I-Team Uncovers Charity Bingo Doesn't Always Benefit Charities
NORTH TEXAS (CBS 11 NEWS) - Some charity organizations across Texas have been pushed to the brink of bankruptcy after getting involved with bingo.
The Texas Lottery Commission runs charity Bingo in Texas. But some non-profit groups believe the state isn't doing enough to protect the groups.
CBS 11 I-Team Reporter Mireya Villarreal has been investigating Charity Bingo, including claims the state lacks enough oversight, for months.
"I know we were preyed upon," Laveda Brown, Director of the Cen-Tex African American Chamber of Commerce, told us. "We were taken to the cleaners."
In most cases, you will find there are definitely non-profit groups and management companies in Texas playing bingo, doing it right, and bringing in money for great causes.
But several sources in the bingo industry that have reached out to the I-Team believe bingo has become a big business the state can't control.
During our I-Team undercover investigation we found at least one management company using dead or incapacitated veterans to play bingo; they pocketed profits for themselves and left the charity high and dry.
In Texas charity bingo is supposed to benefit non-profit groups; without a non-profit groups' involvement bingo halls can't function. But there is no state rule that says exactly how much a charity should get.
While undercover inside several Dallas-area bingo halls, some employees told us they weren't even sure the charities get actual money.
"A lot of ours are AmVets. So, they'll go down to the veterans and they'll take donuts down there," an employee of Players Bingo told us.
Players Bingo is on South Buckner in Dallas. The Sad Sacks Post 3 is one of the non-profit groups that are supposed to reap the benefits of bingo run out of this hall. The Sad Sacks used to be an American World War II veterans organization.
The I-Team tracked down the last 990 Form the charity filed with the IRS in November 2012. It says Horace Reeder is the group's primary director. But according to an obituary discovered by the CBS 11 I-Team, Reeder died in 2009.
♦♦♦ Check Out The Entire AmVets Of WWII Sad Sack #3 IRS 990 Form ♦♦♦
On that same 990 document, Harvey T. Shaddox is listed as an officer of the organization. He's also dead.
E.T. Fogleman is a Sad Sacks officer who's alive, but according to state documents filed in Collin County, also uncovered by the I-Team, he was declared incapacitated in 2011.
"Someone is doing something somewhere that sounds like it's not on the up and up," Fogleman's guardian told us.
We tracked down Fogleman's guardian and sister at an address in Plano. She confirmed to the I-Team her brother is in a VA nursing home and hasn't had anything to do with any charity in nearly four years.
"They're taking advantage of something," Fogleman's sister added. "I don't know if they're taking advantage of him. But they're certainly using his name."
The I-Team has confirmed through the IRS that 26 non-profit organizations are registered to 928 South Buckner in Dallas, the Players Bingo Hall. Twenty of them are veteran-based and all of them have some sort of connection to a man named Charles Hutchings.
Charles Hutchings runs the management company that oversees Players Bingo Hall and AmVet Bingo in Oak Cliff.
When confronted by Investigative Reporter Mireya Villarreal, Hutchings said, "I didn't say I was going to talk with anyone."
"Okay. So you don't have time to talk with us about your bingo halls and the charities you allegedly help," Villarreal questioned. "Allegedly," Hutchings said, frustrated with the question. "This conversation's over."
Laveda Brown is the Director of the Cen-Tex African American Chamber of Commerce out of Waco.
"It was a nightmare," Brown remembered.
She has nothing to do with Charles Hutchings and has never set foot in either one of his bingo halls. But she believes management companies like his work similarly.
"They were very, very happy to string us out and keep us playing even when it was not in our favor because they got money regardless," Brown explained.
In Brown's first year of playing bingo the management company they worked with brought in nearly a $1 million in gross receipts, but her organization's cut was only about $1,600. After two years of playing charity bingo, Brown's non-profit owed more than $26,000 to the Lottery Commission and the management company running bingo for them.
Brown decided to forfeit their bingo license last year and now works as an advocate for other non-profit organizations burned by playing charity bingo.
"I just believe this is a trap," Brown said, adding, "It's a death trap for non-profits."
Brown says the first thing management companies often do is get a non-profit to sign on with them for free. Next, the management company signs up that non-profit with the state. Depending on their access to banking accounts and financial information, some management companies will even file quarterly reports and pay bingo fees for the non-profit.
In Brown's case, the management company in Waco she worked with tried to get the non-profit to sign over access to all financial accounts; however, Brown never agreed to that.
"Well, everything goes to the suppliers. It goes to the lottery commission in fees. It goes to the staff. It goes to the prizes. Everyone got paid but us," she told CBS 11.
Brown's explanation of how things work can also be applied to the Dallas-based Sad Sacks charity. On their last 990 Form, they claimed bingo made more than $1 million in 2011. But after prizes, rent, and those other expenses, they were in the red for more than $13,000.
After weeks of phone calls and emails with the Texas Lottery Commission, and very few answers, we drove down to Austin to speak with Sandra Joseph, the Charitable Bingo Director for the state.
Investigative Reporter Mireya Villarreal approached Joseph during a Texas Lottery Commission hearing, asking to speak with her once things wrapped up, "We want to make sure we don't leave without talking to you."
Joseph said she'd come talk with us after the meeting. But once the meeting ended, Joseph was nowhere to be found. She had slipped out a backdoor and since then has yet to return our emails about the situation.
That left Villarreal to question Texas Lottery Commission Chairman Winston Krause as he left the meeting that day.
Krause admitted he had no idea this was going on in Dallas, but added in general, "We are very concerned about the non-profits and the charitable organizations because the goal is for them to make money. You know, legitimately operating bingo occasions. So, that's what we're here for, to help them out."
Krause wasn't prepared to talk about management companies, issues with specific issues with the non-profits we had investigated, or bingo halls in Dallas.
But the CBS 11 I-Team was able to confirm none of Hutchings bingo halls or the charities that play out of them have been audited in more than four years. Kelly Cripe, a media relations spokesperson for the Texas Lottery Commission, told us neither Hutchings nor his charities are considered a "high priority", which is why they haven't been visited by a Lottery Commission auditor. When asked about how the priority list works, Cripe said she wasn't sure and would have to get back to us. (Since our visit to Austin, Cripe has yet to return any of our phone calls or emails.)
As for Laveda Brown –- she says she's done with playing bingo, but she's not done fighting.
"We've got a bully on the block in the name of the Lottery Commission, in the name of the management companies. And they are bullying the non-profits," she said.
The bingo hall and bookkeeper Brown worked with in Waco refused to talk with us.
Here in Dallas, we've confirmed the Lottery Commission has opened up an investigation into Charles Hutchings, his halls, and the charities that play out of them. All of that happening not long after we started asking questions.
(©2014 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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