DENVER -- A nonprofit group offering leadership training for high school students has suddenly dissolved, leaving students, parents, the Better Business Bureau, and the state attorney general's office wondering what happened.

Losing hundreds of dollars was not supposed to be part of the curriculum at Leader's Challenge. But several parents and high school students said they were ripped off by the nonprofit group, which abruptly notified members of its closure last week.

Citing tough economic conditions, limiting donations and declining enrollment, the group sent this note below by e-mail last week to more than 100 paying members:

To: Leader's Challenge Student Participants, Parents and School Partners
From: Leader's Challenge Board of Directors
Date: October 27, 2009
Re: Leader's Challenge closure effective October 28, 2009

We regret to inform you that effective as of October 28, 2009 Leader's Challenge will be shut down, after ten years of operations.
We apologize that we will not be able to complete the Ignite program for our student participants. We are also sorry that the Leader's Challenge program will cease to exist.
There were many factors that drove the Board of Director's decision to close Leader's Challenge, which included:
Due to the economic conditions we are not able to raise enough money to subsidize the program (the full student program fee for Ignite only covers about 35 percent of the actual cost to execute the program).
Leader's Challenge hit less than 50 percent of its recruiting goal needed to build a sustainable business model. Our 2009/2010 Ignite class was the second smallest in the organization's ten year history.
Unfortunately, the organization was unable to meet its debt obligations and in this economic environment it was difficult to raise critical additional funds.
Over the last ten years thousands of high school students participated in our Leader's Challenge programs and it has been an honor to serve these youth and our community. We are tremendously apologetic for the inconvenience and the abrupt closing.
Each of our 118 student participants will receive the Presidential Service Award distinction. The certificate and pins have been ordered and will be mailed to your home within the next 8-10 weeks.
Again, we are sorry for this news and wish you all the best.
P.O. Box 13878 Denver, CO 80201-----

The post office box was the only contact information left.

"I'm upset and kind of, like, let down that it just failed," said Hannah Hostak, a 16-year-old junior at the Denver School of the Arts at Montview and Quebec. "Well, I think everyone should get their money back for sure."

She heard the pitch one night after school last spring and her mother agreed to pay $700 for a program they thought would run a full year, and which normally went for $875.

"I would say that we didn't get our money's worth and were deceived in what we were going to get," Clare Pramuk, Hannah's mother, who thought the idea of leadership training, networking and volunteer service projects sounded good. "And all of that helps with building your high school resume up to go to college."

Leader's Challenge is a non-profit 501 (C)3 with 10 years of experience, according to founder Tommy Spaulding.

"I don't want our 10-year legacy to get ruined because of a few angry parents. We have touched a lot of kids," Spaulding wrote in an e-mail while on a business trip to the east coast. "I want to close LC down with integrity. It wasn't my decision to close down LC, but I will close it down with integrity."

Spaulding sent this note out last week as well.

October 28, 2008
Dear Leader's Challenge Students, Parents and Challenge Advisors:
When I founded Leader's Challenge 10 years ago, I had a vision to create real change in the hearts and minds of young people. It was my dream to create a high school program that developed young leaders and inspire them to serve others. I felt really good about this dream ... until now.
I am deeply sorry that the Board of Directors of Leader's Challenge voted to close down Leader’s Challenge. Though I was not a part of this decision, and not happy with the decision or the process, I know the decision was the right one. I have been away from the day to day operations of Leader's Challenge since I left the organization in 2005. I have recently returned on a part-time basis to try to help restore the organization. The Board and I did not anticipate the severity of the down economy and the difficulty to raise funds this past year. Our student recruiting numbers for Ignite were less than half this year and past unmet financial obligations has crippled the organization.
I need to be clear that Leader's Challenge will be unable to administer any refunds. The entire Board had the desire to refund something to our participants, but there is no money available and there are also other creditors that will not be paid. I sincerely apologize for this.
It was the Board's intention and the staff's hope to finish the Ignite program and I encouraged the Board to do so. But I understand the rationale behind their decision -- there are no more funds to run the program. I know each Board member and they are all good people. They have all contributed their time and finances to keep Leader's Challenge's door open as long as it has.
But the truthful answer is that Leader's Challenge was not able to raise enough funds through donations and foundations to keep the doors open beyond October 28th. The student program fee represents only a small fraction of the cost to run the organization. Most nonprofits survive on donations and the economy has really halted our donor base.
I wanted to reach out to all of you to apologize as the Founder of the organization. I feel awful that Leader's Challenge is not the program that it used to be. I wish the outcome was different. I wish we were able to complete the program for our current students or give refunds. I wish we were able to impact future students. I am deeply sorry.
I would also like to apologize for the abruptness of the shutdown and that no venue was left to communicate. We did not have everything in place before the website was ceased. Please use this e-mail for any and all communication going forward. I will do my best to address each one. I ask that you please understand that I am a volunteer moving forward and I may not be able to speak on behalf of the Board or address certain issues for legal reasons.
I want to thank you in advance for your grace and for your understanding. I'm sure the closing of Leader's Challenge has upset many people, including me, and disappointed our current participants. I hope in time that I (and others) feel good about the impact on thousands of young people that have gone through our program in the last nine years and that I (we) don't define our 10 year legacy by our unfortunate and abrupt ending.
I have been told by our past Leader's Challenge staff that our current Leader's Challenge students are a special group of young people. I hope that during your tenure participating in Leader’s Challenge you learned the value of serving others. At the end of the day, that is what leadership is all about -- serving others.
Sincerely,
Tommy Spaulding

According to documents filed with the Colorado Secretary of State's office on June, 2009, Leader's Challenge brought in just over 1 million -- $1,003,850 -- in revenue in 2008.

But, the documents show they paid out more than half of that amount -- $512,195 -- in salaries, other compensation and employee benefits.

President Tim Sheahan was paid $109,375, just over 10 percent of the group's revenue total.

"Tim is a good man. There are a lot of good people involved with LC. For 10 years we worked with students all throughout the state. LC is a victim of this economic downturn. As you know, nonprofits survive on donations. And fundraising has been tough," Spaulding wrote. "I'm working with a group of volunteers (parents, principals, teachers, Leaders Challenge students) to find ways to finish the LC leadership and service training."

But the president of the Denver/Boulder Better Business Bureau told TheDenverChannel that paying 50 percent of your revenue in salaries and other compensation is well over the 35 percent maximum they recommend for a nonprofit group.

BBB president Dale Mingilton said his office tried to ask Leader's Challenge about its operations in January of this year, but never got a response.

On Tuesday, Leaderschallenge.org was blank, offering no answers.

"And that's one of the criteria that we look at is that their Web site is easily understood, that you know exactly where the dollars that you're writing a check to them go. I can't find that info right now," Mingilton said.

A spokesman with the Colorado Attorney General's office told TheDenverChannel they've received several complaints about Leader's Challenge and are now "looking into the matter."

Two metro area offices -- at 9101 Harlan Street in Westminster and 1515 Wynkoop Street in Denver -- were empty when 7NEWS went searching for answers Tuesday.

"Like, all I got was, like, some good friends from like, Boulder. But I didn't pay, like, $700 to make friends," Hostak said.