LITTLE LEAGUES FACE FUND LOSSES

More than half a dozen Little Leagues and other sports organizations in California are among about 220 groups nationwide facing losses after an online payment company stopped handing over dues and other funds it was collecting.

The missing payments, which Washington-based Count Me In Corp. acknowledged Tuesday total $5 million, have left many of the organizations wondering how they will make up the difference, particularly given the tough economic times.

“I’ve lost sleep over this,” said Jeff Bacon, treasurer of the Encino Little League, which is owed $100,000 in membership fees. “Everyone is very offended by what this has done or potentially could do to the kids, and also to kids around the country who may not be so fortunate as the ones in Encino.”

No criminal charges have been filed. But lawsuits have been filed in several states, and the Connecticut attorney general on Tuesday urged parents to stop making credit card payments through Count Me In’s website -- a feature the firm said it had disabled two weeks ago on its own.

Terry Drayton, Count Me In’s founder and chief executive, expressed regret Tuesday for his clients’ anxiety but said he was in discussions with three possible investors to raise funds to pay back their money.

He acknowledged that the company made mistakes but said all the missing funds went toward operating costs -- primarily the computer software used by the company’s clients -- and that none of it was stolen.

“How did we get here? We made some errors with the lack of financial oversight,” Drayton said in a telephone interview. “At the end of the day this is my responsibility. I’m the CEO and my job is to fix it.”

About 600 school and sporting groups across the country use the firm’s software to process their online registration fees and other payments, Drayton said.

In the nearly eight years that the firm has been in business, he said, it has collected about $175 million and disbursed $170 million.

The company withholds a fee of about $3 per transaction and is supposed to return the rest to its clients. But Drayton acknowledged that the accounts had been combined and that funds owed to certain clients were instead used to pay company salaries and other amounts owed to third parties.

Drayton said he became aware of the problem about two years ago, but said it took him until May to go over nearly eight years of transactions to figure out precisely how much was owed to whom -- information he would need to show a potential buyer.

Not all of Count Me In’s customers are willing to wait, however. The Alameda Education Foundation is suing the company for $40,000 in Alameda County Superior Court. The New Jersey-based Montclair United Soccer Club filed a complaint in Washington demanding $142,000, and the Avon Junior Athletic Assn. is seeking more than $47,000 in a case filed in Indiana.

Three clients based in Alaska -- the Nordic Skiing Assn. of Anchorage, Campfire USA Alaska Council and the Matanuska Soccer Club -- have petitioned a Washington bankruptcy court to force Count Me In into involuntary bankruptcy. A number of others across the country have filed complaints with their state attorneys general.

Although Drayton said he understood his clients’ anger, he argued that the court actions would make it more difficult for him to raise money to pay them.

“The only thing that I am focused on right now is returning the money we owe all our clients,” Drayton said.

“To do that we do need to find a strategic investor or partner in order to purchase the business,” he said.

Although some sponsorship is available, many Little Leagues and other youth clubs rely heavily on membership dues to cover operating costs.

Tom Watson, president of Carlsbad Youth Baseball in San Diego, said more than 90% of parents paid for their children’s fees with credit cards through Count Me In and the group was missing $70,000.

“It’s going to be a challenge for us to operate our programs,” he said. “The kids and their parents are going to suffer.”

Bacon, of the Encino league, and Eric Van Gilder, president of the Sherman Oaks Little League, said their leagues were fortunate to have sizable reserves, so programming would not be affected in the spring.

But they said expenses would have to be limited until the matter is resolved.

“It’s disheartening,” said Van Gilder, whose league is owed more than $80,000. “Auto dealers are some of our biggest sponsors and it is going to be difficult to turn to them for the same kind of commitment.”

Other California groups reporting losses include the La Costa Youth Organization ($180,000), Orange County-based Earthquake Lacrosse ($40,000) and San Dieguito Youth Softball ($15,000).

Organizations contacted by The Times said they would honor all registrations but were urging families to dispute the charges on their credit card and request refunds, so that the families can write the leagues a check.

The groups said that the credit card companies were cooperating and that they were beginning to recoup some losses, but added that it was a time-consuming process.

A number of clubs said they had worked successfully with Count Me In for years. They first noticed a problem in early fall, when the company began to be late with some payments. According to the clubs, the firm apologized and blamed processing delays.

Soon after, however, the company admitted to customers who asked that it did not have the money to pay them.

“It’s just kind of mind-boggling,” said Todd Pladson, president of Eastlake Little League in Washington state, which he said is missing nearly $67,000. “They were taking in all of this money. Well, where did it go?”

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alexandra.zavis@latimes.com

kate.linthicum@latimes.com