A joint local, state and federal investigation is underway into a possible embezzlement of nearly $200,000 over two years from the Moose Lodge No. 1618 on Williston Road in South Burlington, Vermont Superior Court records show.
South Burlington Police ordered Theodore “Ted” Shaw, 45, of Winooski, a former club employee, into criminal court, but the office of Chittenden County State’s Attorney Sarah George postponed the arraignment when Shaw arrived at court, according to both his defense lawyer and police.
The court citation was issued to Shaw after a judge authorized a search at the lodge on Oct. 24 for evidence to support the embezzlement complaint filed by concerned club members, South Burlington Detective Chris Bataille said in an affidavit.
The Vermont Liquor Control Department and the U.S. Secret Service are cooperating with South Burlington Police for the investigation, Police Chief Shawn Burke said. He said investigators are still sifting through the collected evidence.
Shaw declined comment to The Other Paper on Saturday about the case or the nearly $200,000 reported missing, instead referring questions to his defense lawyer, Harley Brown. The Richmond lawyer said he thinks when a final audit is complete, the numbers will be substantially less.
State Liquor Investigator Matt Gonyo said in a separate court affidavit he limited his initial financial review of the club records for two years. Between June 2016 and June 2018, the Moose Club bought 431 boxes of break-open tickets and that if all the tickets were sold the lodge should have made $360,899, Gonyo wrote.
Shaw had provided records that indicated the club collected $163,697 for tickets over those two years, leaving a $197,202 deficit, Gonyo said in his 6-page single-spaced typed affidavit.
Gonyo said Shaw, during an Oct. 1 interview, estimated he and his staff sell about 80 percent of the break-open tickets in a box before closing it out. Gonyo said even using that estimate, there was still a $142,235 deficit unaccounted for by Shaw.
Gonyo said because the investigation covered only the past two years and the break-open tickets have been sold for nine years, “The actual amount of money due the Moose Lodge #1618 is likely much more.”
This marks the third time in about 10 months a South Burlington establishment is at the center of an investigation into possible embezzlement by an owner or employee for pocketing proceeds from the sale of break-open charity tickets, court records show.
The latest case
Until recently, Shaw had served as the Lodge Administrator for about nine years, court records show.
Shaw had shared self-prepared financial reports with the Moose officers twice each month, but after their meetings he either collected the reports back or had them destroyed, said Bataille’s affidavit, which also is 6-pages single-spaced typed. Nobody is allowed to keep financial reports.
The lodge also has failed to have an appointed or elected treasurer for several years and some members believe that is a violation of Moose Lodge rules, Bataille wrote.
Lodge officers and members said Shaw, who controlled the pull tickets, would win large amounts at what appeared to be at an unusual high rate, Bataille wrote.
On Labor Day, about 3 minutes after the club would have normally opened, one complaining witness reported a bartender was paying Shaw for two winning break-open tickets – one for $500 and another for $100, record show.
One bartender reported a trash can full of opened tickets was found just before the bar opened for the day, Bataille said. Shaw also told investigators that he had not kept the used tickets for two years as required by law.
Various Moose members interviewed also had questions about other club finances.
The lodge netted about $300,000 by selling its property in Winooski roughly seven years ago and relocating to South Burlington. Renovations to the new rented lodge cost about $100,000, but the remaining $200,000 has now dwindled to about $50,000, complaining witnesses said. Bataille said he got a subpoena for bank records that revealed the two accounts had been merged into one and it had about $53,000 as of the end of September.
One club member reported that during a summer week while Shaw was gone, the Moose Lodge made about $10,000 without being busy, Bataille said. He wrote the lodge member said with the rent at $4,000 a month, there were questions how the club could be losing money.
A Moose board member reported Shaw had directed employees about a year earlier to take cash for any food purchases and to deposit the money directly into the drop safe and not run it through the cash register – an apparent attempt to prevent any record of the cash, Bataille said.
During the court-ordered search, investigators from city police and liquor control seized a flash drive, discs of inventory, a laptop and various records. Also listed on the two-page inventory of items seized was a letter pertaining to child support.
Separate complaining witnesses reported Shaw was paid $500 a week, but $300 was going to the State of Vermont for his Child Support payments, Bataille said. One witness said it looked odd that Shaw appeared to carry lots of cash in his pockets and seemed to go on trips every weekend, Bataille wrote.
“I have never taken any money from the lodge ever,” Shaw is quoted in the affidavit as telling Gonyo. “I didn’t take it, maybe it was employee theft or maybe everything was not being rung in the point of sale as it should be.”
Also seized was the video surveillance system for the bar, records show. Bataille said investigators are going through the tedious process of reviewing the movements.
Bataille wrote he conducted interviews with several lodge members and officers and also did follow-ups with some of them. One person noted Shaw wrote personal checks to the lodge, but several times the checks were later found in the office and had not been deposited, Bataille wrote.
Chief Burke and Bataille said it was unclear when the follow-up investigation would be complete.
Two earlier cases
Earlier this fall, Brendan A. McGrath, owner of The Rotisserie restaurant on Williston Road, pleaded not guilty in Vermont Superior Court to three counts of embezzlement and one charge of false information to police to try to deflect the investigation.
McGrath, 43, failed to turn over at least $120,544 between January 2016 and December 2017 due to HomeShare Vermont on Farrell Street, a Vermont Liquor Control Department affidavit said.
Liquor investigators went through all the discarded break-open tickets at the Rotisserie and based on subpoenaed bank records, orders for tickets and other evidence the loss could be as much as $314,808, Gonyo said.
The Rotisserie had failed to file the annual state form designating a charity for 13 years, Gonyo said.
Earlier this year the former owner of the Sugarhouse Bar & Grill on Queen City Park Road denied two felony counts of embezzlement related to nearly $40,000 in missing money from the sale of break-open tickets for charities, court records show.
Nicholas Bermudez, 32, of Milton, operated the bar for about 18 months, but the Vermont Tax Department closed it in June 2017 for failure to stay current with the rooms and meals taxes, officials said. The bar was located just off Shelburne Road in the former site of the longtime bar Franny O’s.
An initial news release from the Vermont Liquor Control Department and several subsequent news stories pegged the loss at $168,000 early this year, but a final audit now puts the loss about a quarter of that shortfall. The confusion was created over the number of boxes or cases sold.
Liquor Control maintains Bermudez pocketed proceeds from the sale of charity tickets destined for the Burlington Amateur Hockey Association and Jones Music Media in Burlington, a court affidavit said.
He is awaiting trial in Burlington.
The state requires 100 percent of all proceeds from the sale of break-open tickets must be given to a pre-determined designated charity or non-profit except for a few permissible expenses allowed by law.
SOURCE: Mike Donoghue, Contributor