"Every board member will stand by the fact that every penny spent was spent for the good of the survivors," Winters said. "We were told to use the money on survivors, and that's exactly what we did."
Like many charities, the Indiana COPS group started small, making do with donations from businesses and charity bicycle rides. It raised $60,000 in its best year, but that changed in 2006.
In August of that year, two officers were killed during the group's annual cross-state bike ride. Bloomington billionaire Bill Cook responded by donating $1 million to the group, making it one of the most lavishly endowed COPS chapters in the nation.
The Cook money was supposed to be kept in a restricted endowed fund in which the principal is never touched. But the group began dipping into it despite Cook's instructions — and over the objections of some board members.
Winters said she saw the $1 million donation by Cook as an opportunity to help ease more survivors' pain. The group began helping more "co-worker survivors," those not related to fallen officers but who had suffered similar trauma. It also expanded its aid to survivors of Indiana officers killed as long as 50 years ago.
Spending started to rise, including a black-tie gala at a downtown Indianapolis hotel to mark the group's 10th anniversary in 2007 and a 2009 trip to Washington for National Police Week that cost more $56,000.
The mounting expenses concerned former treasurer Tracy Wainscott, who said she met resistance when she asked for receipts before approving funds to reimburse a member's expenses.
"When you go from being a small organization to one that's got a million dollars in assets, it changes the perspective of things," said Wainscott, whose brother, Indiana State Police officer Jason Beal, was struck and killed in 2000 while helping a tow truck driver.
Carolyn Dudley, who joined the Indiana COPS board in February 2009 and later became co-president, said she was shocked by the spending and the looser definitions of a survivor.
"I think we did some really weird things with the money," Dudley said. Her husband, Indiana State Police Lt. Gary Dudley, was one of the two officers killed in the 2006 bicycle ride.
The Indiana COPS bank account, valued at nearly $1.38 million in 2007, dwindled to $654,000 by March 2010 because of spending and stock market losses, the audit showed.
"At the rate we were going, that money would have been gone by 2010," Dudley said.
Dudley took her concerns to the national COPS group in July 2009. After the Indiana chapter balked at changes, the national group ordered the audit.
The audit cited the Indiana chapter for dipping into the Cook Group's $1 million gift despite the instructions that the principal was never to be touched.
It also found Indiana COPS failed to report the $1 million gift and a $5,000 donation to the IRS in 2006 and said the salary paid to Winters was "excessively generous." Minutes of board meetings gave no indication Winters' salary had ever been voted on by the Indiana COPS board, the audit said.
Suzie Sawyer, the outgoing director of the national COPS organization, said none of the cash was stolen.
"Nobody ever said it was misspent," Sawyer said.
Winters, the founder, called the situation "sad and heartbreaking" but said she remains proud of the group's work.
"You've got a lot of good people that work with this organization," she said. "They need to be praised for what they've done, not chastised. You have a lot of survivors in the state of Indiana that we were able to assist . . . things they wouldn't be able to do if Indiana COPS wasn't there."