LAKE COUNTY, Calif. – A long-running case involving the former treasurer of the Middletown Colts Youth Football and Cheer Program has resulted in a restitution ruling that the defense attorney in the case called “off the wall” and is expected to result in an appeal.
Retired Judge David Herrick has ordered Carol Outen of Middletown to repay approximately $48,006 in the grand theft case filed against her in 2014.
Outen, the football and cheer program’s treasurer for 12 years, pleaded no contest in the case in January 2015 and the following month was sentenced to three years’ felony probation, 12 days in jail, which was fulfilled with credit for six days at the time of her arrest and other credits, and was ordered to pay restitution.
Outen’s case has sparked deep divisions amongst many community members, some vilifying her and others defending her.
The divisions seem only to deepen when considering the complex nature of the case, the varying viewpoints of what occurred and the fact that the case involves a popular youth sports league, which is reported to serve more than 100 south county children.
Detractors say she hurt children and the community, violating trust.
Friends say Outen, who grew up in Middletown, has over the years paid to help cover the costs for children who couldn’t ordinarily have afforded to participate and even covered the costs of their equipment.
Both Outen and her attorney, Angela Carter, acknowledge that she had wrongly moved money around between the program’s accounts and her own personal business accounts, which Outen explained was a way of floating checks to keep her business afloat during the recession.
“Carol entered a guilty plea in this case because she knew that moving the money around was not legal,” said Carter, adding that Outen made an early admission in the case to that fact.
Deputy District Attorney Rachel Abelson, who handled the case, said the grand theft occurred in 2010 and 2011, based on the investigation.
“It took us a long time to do the restitution hearing,” said Abelson. “It’s probably the most complicated financial case I have ever dealt with.”
Abelson said Outen was moving money in between the football team’s account and her husband’s business account and her personal account on a daily basis in order to cover payments and avoid bounced checks.
She said Outen also would put money back, although she said a lot of cash from the gate and snack shack didn’t appear to have been deposited.
In an interview with Lake County News, Outen said that she had been depressed, wasn’t paying bills and was “letting things go” during the time period for which she was prosecuted because she was afraid she was going to lose her livelihood and her residence.
She admitted she was floating checks in order to save her home and business, All Weather Heating and Cooling, during the continuing impacts of the recession, which Lake County was still experiencing at the time.
She said she was not conducting the activities during football season.
“In my head, I knew I was doing wrong,” she said.
Outen said she was not putting the league in jeopardy or taking from the football team. “That’s how I justified it to myself. Still wrong.”
She acknowledged that the league did not have internal controls in its handling of finances. She said other people besides herself had access to cash, but she doesn’t think anyone stole anything. However, she pointed out that she didn’t have control of the money all the time.
“We ran it pretty stupid,” she said.
Nord, who would become the chief witness against Outen in the case, said she discovered the situation and ultimately reported it to law enforcement.
“October of 2011 is when information just kind of fell into our laps,” Nord explained.
Nord’s husband was contacted by a man he knew who runs the Rohnert Park print shop where shirts and sweatshirts are printed for the team. He was told a check for $3,500 written by Outen had bounced, and that she was not returning his calls.
The man called back the following month, saying another check had bounced, Nord said.
Nord said she went to the organization’s board of directors to ask questions and was told that no one was allowed to look at the group’s books.
She said she started calling vendors and finding out bills weren’t being paid.
Outen said Nord confronted her about the transfers between accounts after Nord did some research and found that a bill to Riddell wasn’t paid on time.
“We had a meeting and I came clean with her, telling her that I had been floating checks back and forth but never took any of (the) Colts’ money,” Outen said.
In May 2012, Nord – whose daughter is a cheerleader and husband has been a coach – took over as treasurer after Outen was relieved of her duties and was handed the group’s records.
Outen said she gave the league $6,700 when she left the treasurer’s position, funds that aren’t accounted for in the recent restitution ruling. Abelson also reported that Outen had paid the league back about $6,000.
Nord said Outen had no paper trail, so she went through and reconstructed what Outen’s checkbook register should look like. As part of that process, she concluded that money was being moved around on a daily basis.
Nord said that in a six-month period of time Outen wrote $40,000 in checks. She could find no deposits for snack shack and gate receipts, or registration fees.
The first season she was treasurer, Nord said the league had to do a lot of fundraising and get sponsors, a process that took two more seasons to complete.
During that time they also worked through the process of buying all new equipment – uniforms and helmets – because she said they were told that none of the helmets would pass safety inspections.
Nord alleged that Outen didn’t pay the league’s insurance the last year she was treasurer. “They were not covered by any insurance in the 2011 football season.”
In response to the issues of equipment and insurance, Outen said she had not purchased inferior equipment for the children, and that she had gotten advice from a local football coach on the best helmets to purchase, which she said she had reconditioned as required.
Regarding the insurance, Outen said they were denied insurance for a year due to a number of people using it as their primary insurance, resulting in numerous claims.
Outen provided Lake County News with emails and a spreadsheet from an insurance company confirming that medical coverage was denied to the league because of 37 claims – amounting to just over $6,000 – submitted by players in the 2010 policy year.
“I had a moral obligation to say something when I knew what was going on,” Nord said of her reasons for reporting the case to authorities.
Nord credited then-sheriff’s Det. Doug Dahmen with getting the criminal case against Outen moving forward.
Outen said Dahmen contacted her and asked her if she would be willing to come and speak with him without counsel. “It said yes as I had nothing to hide.”
She said she visited him and answered his many questions truthfully. “He told me that he didn't know if it would go anywhere but if it had he would contact me again since I was so willing to go talk with him and allow me to turn myself in.”
Outen said she heard nothing for months – until the day Dahmen and two deputies showed up at her home to arrest her. She said Dahmen refused to tell her why she was being arrested.
She said the case would drag on for months, with the District Attorney’s Office saying it didn’t have the needed discovery. Outen said she called Dahmen, who told her to only speak to her attorney. He later called her back and said a plea bargain was being offered and if she didn’t take it he would slap her with a felony for every check she wrote back and forth.
At that point, Outen said she agreed to take the plea – against the judgment of her attorney at the time, Stephen Carter – and accept punishment for floating the checks.
Making the case for restitution
Abelson said Nord was the main witness for the restitution hearing which took place this summer and led to Judge Herrick’s ruling at the end of August.
“It was really hard to figure out what the actual loss was,” said Abelson.
The prosecution presented Nord’s reconstruction of the records during the time period of the investigation. Abelson said Nord kept meticulous records, so they relied on her estimates and figures to come to a projection of what was lost.
In her victim’s impact statement for the league, Nord alleged that the league lost $117,000.
Carter hired forensic Certified Public Accountant Jeffrey Mallan of Santa Rosa to assess what Outen owed the league in preparation for the process of determining the restitution amount.
Mallan has nearly 30 years of experience in accounting, having formerly served as accounting and finance officer for McClellan Air Force Base, worked for the Department of Defense as well as a number of prestigious accounting firms including PricewaterhouseCoopers and Hemming Morse Inc. He also has experience giving testimony in both civil and criminal cases.
As part of his testimony at the hearing, Mallan presented his assessment, explaining to Lake County News in an interview that he wasn’t hired to investigate the case as a whole, merely to quantify the monies taken for the purpose of arriving at a figure for restitution.
Pointing to the league’s continuing lack of internal controls, which presents an issue with tracking cash, Mallan said, “There is no way to recalculate it correctly.”
So, unlike the numbers Nord provided and that the prosecution presented, Mallan didn’t attempt to calculate a possible cash total, explaining there wasn’t adequate information to correctly do it.
The prosecution had presented a gate receipt schedule from 2012 to 2015 that showed an upward trend of $7,300 to $9,000. However, Mallan said, “To get an actual number, there's nothing to back it up.”
He also questioned the difference between the 2012 to 2015 time period used to calculate the restitution estimate and the actual period for which Outen was prosecuted, pointing out that those later years were economically better years than 2010 and 2011 and the prosecution’s calculation of what was lost doesn’t take that into account.
He said the lack of internal controls makes it hard to know if there was any “pillage” between what was taken at the gate or the snack shack and what was counted at the end of the night.
“I think they need to beef up their internal controls at these games,” he said, suggesting a cash register at the snack shack and counters and tickets at the gate.
He said he didn’t work off of the league’s numbers. Rather, “My report is based on the bank statements, the actual information that was presented,” along with receipts.
Mallan’s report shows a cumulative balance of money taken and repaid in chronological order. The total funds paid to herself or her business came to approximately $61,976.44, with $934.50 in bank charges incurred, for a subtotal of $62,910.94, according to Mallan’s tabulations.
He said reimbursements to the league totaled $63,487.45, and concluded that Outen not only repaid the league fully but overpaid by approximately $576.51.
Based on his examination of the available financial records, Mallan wrote, “Carol Outen would appear to borrow funds from MYFL and then reimburse the MYFL for those borrowed funds during the period from May 2010 through January 2012. In addition, Carol Outen appears to have made purchases on behalf of the MYFL, using cash that she held and with funds from her and her husband’s company. Therefore, Carol Outen does not appear to owe any further monies to the Middletown Youth Football League. “
Without internal controls, there is no way to properly track cash and no way for Mallan to quantify it, he said.
As a result, he acknowledged there always will be a question out there about the amounts involved and what Outen owed.
Mallan said he’s done a number of embezzlement cases. “Usually, all I see is money being taken,” he said.
However, this time, he saw money being taken and then being paid back.
“This is misappropriation of assets, clearly,” he said. “There’s no denying that.”
He added, “Usually, an embezzler is not going to pay it back.”
Judge weighs testimony, gives ruling
During his late August ruling, Herrick took in the testimony from Mallan and Nord, Abelson said.
Playing a part in his final ruling was Herrick’s conclusion that Outen deposited little cash – Abelson said only about $2,000 for the two-year period covered by the investigation – and so he accepted Nord’s estimates of how much cash should have been brought in based on Nord’s records during her time as treasurer.
Abelson said Herrick came up with the amount he believed the league should have earned, discounted it about 5-percent for inflation and came up with the number of $48,006.
“The judge made an off-the-wall decision that was not based on the facts that he was presented with,” said Carter.
Carter said Herrick had noted errors in Nord’s accounting and disregarded Mallan’s testimony.
“I’m going to encourage Carol to file an appeal,” Carter said.
Outen said Herrick’s ruling didn’t account for Costco receipts she presented for items she had purchased for the league, the fact that the league had changed colors and so had a big boost in revenue when people bought new uniforms or the amount of fundraising that is now being done, as opposed to the very little being done when she was on the board.
It also didn’t take into account that she gave waivers to children to help them afford to play in the league.
As part of that overall amount, Outen said the judge said she owed the league $12,000 for registration fees – in a league of only 120 children.
Carter said the hearing itself was like a football game, with cheering and yelling in court when things didn’t go Outen’s way.
She said she also was confronted and harassed by a community member outside the hearing.
Outen said she’s been ridiculed, threatened and harassed over the last few years, but she doesn’t want to create more drama, that she wants it to be over.
“Carol suffered a lot of harassment and deep regret over this case,” said Carter. “But she did the right thing nonetheless.”
She added, “I’ve become friends with her over the course of my representation and know her to be a kind, sweet, gentle person. I guess any amongst us in the community who have never done anything wrong or made any mistakes in our lives can throw the first stone.”
On the other side, Nord said people have attacked her for doing what she thought was right by bringing the matter to law enforcement.
While Carter felt the ruling went too far, Nord felt it didn’t go far enough based on her estimate of the league’s total loss.
Abelson said the goal is to get the terms of Outen’s probation modified and extended to cover the time period in which she’s paying the restitution amount. Outen has been on probation since February of 2015, and it’s set to end this coming February.
Outen said she doesn’t yet know how much money she will be required to pay on a monthly basis or the possible impact on her probation.
The process of paying restitution or moving forward with changes to Outen’s probation is likely to be stalled with the filing of an appeal.
One thing that may strengthen Outen’s chances at succeeding in seeking an appeal of the ruling is Dahmen’s involvement in the case.
Dahmen’s performance in the investigation of a Clearlake Oaks home invasion investigation that occurred in 2013 led to questions about the truthfulness of statements he made to his superiors at the sheriff’s office and to the District Attorney’s Office about failing to follow protocols in turning over evidence that proved the innocence of a suspect.
The District Attorney’s Office previously confirmed that Dahmen was placed on the “Brady list” of law enforcement members who have credibility issues before he left the county’s employment in April 2015, as Lake County News has reported.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.
Judge orders restitution payment in Middletown Colts grand theft case
- Elizabeth Larson
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