The Colchester Hockey Boosters Association received only $23,388 from the former owner of the Spanked Puppy over a two-year period despite the bar purchasing enough break-open tickets to make more than $300,000 in profit for the charity, according to an affidavit from the Vt. Department of Liquor Control.

The Sun obtained the affidavit Friday through a public records request to the DLC, which cited the former Spanked Puppy owner, Michelle Simms, for felony embezzlement earlier this year following an investigation into her bar’s sale of the instant lottery games on behalf of the boosters association.

Simms sold the Spanked Puppy last October and has been accepted into court diversion. She did not immediately return a call for comment Friday.

DLC investigators opened their case after reading a Seven Days article last summer that highlighted the Spanked Puppy as an example of how bars that sell break-open tickets bring in millions of dollars annually for Vermont nonprofits despite little to no regulation or oversight. Investigators looked at the bar’s ticket sales from June 2016 to June 2018.

The Sun first reported Simms’ citation earlier this week but was initially unable to obtain the court documents, since court diversion proceedings are confidential. The affidavit offers further details into the accusations against Simms and the question of how much should have been paid to the charity, with investigators writing that Simms’ failure to maintain any credible accounting system has left no way for them to know. 

Nonprofits typically purchase the tickets from wholesalers and provide them to bars, which sell the tickets and return the proceeds, minus payouts, to the charity.

According to the affidavit, Simms told investigators she had sold tickets on behalf of the boosters since she purchased the bar in 2001. She said she used a bank account specifically for the funds raised through ticket sales, pools or donations, and would pay cash to purchase the tickets from Colchester-based distributor, Best Bingo Supplies. She would then write a check to the nonprofit at the end of each month that covered the ticket sale profit.

The boxes include prizes ranging from $1 to $100, and since each box gives out a set number of winning tickets, charities know how much they can expect to make in profits – $921 a box, according to Seven Days – as long as the bar sells every ticket.

“Nobody is going to do that,” Simms told investigators, according to the affidavit. “It’s just stupid. I wouldn’t do that to my customers.”

Instead, she typically sold less than half a box before she closed it out, making somewhere between $400 and $500 in profit, she told investigators. She would then start a new one, even though previous inspectors had told her to sell all of the tickets.

One Spanked Puppy employee shared a slightly different estimate. The employee told investigators the bar would sell an entire box of tickets about 40 percent of the time and said Simms was the only one who could decide to close a box early, according to the affidavit. If a box was closed prior to selling out, employees would bag the unsold tickets, put their name on the bag and put it in Simms’ office, the employee said. She wasn’t sure what happened after that.

State regulations require bar owners to keep these discarded tickets, or so-called “dead soldiers,” so investigators can audit the games, if necessary. But break-open ticket games deal in cash, and because Simms never kept her unused tickets, investigators had no way to check her math.

Asked why she didn’t keep the unused tickets, Simms said, “Because I didn’t build a 30 by 40 [foot] garage,” according to the affidavit. She told investigators she would instead dump the tickets into the kitchen garbage because it is greasy and would ruin them.

The Colchester Hockey Boosters president, Chris Rosato, told Seven Days last year that he believed the club’s long-term relationship with Simms would ensure the charity was being paid what it should. Speaking to the Sun earlier this month, he remained confident that Simms hadn’t stolen from the charity.

Investigators had a different view. In a recorded interview with Simms from October 2018, which the Sun also obtained in its records request, DLC investigators Jay Clark and Matthew Gonyo told Simms that because she doesn’t have any of the “dead soldier” tickets on file, the criminal system will hold her accountable for the entirety of the missing money.

And they said even if they assume her estimates are correct, the numbers come up way short: According to the affidavit, the Spanked Puppy purchased 359 ticket boxes between June 2016 and June 2018. If the bar made an average profit of $400 per box – as Simms claimed – then it should have taken in about $140,000.

“How do I bridge the gap between what you gave them …. What am I missing?” Gonyo asked.

“I honestly don’t know,” Simms said.

“That’s a problem,” Gonyo said.

“Yup,” Simms responded.

The investigators continued to press her, saying she’s better off telling the truth. “I just need to know what the answer is: Why are we not even close?” ” Gonyo asked. “Tell me what caused you to not give the rest of this money to the charity.”

“In reality, I thought I was donating a good number,” Simms said.

“I’m telling you you didn’t,” Gonyo responded. “You’re not even close. And understand that we’re only doing a two-year snapshot. We can go back a lot further – the tax department will go even further. This can get a lot worse.”

Simms then said she needed to think over what she was going to say, and the interview ended a few minutes later.

The court diversion program requires that participants accept responsibility for their actions, according to the program’s website. It’s a voluntary process; If Simms does not successfully complete the program, the case is returned to the state’s attorney for prosecution.