A former University of Colorado club ski team coach who says he was forced to resign over "ethical misconduct" allegations is now the subject of a criminal investigation over whether he misappropriated more than $100,000 in dues paid by student athletes.
Palmer Hoyt, 33, is accused of paying himself and other coaches from an unauthorized external bank account that he set up on behalf of the CU Freestyle Ski Team, a club team that has no connection to the university's top-ranked NCAA ski team.
In an interview with the Daily Camera, Hoyt acknowledged supplementing his $2,100-a-year CU salary with money from the club ski team's account, and admitted to withdrawing $50,000 within days of resigning in November 2013.
But Hoyt denied any wrongdoing, saying the university understood the arrangement, and that he believed the team owed him the $50,000.
The director of CU's Club Sports program at the time said he was unaware of the private bank account, which is not allowed under university policy.
CU officials declined to address Hoyt's characterization of the reasons behind his departure, which he said involved allegations that he touched athletes inappropriately.
"This all stems out of resentment, and accusations were made that aren't true... so that other people could take over the team," Hoyt said. "And all the monies that were paid to me were legitimate and should have been paid and have a basis for having been paid. It was legal."
More than a year later, with a criminal investigation underway, team members and their families are still trying to understand how their former coach, confidant, friend and mentor could take their money.
"I paid for my son to be able to compete doing something he loves," said Jean Willis-Brown, whose son Jeremy competed on the team for many years and is now a coach. "We paid those fees for the athletes, not for (Palmer). I've met Palmer several times and I didn't think he was capable of being so selfish. You assume that, as a coach, he would have the kids' best interests at heart. He clearly proved that his interest is totally self-serving."
The Boulder County District Attorney's office and CU confirmed that they're working with the Boulder County Sheriff's Office on the investigation, but each declined to provide many details about the open case.
CU-Boulder spokesman Ryan Huff's statement on club ski team investigation:
"In November 2013, the university discovered that a CU contract employee in a leadership position for the Club Sports freestyle ski team inappropriately deposited club funds into an external bank account. The implicated funds were dues paid by student members, and not taxpayer or tuition money. Personnel action was taken promptly and the contract employee no longer works for the university. CU policy prohibits Club Sports teams from having external bank accounts outside of university control and oversight. Suspecting fiscal misconduct, CU-Boulder administrators promptly contacted law enforcement authorities and the CU System Department of Internal Audit. At the administration's request, the Department of Internal Audit is reviewing policies and procedures for all Club Sports. A Boulder County Sheriff's Office investigation into this matter continues. University officials have fully cooperated with both the sheriff's office and Department of Internal Audit."
"Yes, there is an ongoing investigation related to this issue," District Attorney Stan Garnett said. "It's financial in nature and we're working in conjunction with the University of Colorado police, the sheriff's office and the University of Colorado."
CU's internal audit department also is looking into what happened with the CU Freestyle Ski Team, a group founded in 1990 as part of the CU Recreation Center's Club Sports program. The team specializes in skiing that involves rails, jumps, halfpipes, moguls, aerial tricks and terrain obstacles.
The audit department is also conducting a broader inquiry into Club Sports' finances, said Kevin Sisemore, CU's associate vice president for internal audit.
External bank accounts are not allowed under university policy, according to the Club Sports handbook. All club dues, donations, gifts and money gathered through fundraising are expected to be held in accounts overseen by the university.
"An external account has the potential to be used with less oversight than a Rec Center account," Sisemore said.
Though an audit is still in progress, preliminary figures suggest "there is the potential for the loss to be over $100,000," Sisemore said.
Outside bank account
Hoyt, who competed for the freestyle team as a student, began coaching the team shortly after graduating from CU with a business degree in 2005, he said.
In eight years, Hoyt said he transformed the once-struggling and disorganized group into a smoothly functioning team that won a handful of national championships, including men's and women's titles in 2013.
In order to help the team succeed, Hoyt said he created a nonprofit corporation called CUFST and opened an external Wells Fargo bank account. That way, the team's coaches could account for club dues and fundraising, and spend the money as needed for travel and equipment without having to deal with the bureaucracy of the Club Sports system, he said.
Hoyt said the salary he received from the university was "minuscule," so he and other coaches paid themselves additional money out of the corporation's bank account.
"Out of necessity, the coaches made that determination because freestyle skiing acts in a different way than normal (club) sports," Hoyt said. "The coaching staff does the organization, the scheduling, training manuals, training scheduling, learning material, sponsorships, coordination with the mountains and a slew of other things."
Hoyt said between CU and the corporation, he made an average of $20,000 to $30,000 per year as the team's head coach.
But university officials said Hoyt was paid just $2,100 per year directly by CU.
Another former coach, Joel Bettner, told the Daily Camera that he also received a paycheck from the university and a paycheck from the corporation that together averaged about $20,000 per year.
It was not clear how many other coaches may have received money from the club's external bank account set up by Hoyt, nor whether Bettner or others also are part of the criminal investigation.
Allegations 'sexual in nature'
Kris Schoech, who retired in December after 28 years at the helm of CU's Club Sports program, said he only found out about the ski team's external bank account after Hoyt left the university.
Hoyt, who had recently been given an award from the CU Parents Association, said he was forced to resign on Nov. 8, 2013, after accusations of "ethical misconduct" were brought forward by some team members.
He said that, during that November meeting, his bosses asked him questions about how he conducted the team and insinuated that he may have touched some athletes inappropriately.
"They asked me how I instruct when it comes to managing training when there is physical conduct between coach and athlete," Hoyt said. "And I cited to them that all coaches prescribed to the standard of you ask permission, you touch on the upper shoulders, and you just don't make anybody uncomfortable with anything you're doing."
Hoyt said he believes the accusations were "sexual in nature," but said he was never made fully aware of the allegations against him.
He denied that he behaved unethically or improperly while working with the ski team.
Hoyt agreed to resign, then asked a private investigator to look into the accusations. The private investigator determined that a young woman had been "influenced" to make false accusations, Hoyt said.
Hoyt said he believes the accusations were part of a plot by student athletes to get rid of him so that they could run the team.
CU officials repeatedly declined to address or even acknowledge the allegations surrounding Hoyt's conduct with his student athletes.
Campus spokesman Ryan Huff would only say that the university took action after it learned in November 2013 that Hoyt "inappropriately deposited club funds into an external bank account."
'What about our dues money?'
After resigning, Hoyt tallied up the number of hours he'd worked between April and November of 2013, and said he wrote a check to his father and attorney, Wesley W. Hoyt, for $49,750 from the corporation's bank account.
That figure included $10,000 for intellectual property rights, brand identity, image development and web design, according to a detailed invoice that Hoyt said he sent to the team.
At around the same time, Schoech told team members about Hoyt's resignation. That's when he learned about the account.
"When he left, we just said, 'Palmer recently resigned and we're just going to leave it at that,'" Schoech said. "Then the question was not so much that Palmer was resigning, it was, 'Hey, Mr. Schoech, what about our dues money?' I said, 'You guys gave me your dues money, about $12,000.' They said, 'No, no we gave Palmer more than that.'"
Bettner, who was also a coach at the time and the second signer on the corporation's account, said he told the university about the $50,000 check shortly after it cleared.
Bettner also filed a fraud claim with Wells Fargo, Hoyt said. That claim was denied, Hoyt said, because everything he did was "legal and proper."
"According to our research, you removed Palmer Hoyt as signer on the account on November 12, 2013," Wells Fargo financial crime analyst Candi Gutierrez wrote to Bettner in a letter provided to the Camera by Hoyt. "As per our telephone conversation, it appears Mr. Hoyt and you were at different Wells Fargo stores possibly at the same time."
CU: Not aware of account
Hoyt insisted the university was aware of the outside bank account.
"It was known about," he said. "It was looked down upon for Club Sports to have outside accounts, but in certain situations ... it was a necessity to have some outside accounts for the larger financial accounting needs that Club Sports couldn't provide."
Schoech, the former Club Sports director, said he and other university employees were not aware of the ski team's external account.
He said the prohibition on external bank accounts was reiterated at every meeting with Club Sports teams, officers and coaches. He said it's written in the Club Sports handbook and was part of regular conversations his office had with teams.
In 2013, Schoech said there were roughly 40 ski team members and around $12,000 worth of dues in the club's university account. He said $300 per athlete in dues seemed reasonable. But Hoyt said he was charging students $750 in annual club dues.
"We thought all the money was coming into our office," Schoech said. "What we didn't know was some of their dues, Palmer was collecting them directly and putting them into an outside account."
Student athletes made out their checks to the corporation CUFST, Hoyt said, and then the corporation deposited money into the CU account.
"We were clear and transparent about it," Hoyt said. "Kids wrote their checks to CUFST so there'd often be questions about, 'Well, shouldn't it be going to the university?' And we explained to them, 'Well, there's an outside corporation and based on the way the finances work, we put the money into the outside corporation and then we funnel the money that we need to the university.'"
Jeremy Brown, who was an athlete under Hoyt for four years before becoming one of the team's current coaches, said he didn't know anything about the corporation or the bank account when he was skiing for the team.
He said students paid cash or made checks out to CUFST, and most assumed the money was being taken care of appropriately.
"It was kind of just like, 'That's how it works, OK cool, let's go ski,'" said Brown, 24, who now lives in Silverthorne. "Nobody really questioned it. We didn't have a reason to. They just showed up and said, 'Ski team sounds awesome, all right I'll get my dues.'"
'You never know'
The university charges Club Sports teams roughly 18 percent of a coach's salary to cover the cost of infrastructure, accounting, insurance for coaches and other administrative overhead costs, Schoech said.
Hoyt said he was trying to save the team that 18 percent by paying himself from an external bank account. The account also made it easier to make last-minute travel plans and purchases, he said.
When he resigned, Hoyt said he had left behind a fundraising plan that could have made the team $35,000. He said he also left about $12,000 in the external account, which would have been enough for the team to function on.
Schoech said the ski team situation is an unfortunate reminder of why the university has a policy against external bank accounts.
He acknowledged the difficulty of enforcing that policy because bank accounts are private, and because there are 32 Club Sports teams with some 1,500 individual athletes.
Schoech said it's also a reminder of why students — not coaches — are expected to be responsible for all administrative aspects of their team, such as submitting an annual budget proposal, fundraising, organizing travel arrangements and scheduling practices.
Those responsibilities are part of the "educational process" that Club Sports provides to students, Schoech said, and act as safeguards against potential wrongdoing.
"We don't let the coaches get too close as far as collecting money; student athletes always do it," he said. "Student athletes are not going to rip off their fellow students, but when coaches get involved, you never know."