Financial Mismanagement

 

The financial mismanagement of SRRBBL has been the most concerning issue to the SRRBBL Community. Please keep in mind that SRRBBL is a non-profit organization, which is also known as a “501(c)(3).” The three main areas of financial concern are the SRRBBL Taxes, the SRRBBL 2016 Financials and Other SRRBBL Financial Transactions.

1. SRRBBL Tax Filings Make No Sense

For tax years 2001-2011, SRRBBL only reported one time (for one year) income less than $50,000. For all other years SRRBBL reported income of over $50,000. (All of this information is public record.  The SRRBBL EIN, also known as the Employer Identification Number, is 542006966.  This is the unique, nine-digit number assigned by the Internal Revenue Service (IRS) to business entities.)  See below for tax years 2001-2011:

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For tax year 2011, when the league was under the previous SRRBBL Board, SRRBBL filed the tax Form 990, which is used when a non-profit makes “more than $50,000 in gross income”. By filing that tax form, SRRBBL had to provide their financial information to the IRS.  That last year they filed Form 990, which was for tax year 2011, gross income was $96,472 and expenses were $82,651.  Tax From 990, filed by SRRBBL for tax year 2011, can be found here:

SRRBBL 2011_990EZ

For tax years 2012-2015, under the new and current SRRBBL Board, SRRBBL filed tax Form 990N (different then tax Form 990) for all four years, essentially a post card that a 501(c)(3) sends to the IRS claiming “gross income below $50,000”.  Confirmation of all four of the SRRBL tax filings for those years can be found here:

SRRBBL_990N-2012

SRRBBL_990N-2013

SRRBBL_990N-2014

SRRBBL_990N-2015

When a non-profit files tax Form 990N, they are under no obligation to report any financial data, gross income or expenses, for that year.

Below, you can see the history of SRRBBL gross income reported to the IRS for years 2009-2016, and associated number of players, noting that while the number of players increased from 2011 to 2013, and the number of players from 2012-2015 was more players than 2011, gross income was down for all four years of 2012-2015:

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(1) SRRBBL originally reported 668 players for 2016. In early June, Members of the SRRBBL Community compiled the numbers and concluded that there were an estimated 828 to 842 players in the league. It was reported to PRCS.  Once reported to PRCS, SRRBBL then changed the number to 853 players by way of claiming an additional check was sent to PRCS in the amount of $2,312.50 to cover those additional 185 players, which PRCS never received. SRRBBL and PRCS then claimed a check was sent in December 2016 and was “addressed to a staff person (at PRCS) who left and may have been lost of misdirected.” This additional $2,312.50 was missing from the 2016 P&L provided by the SRRBBL Commissioner.  Please see more about this topic and reporting discrepancy under “League Mismanagement, Section 4, SRRBBL Providing Misinformation to PRCS.”

For tax year 2016, with the mounting pressure from the SRRBBL Community, SRRBBL Commissioner Anton Perkins, on April 25, 2017, provided the SRRBBL 2016 Profit & Loss Statement (also known as the Income Statement)—two days before the election. The official document containing the SRRBBL 2016 P&L, provided by the SRRBBL Commissioner, can be found here:

Revenue & Expenses 2016-17 Season

Below is a table showing the same information:

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Taking all of the above information located within the three tables, which is available to the public via IRS websites or provided by the SRRBBL Commissioner, one can quickly start to see inconsistencies viewing the chart below:

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Some questions that need to be answered, and have gone unanswered so far:

A. What were the financials for 2012? By the tax form that was filed for tax year 2012, SRRBBL is claiming gross income of less than $50,000.

That means, gross income in 2011 was $96,472 and dropped to less than $50,000 in 2012? That would be a year-over-year decrease of $46,472 in gross income, which equates to 368 less kids registered. That is a 48% drop in gross income. And yet, the player numbers reported to PRCS by SRRBBL for 2012 was 689, up 135 from the previous year when gross income was at $96,472, but at less than $50,000 for 2012?

B. What were the financials for 2012-2015?

Again, the league, per information SRRBBL provide to PRCS, grew in number of players from 2011 to 2012, and again from 2012 to 2013. In fact, the number of players in 2012, 2013, 2014 and 2015 were higher than the number of players in 2011, but yet for all four of those years, gross income was less than 2011, by at least $46,472, all four of those years. At the last SRRBBL Board meeting, one SRRBBL Board Member stated that “…the league is more financially strong than it has been in years.”

C. Is SRRBBL claiming that for four years, 2012-2015, gross income was less than $50,000, but then in year 2016 gross income grew by at least $37,000, to $87,000?

That is a 75% growth rate in gross income versus 2015. That translates into 296 additional players registered in 2016 versus 2015, and yet SRRBBL originally claimed a decrease of 32 players registered, but then revised it to an increase of 153 players registered?

D. For 2012-2016, the average player registration fees do not make sense.

The below table shows that if gross income for years 2012-2015 was no more than $50,000, the “Average Player Registration Fee Per Player” is very low, lower than the “Early Registration Fee”:

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For years 2012 through 2015, based on gross income reported to the IRS and player numbers reported to PRCS, both by SRRBBL, the average player registration fee ranges from $57 to $73, rounding up–how is that possible given registration fees have never been below $100?   In 2016, SRRBBL gross income was $87,000 with 853 players–that equates to an average of $102 per player.  How is that possible when the lowest registration fee was $125?

Taking it one step further, when a SRRBBL Member is registering a child to play in SRRBBL, they are given the option to pay a “Volunteer Buy Out” fee.  For the current SRRBBL 2017-18 Season, that “Buy Out” fee is $50.  In years pass, that same option was possible, but at varying amounts.  So the question becomes, for the SRRBBL Members who chose that option and paid that fee, how are those amounts reflected in the SRRBBL gross income number?  Even if only a “small portion” of SRRBBL Members pay that buy out fee, the “Average Registration Fee Per Player” reported above is even more questionable.  If a SRRBBL Member registers a child to play in SRRBBL during the “Early Registration Period” and pays the “Volunteer Buy Out” fee, there total money paid to SRRBBL is no less than $175 ($175 = $125 Registration + $50 Volunteer Buy Out).

2. The SRRBBL 2016 Financials Raise Many Questions

A. The 2016 P&L appears to not be system generated.

Therefore, additional questions that need to be answered, and have gone unanswered so far:

  • Are the financials being maintained in a proper financial system? If not, there is no integrity in the numbers and potentially points to doctored financials and /or poor record keeping.
  • The financials provided are all rounded to the “nearest 50 or 100?” How is that possible? That is not normal for proper financial records. This points to no integrity in the numbers and potentially points to doctored financials and /or poor record keeping.
  • Why are “future expenses” included on the P&L? No P&L ever includes anything of that nature. This points to manual creation of the financials, which points to no integrity in the numbers and potentially points to doctored financials and /or poor record keeping.
  • Why do the financials list out the fees the league has to pay to PRCS, which is $12.50/player, at $8,350? It has been proven, by SRRBBL’s own admission, that as of June 7, 2017, there were at least 853 players in the league, and they knew this back in December of 2016. That’s at least a $2,312.50 error. Please see more about this topic and reporting discrepancy under “League Mismanagement, Section 4, SRRBBL Providing Misinformation to PRCS.” If there was in fact a “missing check”, as claimed by SRRBBL and PRCS, financial practices still would have required this check to be accounted for and included as an expense in the 2016-17 P&L provided by the SRRBBL Commissioner. This points to no integrity in the numbers and potentially points to doctored financials and /or poor record keeping.

B. The financials provided were only a Profit & Loss Statement (P&L).

Are there other financial statements, such as a Balance Sheet, and more importantly, a Cash Flow Statement? A P&L and a cash flow statement are two very different things–a P&L does not show the full and inclusive cash flow situation, one would want to see the ins and outs of cash.

3. Other Concerning SRRBBL Financial Transactions

A. Are the finances of SRRBBL and the Horizon Institute being maintained completely independent?

SRRBBL Commissioner Anton Perkins runs his own company, which provides a basketball league in the summer, called the Horizon Institute.  On the bottom of the 2015-16 SRRBBL website Homepage, as shown here, and on another page in that same website, as shown here, SRRBBL refers to the Horizon Institute as “our non-profit partner” or “partner”. The two organizations being tied together presents a major financial / general conflict of interest. The SRRBBL Commissioner, or the league, should not be able to divert any funds, financial transactions or SRRBBL generated goodwill towards the Horizon Institute.  (Currently the Horizon Institute uses SRRBBL email distribution lists for generating business.)  Most similar organizations address this issue with a “Conflicts of Interest Policy” that requires disclosures and signatures.

B. At the last SRRBBL Board meeting, SRRBBL Commissioner Anton Perkins stated that the mid-season All Star Weekend also serves as a fundraiser.

This event sells concessions, all cash transactions. How does this event, a cash transaction, serve as a fundraiser? Who is keeping the records and ensuring the cash is managed properly?

C. In July of 2017, Members of the SRRBBL Community were made aware, by a third party / non SRRBL Coach or Member, that the SRRBBL Commissioner had a lien placed on his property in 2013, in an amount in excess of $60,000+, by the IRS. (This is public information and was not something the SRRBBL Community knew about, nor was any such research done to initially uncover this lien.)

Board Members of a non-profit, in that situation, being trusted to manage financials and accurately report financial data to the IRS, is unacceptable.

To summarize the, the SRRBBL Board has filed tax forms that point to $40,000 year-over-year changes in gross income, they have provided the 2016 P&L that appears to be manually created and raise more questions than they answer and SRRBBL is doing business with the SRRBBL Commissioner’s own company.  All of this points to financial mismanagement.