UNIVERSITY OF COLORADO BOULDER

COLLEGIATE CLUB SPORTS FREE STYLE SKI TEAM

INVESTIGATION REPORT
MAY 7, 2015
Internal Audit completed an investigation into allegations of fiscal misconduct by Palmer Hoyt, a
part-time recreational instructor/coach on a contract basis for the Collegiate Club Sports, Free
Style Ski Team (Ski Team) on the Boulder campus.
Definition of Fiscal Misconduct
A finding of fiscal misconduct, as defined in Board of Regents Policy 13-E, requires a
determination that the employee deliberately acted or failed to act, contrary to law, rule, or
policy, with the intent to gain an unauthorized benefit, resulting in a loss or other damage to the
university. In the context of Board of Regents Policy 13-E, an unauthorized benefit refers to
obtaining a personal gain, for oneself or to advance a familial or personal relationship, that is not
authorized by university policy or rule.
Summary and Overall Conclusion
Sufficient information was obtained to support a conclusion that the actions of Palmer Hoyt, with
respect to the allegations of forming an outside organization, using Ski Team funds without
authorization by the university, and use of an outside bank account to deposit club funds to pay
for unauthorized salary increases for himself and other coaches, as well as other inappropriate
transactions, constitute violations of university policy and signed agreements. A review of these
inappropriate transactions identified a loss of $178,188.72 to current and former students who
participated in the Ski Team. However, as the loss was from student Ski Team dues, Mr. Hoyts
actions do not constitute fiscal misconduct as defined in Board of Regents Policy 13-E, as there
was no direct financial loss to the university. Palmer Hoyts actions may state violations of law
and may be otherwise actionable by those students who paid dues to the Ski Team, but that
determination is not within the scope of this investigation.
Investigative Approach
Internal Audit performed the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.

interviewed key personnel

reviewed the Ski Team and club sports websites
obtained and reviewed the club sports operations manual for applicable policies
obtained and reviewed offer letters for the coach and assistant coach
obtained information about the outside organization and the checking account
obtained and reviewed bank account statements for the outside bank account
obtained financial documents for the outside organization
established who had access to the outside bank account and who authorized expenses
reviewed the outside organizations transactions for unallowable expenses

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10. reconciled the outside organizations transactions to the bank statements to determine if all
transactions were accounted for
11. reviewed the university speedtype(s) for the Ski Team
12. determined the dollar loss
Relevant University and Other Policies or Regulations

Regent Law, Article 13: Business and Finance, Part C: Fiscal Authority and
Responsibility of All Employees, 13.C.1 and 13.C.2

UCB Department of Financial Management Guide University Business vs. Private Business
APS 4004 Bank Account and Investment Account Restrictions
CRS 11-10.5-103 Financial Institutions, Banks and Industrial Banks (9) (a) & (b), (12)
Definitions from the Office of Policy and Efficiency:
o independent student organizations
o university funds
o special revenue types auxiliary and self-funded revenues

Collegiate Sport Clubs Operations Manual (Club Manual) Chapter 8, Spending

Collegiate Sport Clubs Funds
Background Information

Club Sports General Information

The Ski Team was created in 1990 to give student-athlete skiers the opportunity to train and
compete while working towards a college degree. The Ski Team is one of the collegiate club
sports (not NCAA affiliated) housed in the Student Recreation Center (Recreation Center) and
within the Division of Student Affairs. The university identifies a collegiate club sport as a
group of fee-paying (i.e. dues paying) students and Recreation Center members, voluntarily
organized for the purpose of furthering their common interests in a physical sport through
participation and competition. Financial funding for each club sport is allocated from various
sources: CU Student Government (CUSG) student fees, optional fee check-off, dues, donations,
and individual club fundraising.
The club dues are a separate revenue stream for the club sports in that they are paid directly by
the individual student athletes. According to the Club Manual, the method of establishing and
collecting dues should be set forth by the club. These funds are to be deposited directly into the
clubs fundraising account and may be spent as the club deems necessary, with prior approval of
the sports club coordinator, whereas the student fees are deposited to the student fee account.
The Club Manual requirements for club leadership include one head coach, four assistant
coaches, three captains, and five officers. The Club Manual also states that all coaches, paid or
volunteer, must sign a Coachs Agreement, and coaches must act as a role model for the club and
ensure that all members represent the University of Colorado at all times. It also specifies that
coaches must follow all conduct guidelines in the Club Manual and adhere to the University of
Colorado Boulder Recreational Sports code of conduct. All coaches are at will employees.
When coaches sign the agreement, they state that they understand their role and responsibilities
as outlined. Coachs compensation comes from clubs student fees, gifts, and fundraising
accounts. Under no circumstances is a coachs compensation to exceed $2,000 from the student

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fee account. If a team is to pay additional compensation to coaches from dues or other revenues,
those payments must be made from the clubs fundraising account, subject to the approval of the
sports club coordinator. The Club Manual does not anticipate, under any circumstances, that
compensation can be paid to coaches from outside accounts or without the approval of the sports
club coordinator.
Within the Coachs Agreement in item number one is the coachs role. It states: I understand
that I will be representing the club as a coach and not as an administrator. I will allow the Clubs
President and other elected officials to manage the clubs regular activities. Administrative
activities not permitted of coaches would include administration of the clubs budget and
authority to authorize disbursement of club assets.
Coaches also sign an offer letter annually that includes begin and end dates for the coachs
services. The offer letter also includes a paragraph required by state law as follows:
Your employment contract is subject to termination by either party to such contract at
any time during its term, and you shall be deemed to be an employee-at-will. No
compensation, whether as a buy-out of the remaining term of the contract, as liquidated
damages, or as any other form of remuneration, shall be owed or paid to you upon or
after termination of such contract except for compensation that was earned prior to the
date of termination.
Officers of the club sports are to volunteer their time and expect no monetary compensation.
The Club Manuals Volunteer Policy states that volunteers in the Collegiate Sport Clubs program
are not entitled to receive any compensation or benefits of employment.
The Club Manual includes a chapter on code of conduct and discipline. It states that All club
members, officers, and coaches are responsible for understanding and upholding the policies and
procedures put forth in the Manual. Ignorance is not an excuse and any club members failure to
abide by the Collegiate Sport Clubs behavioral guidelines or the University of Colorados Code
of Conduct will face disciplinary sanctions.
Ski Team Issues
Outside Bank Account
Friday, November 8, 2013, the sports club coordinator became aware that the Ski Team had an
outside bank account, which is against university and club sports policies. Chapter eight of the
Club Manual specifies that Outside checking accounts are NOT allowed according to
University regulations, nor are student agency accounts through the UMC.
The bank account was opened by the then coach of the Ski Team, Palmer Hoyt, on September 9,
2011. Mr. Hoyt added Joel Bettner, the assistant coach, as an authorized signer on the account.
On Friday, November 8, 2013, after Kris Schoech, sports club coordinator, learned there was an
outside bank account for the Ski Team; Mr. Bettner was instructed to freeze the account.
However, it was too late in the day for Mr. Bettner to take any actions that day. Mr. Schoech
scheduled a meeting with Mr. Bettner for Monday morning, November 11, 2013. During the
Monday meeting Mr. Schoech instructed Mr. Bettner to close the bank account and deposit the

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funds in a university account. The account could not be closed on Monday since the banks were
closed for Veterans Day. Mr. Bettner informed Mr. Schoech that he had agreed to meet with
Mr. Hoyt on Tuesday morning, November 12, 2013, at 10 a.m. for coffee and would go to the
bank afterwards and remove Mr. Hoyt from the account, as Mr. Hoyt resigned from his position
as head coach November 8, 2013, for reasons unrelated to the issues described in this report.
At their meeting, Mr. Hoyt presented Mr. Bettner with an invoice for $49,750 that Mr. Hoyt said
the Ski Team owed him for services rendered and intellectual property. Mr. Hoyt also asked Mr.
Bettner to sign a confidentiality agreement. Mr. Bettner refused. Mr. Bettner went to the bank
later in the day and discovered that Mr. Hoyt had withdrawn $49,750 from the account via a
cashiers check made out to his father, Wesley Hoyt. Mr. Bettner contacted Recreation Center
management to update them on the status of the newly-discovered account. Mr. Schoech
attended the Ski Team meeting that evening and received the bank documents from Mr. Bettner.
Outside CUFST (CU Freestyle Ski Team) Organization
Mr. Hoyt formed a non-profit corporation named CUFST on September 1, 2011. The articles of
incorporation list the principal office as Mr. Hoyts home address at that time, and the name of
the initial registered agent of the corporation as Palmer Hoyt. Joel Bettner is listed as one of the
initial directors with Mr. Hoyt.
Internal Audit interviewed Mr. Bettner regarding the corporation and the outside bank account.
Mr. Bettner stated he was unaware that having an outside bank account was against university
policy. He stated that he and Mr. Hoyt opened the bank account in 2011 to try and grow the
team and to buy items, such as a team vehicle, a team house in the city, and a team house in the
mountains. Mr. Bettner stated that both he and Mr. Hoyt started what he believed to be an S
Corporation named CUFST. During the interview, Mr. Bettner remembered that they had
applied for 501(c)(3) status in the spring of 2012; however, it had not yet been granted. Mr.
Bettner said that he let Mr. Hoyt handle this, as Mr. Hoyts father is an attorney and Mr. Bettner
felt that it would be easier for Mr. Hoyt and his father to deal with it.
Mr. Bettner stated that the bank account was used for coachs salaries, food for barbeques, a
parents breakfast, ski passes for coaches, t-shirts, parking, and other expenses, and to help
subsidize travel. Mr. Bettner was asked why salaries were paid out of this account. He
responded that the CUFSTs budget allowed for his salary to be increased to $20,000, including
what he was paid from the university authorized account.
On November 12, 2013, Mr. Schoech asked Mr. Bettner to provide a breakdown of dues and
financial documents for CUFST. When Mr. Schoech reviewed the documents he discovered that
the coaches were all paid more than the amount that club sports management had budgeted. This
was possible because the student athletes were paying more than the university was aware of.
The authorized amount the athletes were to pay for the annual dues was $200 per student.
However, Mr. Palmer raised the amount to $750 for fiscal year 2012 and for most athletes in
2013. For fiscal year 2014 the amount per student was between $795 and $900 per student. The
lesser amounts were offered to the athletes who signed up early.

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Once a year Mr. Bettner wrote a check to the university from the CUFST outside account for the
club dues amount expected to be deposited in the appropriate fund 20 speedtype. The balance of
the dues, after the check was written to the university, remained in the outside bank account and
transactions with those funds were accounted for through the outside organization. Because the
salaries were paid from an unauthorized account for an unauthorized 501(c)(3) corporation
created by Mr. Hoyt and Mr. Bettner, not subject to the oversight of the sports club coordinator,
we have determined that all salaries paid in this manner were unauthorized.
Fiscal
Year
2012
2013
2014

Total Unauthorized
Salaries Paid
$35,570.00
$45,775.00
$45,975.00

Total Expenses

% Salaries Paid

Total Dues Collected

$ 57,289.93
$109,319.29
$ 64,226.37*

62%
42%
72%

$51,500.00
$62,295.00
$72,831.50

% of Dues Paid
as Salaries
69%
74%
63%

*This includes the $49,750 and is for only about 2 months

Review of the outside organizations financial documents revealed that donations were also
deposited in the outside bank account. Chapter seven of the Club Manual, Fundraising, states
that all checks must be mailed directly to the Collegiate Sport Clubs office. Review of the bank
deposits documented in the outside organizations financial statements revealed a total of
$17,346.80 in donations was deposited in the unauthorized bank account.
Student Athletes
Internal Audit spoke with a Ski Team officer and one of the captains regarding the outside
organization and bank account.
Ski Team Officer
The Ski Team officer stated that the coachs salaries on the university-provided budget reports
mirrored the salaries the Ski Team agreed to. However, the officer became suspicious when he
saw the Ski Team account balance was only $12,000, which he thought was low since there were
at least 60 members who he thought paid $750 each. The officer said that Mr. Hoyt eventually
mentioned the outside account and told him that it was being used to pay for coachs salaries,
shirts, and to fund trips. But he didnt remember if it was explained to him why some of the dues
were in the outside account. The officer also stated that it wasnt until Mr. Hoyt sent the final
invoice upon resignation that he saw what the coaches were actually being paid which far
exceeded the amount the team agreed to compensate the coaches in the Coachs agreement.
The officer stated that he became more suspicious and asked Mr. Hoyt about the finances of the
Ski Team. The officer stated that Mr. Hoyt kept him away from the decision making and
finances. At that point their relationship deteriorated.
Ski Team Captain
The captain stated that he had no idea how the finances were run and was not aware of the
outside organization. He stated that Mr. Bettner and Mr. Hoyt handled all of the finances for the
team. The captain admitted that he is not familiar with accounting and financial statements.
During the monthly club sports meetings the captain stated that Mr. Schoech would give the Ski
Team a monthly financial budget and statement, but the captain would just give it to Mr. Bettner
since he has an accounting background.

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When the captain was asked what he believed the higher dues were used for, he thought it would
primarily be used to pay coachs salaries with the remainder used for team travel, shirts, and
other memorabilia. He also stated that he thought all of the funds were going into the account
with the university.
The captain stated that after learning that Mr. Hoyt had resigned, the team focused its efforts on
the trip to Italy. He said that the team had to use many avenues of fundraising including a few
websites.
Analysis: Elements of Fiscal Misconduct
Based on a review of the available documentation and interviews with university personnel
involved, Internal Audit identified the following issues related to Palmer Hoyts actions.
Deliberate acts or failure to act
Mr. Hoyt opened a non-university bank account using Ski Team dues and formed a separate
corporation to administer the account. Mr. Hoyt used this account to pay himself and the other
coachs salaries that were in addition to the amount that was agreed upon when the coachs
agreements and the offer letters were signed. Interviews with club sports management and Ski
Team members confirmed Mr. Hoyt did not discuss with, or disclose to the university, club
sports management, or the officers of the Ski Team that he took those actions.
Contrary to law, rule or policy
University and campus policies, as well as the Club Manual, prohibit outside bank accounts
without consent from the university Treasurer. The athletes dues and some fund raising
donations were deposited in the outside account although university and campus policies and the
Club Manual specifically require all funds be deposited through the Recreation Center in an
authorized university account. Mr. Hoyt also formed an outside organization using the
University of Colorado name without authorization. Mr. Hoyt also acted in an administrator role
for the Ski Team even though the Coachs Agreement he signed specifically states the coach will
be representing the club as a coach and not an administrator. The coaches are to allow the
teams president and other elected officers to take the administrator role and places emphasis on
student leadership, participation, and development.
Because the salaries were paid from an unauthorized account for an unauthorized 501(c)(3)
corporation created by Mr. Hoyt and Mr. Bettner, not subject to the oversight of the sports club
coordinator, we have determined that all salaries paid in this manner were unauthorized.
Intent to gain an unauthorized benefit
Mr. Hoyt increased his compensation and that of the other coaches without university
authorization. Mr. Hoyt also increased his compensation beyond what the club sports officers
authorized. Part of the extra pay was documented as administrative pay. Mr. Hoyt also
withdrew $49,750 from the outside bank account after he resigned from the university. Many of
the expenditures made through the outside organization would not have been allowable if the
funds had been deposited through the Recreation Center. The costs of forming the organization

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were paid through the outside account along with other administrative costs, such as paying an
accountant and IRS payment for tax returns.
Resulting in a loss to the university
Internal Audit reviewed all of the transactions recorded in the outside organizations financial
documents. Based on Internal Audits review and meetings with the Recreation Centers
associate director, the business and finance coordinator, and the collegiate sports club
coordinator, the transactions resulted in a loss to the Ski Team (student athletes) of $178,188.72.
Internal Audits review did not indicate any university funds were inappropriately used.
Conclusions
The information obtained and the analysis above do not support a conclusion that the actions of
Palmer Hoyt, as they relate to unauthorized payments to himself and others and other
unauthorized or unallowable transactions, constitute fiscal misconduct as defined by Board of
Regents Policy 13-E, as the loss related to Mr. Hoyts actions did not involve university funds.
However, the information obtained does indicate that Mr. Hoyts actions represent violations of
university policies and a breach of his obligations as detailed in his coachs agreement and
appointment letter.
Palmer Hoyts actions may state violations of law and may be otherwise actionable by those
students who paid dues to the Ski Team, but that determination is not within the scope of this
investigation. Internal Audit recommends that management refer this matter to appropriate law
enforcement authorities for further investigation.
Please provide the Department of Internal Audit a description of any actions taken related to this
matter as soon as it is known. Such information will be included in a periodic summary report
provided to senior management and the Board of Regents Audit Committee.

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