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Friday, March 22, 2019 07:14 pm

An utter mess

Basketball tourney audit uncovers problems

 Financial records from a high school basketball tournament that once bore the name of Springfield School District 186 board member Adam Lopez are such a mess that auditors can’t determine whether money is missing.

Among myriad financial issues, money from ticket sales wasn’t properly accounted for, auditors hired by the district found in a report released late Thursday.

“We were informed through the interview process that the cash box was taken home by Adam Lopez each evening without counting and recording its contents,” auditors reported in a report disclosed after a records request from Illinois Times made under the state Freedom of Information Act. “The district policy is to have the cash box locked in the school safe at the end of the evening and staff was made available to perform this task. This was not done.”

Lopez now sits in the Sangamon County Jail on unrelated charges, accused of  theft, financial exploitation of the elderly and financial exploitation of a disabled person. The charges stem from accusations he stole money from people, including relatives, who entrusted him with money that was supposed to be invested. If convicted as charged, he faces between six and 30 years in prison, with no chance of probation. Prosecutors say that Lopez, a former financial planner, has stolen as much as $1 million. Country Financial, Lopez’s former employer, fired him last fall, after he fell under criminal investigation. Even from a jail cell, Lopez remains a school board member. Daniel Noll, Lopez’ lawyer, declined comment.

After Lopez’s arrest last fall, the district ordered an audit to determine whether money was missing from transactions associated with the Adam Lopez Country Financial Thanksgiving Tournament, a high school basketball jamboree that drew teams from throughout the state. The tournament began in 2015 and dropped the Lopez name last year, after Frank Vala, a local businessman, questioned the propriety of a school board member sponsoring a tournament involving district facilities. Illinois Times subsequently uncovered shaky financial problems, several confirmed by auditors from Eck, Schafer and Punke, the firm retained by the district last year and paid more than $26,000.

The audit released late Thursday in response to a Freedom of Information Act request from the newspaper confirmed multiple problems in addition to Lopez taking cash boxes home. In 2015, auditors found, payments totaling $1,725 from tournament sponsors were not recorded or deposited in the district’s tournament account. In 2016, gate receipts of $8,800 didn’t make it into the tournament account. Instead, Lopez wrote a check for $8,100, with no written explanation as why the check was for $700 less than gate receipts. Invoices were missing in 30 of 117 transactions recorded in the tournament account. In 29 instances, authorization forms and checks were signed by the same person. In three cases, checks were signed by one person instead of two, as required by district rules.

Auditors didn’t review all records because they weren’t available. For instance, the district provided auditors with records of just two of 18 ticketed events, according to the audit report. Daily deposits of monies weren’t made. Instead, gate receipts were deposited long after the tournament ended, and deposits from Lopez or Justin Chance, an office assistant for Lopez, came in checks written in large, round amounts. Just how much money was involved, or how many tickets were sold, couldn’t be determined.

“We…attempted to estimate a reasonable amount of gate revenue by calculating attendance for each year,” auditors wrote. “We interviewed personnel associated with the tournament, however, they were unable to produce reasonable attendance counts.  Without additional supporting documentation, we are unable to verify the accuracy of total ticket sales for each year.”

In 2015, auditors reported, Lopez was supposed to pay $15,000 to put his name on the tournament. Lopez wrote two checks totaling $10,000, auditors found, but the money never was deposited into the district’s activity fund. The audit report doesn’t specify where the $10,000 was deposited. In 2016, three deposits totaling $20,000 were deposited into the activity fund, including a $12,000 deposit from Chance that were recorded as gate receipts. “There was no additional supporting documentation to verify the source of these deposits or if they were for payment of the 2015 title sponsorship,” auditors reported.

On paper, at least, the tournament over the course of three years was slightly in the black, auditors found. But auditors wrote that they couldn’t account for all funds. “(G)ate receipts were deposited weeks or even months after the tournament ended and the deposits were in large, round numbers from checks written from the personal or business accounts of either Adam Lopez or Justin Chance,” auditors wrote. “Due to the lack of internal controls over the gate receipts, the calculation of possible missing funds from the gate sales was not determinable. We were informed through the interview process about a missing cash box during the 2017 tournament. The missing cash box was not reported to the district in a timely fashion and therefore any amount missing is not determinable.”

Payments to members of a committee involved with organizing the tournament also were murky, according to auditors who found that eight people received $19,400. “We were informed… that some committee members were paid in cash or by check for each year the member served on the committee,” auditors wrote. “These payments were not made by the district, and no documentation of these payments were found in the district activity funds. They were not recorded as an expense of the tournament. We confirmed the amounts received directly with the committee members. … We were not able to confirm if these amounts were paid from tournament funds or the personal funds of Adam Lopez.”

Auditors concluded that accounting controls “were inadequate in several instances.” Disbursements were made contrary to district policy, and cash and “other payments” were made to tournament committee members without documentation or proper reporting.

“Our work concluded that the Adam Lopez Country Financial Thanksgiving Tournament had a lack of district oversight and inadequate procedures over multiple accounting processes,” auditors wrote. “(I)t is not possible to determine the volume and extent of transactions and funds that were not recorded. As such, we cannot conclude if there was any misappropriation of assets and an opportunity lost to the district  from additional tournament activity.”

On the plus side, auditors noted, what records were available showed a surplus of $773 over three years. The district also got a sign for Lanphier High School from tournament backers, and student organizations benefited from concession sales. But signs bearing the names of Lopez and Country, his employer, that were installed at Lanphier in the course of the tournaments have been removed, according to the district.

There have been personnel changes since controversy over the tournament erupted. In an email, Julie Hammers, school board secretary, wrote that Lanphier athletic secretary Madonna Larrea has been replaced by Lori Small and Lanphier athletic director Brian Caton has been replaced by Cody Trigger. Former tournament bookkeeper Kathy Moreland has been replaced by Sharon Burtle, Hammers wrote, and the district has rewritten procedures that tournament organizers must follow. In addition, Hammers pointed out, Lopez’ name has been removed from the tournament, which was called the Abe’s Roundball Classic Basketball Tournament when it was held last November at Lincoln Land Community College instead of Lanphier High School.

Last August, Lopez called for an audit during a school board meeting, saying any criticism had “no basis in fact” and was politically motivated. “If it is found that the district has lost any money on tournaments, I pledge to pay that amount to the district plus the cost of the audit,” Lopez told his colleagues, reading from a written statement. School board president Mike Zimmers thanked Lopez for his statement and for “clarifying some things.”

“I think that all of the information that we can possibly give to the parties that have had some concerns about this has been given to them,” Zimmers said last August. “It’s time to move on.”

Two months later, Lopez was fired from his job as a financial adviser after a relative reported that he’d taken more than $600,000 that was supposed to have been invested but had disappeared. The district last October commissioned a forensic audit. Lopez remains a school board member but unable to attend meetings, given he's in jail. His term expires next month.

Contact Bruce Rushton at brushton@illinoistimes.com.

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