Testimony: Krebs tapped 'contingency fund' to bail out Lobo Club after Scotland golfing trip

An under-attended golfing trip to Scotland left the University of New Mexico Lobo Club with a problem in the form of a $13,000 shortfall, a witness told jurors on the second day of a trial for Paul Krebs, UNM’s former athletic director.

The trial took a dramatic turn Tuesday when state District Judge Cindy Leos booted television cameras and crews from the courtroom. Leos took the action after she learned that two stations had been livestreaming the trial on YouTube in violation of her order governing media conduct.

Patrick Dee, who served as finance director for the Lobo Club at the time of the 2015 golfing trip, told jurors that cancellations for the trip left the nonprofit group short of funds on the eve of the nonprofit’s annual audit.

Krebs, 66, is charged with two counts of felony embezzlement for allegedly using public funds to pay for the trip, which was intended to court large donors to UNM’s athletic program and its nonprofit fundraising arm, the Lobo Club.

The trial is expected to continue through Friday in 2nd Judicial District Court in Albuquerque. The New Mexico Attorney General’s Office is prosecuting the case.

Krebs’ attorney, Paul Kennedy, told jurors in opening statements that Krebs did not commit a crime because he received no financial benefit from the trip, which Kennedy called an essential element of embezzlement.

Dee testified Tuesday that a travel agency that arranged the overseas trip had required a $50,000 deposit to “lock in” arrangements for the trip.

The deposit allowed Anthony Travel, a large sports travel agency, to book arrangements at prestigious golfing destinations, including St. Andrew’s and Carnoustie in Scotland.

The Lobo Club fronted the cost of the deposit with the understanding that Anthony Travel would refund the money to the Lobo Club after the trip, Dee told jurors.

But because several people backed out of the trip, the travel agency refunded only about $38,000, leaving the Lobo Club about $13,000 short, Dee said.

Dee sent an email to Krebs on July 28, 2015, outlining the Lobo Club’s problem: The club needed to be reimbursed for the shortfall, or it would need documentation explaining the reason for the expense in advance of the club’s annual audit.

Prosecutors allege that Krebs fraudulently used $13,625 in UNM funds “to pay the Lobo Club for its initial down payment to Anthony Travel for the Scotland golf trip,” according to the second count of the indictment.

On July 30, 2015, Krebs sent an email to his business operations director, Yvonne Otts, directing her to reimburse the Lobo Club $13,625 from a “contingency fund” controlled by Krebs, Otts testified.

The same day, Otts forwarded the email to an official at the Lobo Club directing her to transfer the money from the contingency fund to a Lobo Club account, according to an email introduced as evidence in the trial.

Prosecutors also allege that Krebs used $24,500 in UNM funds to cover expenses for three large donors who attended the trip.

Kole McKamey, a former fundraiser for the Lobo Club, testified that Krebs authorized him to waive the $8,100 cost of the “ground package” for each of the three donors if they paid for their own airfare and meals.

TV crews booted from the courtroom

An angry Leos halted the trial at about 1:35 p.m. Tuesday and announced that she had learned that at least one television station was streaming the trial on YouTube in violation of an order she issued earlier this month.

Leos said she would allow attorneys to review the video and request a mistrial if they considered the violation damaging to the case. She also threatened to assess the cost of the trial to the stations in the event of a mistrial.

Leos called the media into the courtroom at 1:55 p.m. and said that she would allow the trial to continue. But she barred reporters and crews from all three Albuquerque television stations from the courtroom.

The judge allowed reporters for the Albuquerque Journal and Santa Fe New Mexican to remain in the courtroom.