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Former Kearsley teacher, coach allegedly used schools as cover to embezzle thousands in charitable gaming funds

Detroit – A former Kearsley High School physical education teacher and baseball coach was arraigned Nov. 13 on embezzlement and charity gaming law violations in 67th District Court, Flint, for allegedly diverting funds raised at 22 charity poker events advertised as benefits for Kearsley district schools.

The Michigan Attorney General’s office and the Michigan Gaming Control Board investigated Timothy Phipps, 49, of Flint, who allegedly used district officials’ names to set up poker games, diverted the funds and then siphoned off some of the proceeds for personal use between July 2012 and October 2013.

“Phipps allegedly misrepresented himself as an official or agent of various schools in the Kearsley school district to obtain millionaire party licenses and divert tens of thousands of dollars raised through charity poker events,” said Richard Kalm, MGCB executive director.  “Investigators discovered district officials were unaware of 22 millionaire party events for which he obtained licenses. Phipps allegedly diverted funds from the events, which were advertised as fundraisers for the district’s schools.”

The licenses authorized the sale of $330,000 in chips during charity poker events over the 15-month period. The events were held at two former Flint-area venues, Gloria’s Poker Palace and Pocket Aces, which the MGCB closed in 2013 for charity gaming law violations. 

Under the state’s Bingo Act, qualified non-profit organizations may obtain up to four licenses annually to host casino-style events called millionaire parties to raise funds for charitable purposes.

Phipps chaired 49 millionaire party events or paid a family member or family friend to act as chairman between 2009 and 2013.  He allegedly forged district officials’ signatures on event applications and reportedly placed some gambling profits in a bank account for the Kearsley Baseball Boosters group, which is not affiliated with the schools. While some funds were used legitimately, investigators say nearly $17,000 was never deposited into the schools’ or boosters’ accounts. 

“He was able to get 22 millionaire party licenses by misrepresenting himself and allegedly raised thousands of dollars for his personal use,” Kalm said.  “We need stronger laws to make sure this doesn’t happen in charity gaming. Criminal and civil penalties are necessary to weed out unscrupulous people and prevent them from tainting the good works and fundraising capabilities of legitimate charities.”

Phipps is a 1984 graduate of Kearsley High School. He has taught science and physical education at the high school, coached baseball through the 2014 season and served as an assistant coach for varsity football.

The Kearsley district schools appear to be innocent victims and are not accused of wrongdoing, Kalm said.  The schools have cooperated with the investigation. Phipps allegedly embezzled funds while claiming to work on behalf of the following schools:

  • Armstrong Middle School
  • Kate Dowdall Elementary School
  • Leota Fielder Elementary School
  • Kearsley High School
  • Burgtorf Early Childhood Center
  • Phipps was charged Nov. 12 by the Attorney General’s office with embezzlement and violating the state’s Bingo Act, which authorizes millionaire parties and other forms of charitable gaming. Phipps was arraigned Nov. 13 in 67th District Court, Flint, before Judge Jennifer J. Manley on:

  • One count of embezzlement of $1,000 or more but less than $20,000 (felony penalty: up to five years in prison and/or a $10,000 fine or three times the amount embezzled, whichever is greater)
  • Two counts of gambling-charitable gaming-disposition of proceeds for devoting a portion of the net proceeds of a millionaire party for an unlawful purpose by using, taking or converting a portion of the proceeds for personal use (misdemeanor penalty: six months in jail and/or $1,000 fine for each count)
  • A criminal charge is merely an accusation, and the defendant is presumed innocent until proven guilty.

    Phipps was released on a $20,000 personal bond and is next due in 67th District Court Nov. 25 for a probable cause hearing.

    "The Michigan Gaming Control Board shall ensure the conduct of fair and honest gaming to protect the interests of the citizens of the State of Michigan."