It was only when the taxman came knocking that Surf Life Saving Taranaki realised it was drowning in debt.
The IRD contacted the organisation's chairman in June last year looking for several years of unpaid PAYE payments and penalties totalling $108,000.
That led to the discovery of a decade of embezzlement, forged audit reports and dishonesty.
The organisation's former highly-regarded district manager, Alison Douglas, pleaded guilty before Judge Robert Murfitt in the New Plymouth District Court yesterday to 18 charges of fraud, one of theft and 23 charges of failing to make payments to the IRD over a decade of dishonesty.
Douglas, 65, who was made a life member of the organisation in April last year, is now behind bars on remand waiting to be sentenced on April 24.
The scandal sent shockwaves through the tight-knit surf lifesaving community and the organisation was almost brought to its knees.
During her time at the top, Douglas had sole responsibility for the organisation's funds, including paying wages and financial reporting to the board.
Police prosecutor Sergeant Kerry Yates said between 1998 and last year Douglas had overpaid herself $198,764.68 and clocked up $6783.56 in unauthorised domestic and international travel for herself, her son and his partner.
Douglas admitted what she had done when spoken to by police in January this year. "She did so that her pay was consistent with persons in other district surf lifesaving organisations around the country and also the amount of hours she put in for Surf Life Saving Taranaki," Ms Yates said.
To cover her tracks Douglas produced false audit reports at annual general meetings from 1998 to 2007, claiming they had been prepared by a firm of chartered accountants.
Ms Yates said Douglas had photocopied a letterhead and a signature on to the reports.
"By doing so the defendant was able to conceal the true financial position of Surf Life Saving Taranaki, which was vastly different from that being reported."
Douglas' treachery came to an end when the organisation's chairman confronted her about the missing IRD money in June last year and she was stood down.
She later resigned.
Surf Life Saving Taranaki is seeking reparation of $205,548.24 from Douglas.
Defence lawyer Pamela Jensen said Douglas knew she was going to jail and consented to being remanded in custody before sentencing.
Judge Murfitt said he had no option due to the scale and breach of trust in Douglas' offending.
"I agree that imprisonment is an inevitable outcome," he said.
A tearful Douglas was then led down to the court cells.
The trust's chairman Graham Goldsworthy was pleased Douglas had pleaded guilty to the charges and avoided a lengthy trial.
"Dragging it out wouldn't have achieved anything," Mr Goldsworthy said.
The district's board and new manager had been working hard to make the organisation financially viable again.
Mr Goldsworthy said the situation had served as a warning to other community organisations to focus on accountability.
"Without that you are vulnerable," he said.
- © Fairfax NZ News
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