The Key Royale Club in Holmes Beach is situated on Bimini Bay among expensive waterfront homes. It offers equity and non-equity golf memberships, a nine-hole course and clubhouse. Islander Photo: Jack Elka
Members of Anna Maria Island’s only golf club, the Key Royale Club in Holmes Beach, received notice last week from newly elected president Craig Humphreys that the club is in financial difficulty and it’s worse than he and the club’s board of directors originally believed.
“Due to the recently discovered embezzlement and the resulting financial impact,” Humphreys said in his May 18 letter to members, a proposed clubhouse renovation is on hold indefinitely.
“We are now faced with the more pressing problem of funding our club through the remainder of this year,” he wrote.
Humphreys declined to comment when contacted, saying, “It’s a private club and it’s none of your business.”
Humphreys stated in the letter that if the present line of credit is not increased from $150,000 to $300,000, the board will be “forced to ask our current membership to step up and help restore financial stability to the club.”
He also outlined steps the board is taking to provide better accountability — a new accounting firm, training for office staff, and division between two employees in the office administrator position to provide checks and balances in the handling of the club’s finances.
He indicated a group of 26 members already had committed to a $300,000 loan to the club in response to troubled financial conditions before the club learned of the alleged embezzlement.
Humphreys said the “group of 26” is being asked to “double-up their prior commitment,” and, if they do not, other members will be asked to step in with financial aid.
The loan needs to be $600,000, he stated in the letter, in order to pay off an existing $230,000 mortgage and fund operations through the end of the year.
A source included in the 26 members committed to the $300,000 promissory note for the club said he was unsure how the note was to be secured.
The board “wishes to assure” its members that “every effort is being made to continue normal operation of our club during this difficult time,” Humphreys said.
In addition, the board is “pursuing every means of prosecution and recovery while we continue to operate the club in the manner to which you are accustomed,” he stated.
At the same time Humphreys and the board are pursuing additional funding to keep the club operational, the club is cooperating with the Holmes Beach Police Department. A “police investigation is ongoing,” he said, adding that the state attorney’s office is gathering evidence in the case via subpoenas of documents.
He did not elaborate on the amount of money embezzled, which apparently occurred sometime within the past year. He also did not name the employee he alleged to be involved in the embezzlement.
Humphreys states in the letter that the board is investigating its net loss after filing a claim for the club’s $50,000 fidelity bond coverage for employee dishonesty.
HBPD detective Mike Leonard confirmed there is an ongoing investigation, but said he had “no further comment at this time.” He declined to place a value on the club’s loss.
Leonard said there is a suspect, but he declined to provide a name “at this time.” He confirmed he’s spoken to someone at the state attorney’s regarding the matter.
Another contact offered in Humphreys’ letter, club treasurer Tim Friesen, also declined to comment when contacted. Terry Schaefer, also named as a contact did not return messages by presstime for The Islander.
The Key Royale Club is centered on a dredge-and-fill development project that originated in the 1960s on what was then School Key. It has a maximum membership that for many years saw a waiting list among Key Royale’s affluent residents, but membership diminished to approximately 300 in recent years, apparently due to the economic recession.
The golf course is a nine-hole, par-32 executive-style course surrounded by affluent homes and fronting Bimini Bay to the west.
KRC offer to members
Key Royale Club president Craig Humphreys, on behalf of the board of directors of the Key Royale Club, wrote a letter May 18 to members to inform them of financial problems at the club and make the following offer:
New club member lender loan:
• $600,000 10-year mortgage.
• 5.5 percent per annum, payable quarterly (P&I)
• Secured by first mortgage on all real property owned by KRC.
• No prepayment penalty.
• $10,000 minimum participation.
The letter establishes a deadline for member participation of June 14.
Questions on participation were referred to Humphreys, treasurer Tim Friesen, and Terry Schaefer, phase 2 project manager.