day.

Many high school sports teams have booster clubs, especially prevalent for powerhouses like East. The clubs raise money to support them — Duluth East raised $147,000 in 2018 alone — with extras like meals and promotional items, or things not covered in a school district budget.

Families are asked by the booster club to contribute to costs associated with meals and an end of year banquet, equipment, travel, referees, ice time, clothing and state tournament costs, if the team qualifies. This is in addition to funding provided by the Duluth school district, which during the 2021 school year paid more than $53,000 to support East hockey, district records show.

The BCA is assisting the Duluth Police Department in the investigation.