Sled dog race seeks donors after suspected theft SHORTFALL: Major sponsor of Kobuk 440 also facing tax debt.

You can buy a mile of this year's Kobuk 440 sled dog race.

Or sponsor a checkpoint at one of the six Inupiat villages along the 438-mile route. Or spend $50,000 and maybe get your name squeezed into the title of the event.

This unusually aggressive fundraising push by race organizers comes as their usual sponsor -- a Kotzebue-based mushers association -- faces unexpected debt that threatens to leave mushers competing for less cash across Northwest Alaska races.

"Last year we realized early in the year that we had a problem with our finances," said Kotzebue Dog Mushers Association President Paul Hansen. "We suspected that there was a problem with employee theft."

The employee has since been fired, the mushers association told the IRS in 2010. Hansen said the group met with police and that he can't talk in detail about the case because of an ongoing investigation.

The shortfall leaves the Kobuk 440 -- a middle-distance Iditarod qualifier -- without its major sponsor and scrambling for donations.

"We're going to have a race," said Kobuk 440 volunteer Tracey Schaeffer. "As Chuck put it, we're either going to be racing for a purse or racing for a bag of sheefish."

That Chuck is her husband, Chuck Schaeffer, president of the Kobuk 440 Racing Association. The race receives a "major portion" of its purse from the Kotzebue nonprofit, he wrote in a recent fundraising letter.

"Unfortunately, the Kotzebue Dog Mushers Association is experiencing management problems and hasn't recovered as of date," Chuck Schaeffer wrote.

Tracey Schaeffer said some new sponsors, such as an appliance store owner and Kobuk 440 rookie musher, have stepped forward to help pay for the race.

One lingering concern: building a purse big enough to convince top-tier mushers to travel to the remote competition just above the Arctic Circle.

Separate from the Kobuk 440 Racing Association, the Kotzebue Dog Mushers Association finances and hosts several other sled dog races in Northwest Alaska.

The nonprofit held a full set of races last year despite its money troubles, Hansen said. Some purses were reduced.

Last year's Arctic Circle Championship payout was $20,000, for example, compared with $26,000 the year before, he said.

It's unclear how much, if at all, the alleged theft played a role in those changes.

Much of the dog mushing association's revenue comes from gaming -- bingo and pull tabs -- and sales have been down lately, Hansen said.

The dog mushers association lost $81,000 between July 1, 2008, and June 30, 2009, the group reported to the IRS.

BURDENED BY DEBTS

This isn't the first time an Alaska mushing group has said that an employee stole money or failed to pay taxes.

The Kuskokwim 300 Sled Dog Race, held last weekend, offered a total purse of $100,000 this year despite a former manager stealing an estimated $15,000.

Staci J. Gillilan was arrested in 2008 and convicted of felony theft, according to court records. She was fired after the Kusko 300's board of directors learned the race had failed to pay upward of $20,000 in gaming taxes, according to news reports at the time.

The Kotzebue Dog Mushers Association has now discovered unpaid tax debt too, Hansen said. He wouldn't say if the unexpected debt is directly related to the alleged theft.

"Over the course of the investigation, we identified some debts that we didn't realize that we had. That's why this year we're affected again," Hansen said.

Kotzebue city officials declined to talk about the association's tax records, saying those numbers are not public documents under city code.

The alleged theft at the dog mushers association was revealed in an IRS form that shows how nonprofits earn and spend their money.

"A prior (employee) for the organization was terminated due to alleged theft of funds," the association told the IRS in a form received May 19. "The amount of the theft is currently being quantified and is under investigation."

Hansen said the association is committed to continuing its mission of promoting dog mushing and hosting races.

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