Former local bar owner cited for embezzlement

Liquor control investigators say the former owner of two Colchester restaurants embezzled money that was supposed to benefit the high school’s hockey team. Michelle Simms, who previously owned the Spanked Puppy and Clover House, was cited in February for felony embezzlement following a Department of Liquor Control investigation into the sale of break-open tickets on […]

Liquor control investigators say the former owner of two Colchester restaurants embezzled money that was supposed to benefit the high school’s hockey team.

Michelle Simms, who previously owned the Spanked Puppy and Clover House, was cited in February for felony embezzlement following a Department of Liquor Control investigation into the sale of break-open tickets on behalf of the Colchester Hockey Boosters Association. Simms sold the Spanked Puppy last October, and Clover House has since closed.

DLC investigator Matthew J. Gonyo couldn’t specify how much Simms is accused of stealing, referring questions to the Chittenden County State’s Attorney’s Office.

But the case files will remain confidential because prosecutors agreed to send the case to the court diversion program, a voluntary process that requires individuals charged with crimes to admit responsibility for their actions. If Simms does not successfully complete the program, the case is returned to the state’s attorney for prosecution, according to the court diversion website.

Gonyo opened his investigation last summer after reading a Seven Days article that highlighted the Spanked Puppy as an example of how bars that sell break-open tickets – instant lottery games akin to scratch-offs – bring in millions of dollars annually for Vermont nonprofits despite little to no regulation or oversight, creating a system ripe for wrongdoing.

Gonyo’s inquiry turned up little of note at the Clover House, which also sold the tickets. But the investigator said evidence from the Spanked Puppy proved enough to cite Simms for embezzlement. Multiple attempts to reach Simms for comment were unsuccessful.

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.

The Colchester Hockey Boosters president, Chris Rosato, told Seven Days that the system lacks accountability but he believed the club’s long-term relationship with Simms would ensure the charity was being paid what it should.

Reached earlier this month, Rosato said DLC investigators told him they’d cited Simms for embezzlement, but Rosato remained adamant that the only injustice perpetrated against the boosters is from state investigators.

“I really don’t know what they’re doing,” Rosato said. “I think someone read the [Seven Days] article and felt they had to go do something, and lo and behold, someone isn’t following the rules, so they throw the book at them.

“I don’t believe she’s guilty,” Rosato added of Simms. “I think she’s innocent. I don’t think she stole money from our charity at all.”

According to Rosato, the state’s case centers on an accounting discrepancy between the game revenue and the money given to the boosters. In theory, tracking money owed to charities should be as simple as subtracting prize money from ticket sale revenue.

But as Seven Days noted, some bars stop selling tickets once the big prizes are paid out, and unless the bar keeps these so-called “dead soldier” tickets on file, it’s difficult if not impossible to audit the system.

At the time, Rosato told Seven Days he thought Simms probably threw away some tickets. But speaking to the Colchester Sun a year later, he said Simms is unfairly taking the heat for a systemic problem.

“The DLC expects bars are going to hold on to those tickets for up to 24 months,” Rosato said. “In reality, it’s totally impractical, saving two years’ worth – tens of thousands, maybe hundreds of thousands – of tickets. You would need a forklift to do that.”

Rosato told Seven Days last year that the break-open ticket revenue was vital to the hockey nonprofit, going as far as claiming the high school would lose the sport without it: “It’s the only thing that keeps us on the ice,” he told the paper.

Indeed, the $44,000 revenue represented more than two-thirds of the nonprofit’s overall revenues in 2016, according to its tax filings. But Rosato backtracked the doomsday prediction when speaking to the Sun, saying the loss won’t sink the team thanks to other revenue sources.

He added there are better ways to fix the system instead of arresting people who don’t follow the rules.

“Nobody wants to take the initiative to put a system in that works for charities like mine and for the bars and makes everybody happy,” he said. “I guess that’s too much work.”

The Spanked Puppy’s new owner, Ted Tomlinson, continues to sell break-open tickets but said the pub is partnering with a new nonprofit. He said the bar enacted several accountability measures, including a ticket reconciliation in which a pub employee and charity representative sign off on the monthly donation amount.