A former Dubbo City Bowling Club board member claims the club was drowning in debt "to the tune of $283,000" after former manager Adam Lee resigned.
Lee was sent to prison on Wednesday and ordered to repay about $90,000 he stole from the club during his reign as manager.
The former board member, who asked to remain anonymous, confirmed insurance coverage meant the club got back the money Lee stole.
"The money [Lee was ordered to repay] will probably go to the insurer," the man told the Daily Liberal.
"We were overextended in credit to the tune of $283,000 [after Mr Lee resigned]."
He said the debt was used to fund building alterations, painting and various other things.
"We were duped.
"He [Mr Lee] was withholding information."
Several distraught club members lost confidence in the club during the whole debacle, the man said.
"They trusted the man to do the job he was paid for.
"Nobody suspected anything."
Another club member, who also wished to remain anonymous, said a solicitor advised the board to "find out what was taken" after Lee confessed to his crime in a letter to club officials.
"I firmly disagreed with that," he said.
"I told them they were mad and they should have gone straight to the police."
Documents tabled in the District Court revealed club officials were first told of Lee's theft in a letter he wrote to them in May 2016.
Lee met with club officials in August and the matter was reported to police in November 2016.
The former board member said everyone at the club was concerned about the Lee's welfare after they received the letter.
"It's an unfortunate thing that happens to smaller clubs when they are very trusting," he said.
"We can only move forward now we have an assumed future [after Dubbo RSL took control of the business]."