Following the largest ever theft from a children’s hockey league in Canada, a former treasurer of the Pickering Hockey Association has been ordered by a judge to repay $725,000 in stolen money.

Steve Scott’s embezzlement has stunned the PHA’s 400 volunteers, who spend weekends and evenings running minor hockey programs for 1,100 kids.

“I never thought I’d see the day when something like this would happen in minor hockey,” said association president Don Linthwaite. “It brings a sense of disappointment and heartache for the people that do it for the right reasons. I don’t know how somebody could do it. How do you do that?”

The judge’s repayment ruling arises from a civil lawsuit successfully brought against Scott by the PHA. Linthwaite said the association also has filed a complaint with Durham Police, and there is an “ongoing police investigation.”

A Durham Police spokesperson wouldn’t comment on the matter.

Glen McCurdie, vice-president of membership services for Hockey Canada, said Scott’s fraud is the biggest against a volunteer minor hockey association that he’s seen in Canada. “Situations like this are disturbing in any volunteer organization. We can only rely on our associations to do their best to ensure this doesn’t happen again.”

Scott, treasurer for the PHA for 16 years, was a “respected man in the association,” says Linthwaite, and no one suspected wrongdoing until two years ago, when the City of Pickering informed the PHA board of directors that it was $335,000 in arrears for ice rentals.

According to the judge’s decision in the civil suit, Scott initially told the board the debt would be paid when a registered guaranteed investment certificate matured.

He later admitted there was no such investment but insisted he was trying to obtain the money from “unconventional lenders” and that the association’s account was in arrears because of “mismanagement,” the decision says.

Then, on Jan. 31, 2011, in a text message to the association’s former president, Scott came clean.

“Time to set the record straight,” he wrote. “Years ago I took (Pickering Hockey Association) money convinced there were big profits in Enron. Bad idea. For years I was gambling with PHA money trying to pay it back. Bottom line, I owe the PHA 200K with no assets.”

In a later meeting with the board, Scott resigned and admitted that he had been taking money from the PHA for 11 or 12 years, forging the signatures of association signing officers on cheques and gambling with the money, the court record states.

Scott said he drew on his relationship with the association in “the hope that I could get my life insurance business back on track and do a quick turnaround and repay these funds,” says the judgment.

“However, the gambling bug was hard to overcome. With no other recourse, over time I turned to third-party lenders to repay PHA monies. The spiral continued: borrow from this to pay that, always hoping that something would turn up and it would all work out.”

Scott could not be reached for comment. The judgment in the civil suit states that no one appeared in court for the defendant.

Madame Justice Ferguson, who issued the ruling in the civil suit, concluded the former treasurer fraudulently pocketed nearly three-quarters of a million dollars, based on audit records.

In addition to repaying $725,000 for “fraudulent misappropriation of funds,” the court ordered Scott to pay the association another $40,000 in damages, nearly $9,000 in court costs and $5,650 for accounting fees.

Obtaining a court order for reimbursement is one thing. Collecting the money is another, says Linthwaite, a 30-year volunteer with the PHA — the cost of attempting to collect might be more than the association would ever actually see.

“What the chance of recovering this is I wouldn’t want to guess,” says Linthwaite.

There’s also still the matter of outstanding ice rental fees owed to the city.

In the aftermath of the theft, the association has created a much more rigorous auditing system. Among its oversight reforms: annual financial audits, monthly financial statements to the board, double signatures on all cheques and receipts, replacement of cash transactions with more electronic payments, a review of all supplier relationships and making the treasurer a paid employee who reports directly to the board of directors.