Article: New Times LA, October 11, 2001

Coalition for Justice in Hawaiian Gardens and Jerusalem

New Times LA
October 11, 2001

Bingo's Fat Cats
Government has turned a blind eye as giant "charity" bingo operations at Hollywood Park and in Hawaiian Gardens skirt the law while raking in countless millions. Meanwhile, school and church games are drying up.

By Ron Russell

Part II
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Click here for Part I

Officials at the United Church of Christ in Cleveland seemed both concerned and perplexed by the question of the South L.A. church's legitimacy. Sheila Kelly, in the organization's research department, confirmed that the church was neither in the UCC's database nor appears in its annual yearbook. "I can definitively say that there were no congregations in Southern California associated with UCC that were founded in 1989," she says. That was not only the year that Ioane Mailo cites as having founded the church, but it is the date listed in the church's articles of incorporation. And although the South L.A. church's letterhead clearly identifies it as UCC affiliated, Ron Buford, the UCC's marketing and public relations manager, confirms that the organization has no affiliate church by that name.

However, the Reverend Mailo is a minister in full standing with the California-Nevada Southern Conference of the United Church of Christ, Buford says. Indeed, the UCC's Web site lists Mailo as pastor of the "Samoan Congregational Christian Church" in Carson. But there are reasons to suggest that this church -- like the South L.A. congregation -- may exist only on paper. According to the UCC, the Carson church, unlike the South L.A. bingo-sponsoring church with a similar name, was founded in 1997. According to UCC records, it is at an address on Carriagedale Road in Carson. The UCC's Web site marks the address with a church-shaped icon. But anyone who goes there expecting to find a church will be disappointed. The Carriagedale Road address is Mailo's house.

While Mailo's South L.A. congregation has never had a place of worship of its own, it has always had a bingo parlor. And it appears to have done quite well. As far back as 1990, the first full year after the church was founded, its bingo operation (at the time, in Carson) reported revenue of $2.2 million and a profit of $533,000. Yet, according to the church's records, copies of which were obtained by New Times, it spent less than $86,000 on activities directly church-related, including preaching and pastoral matters. By contrast, in just that one year it listed having spent $270,000 for administrative expenses and salaries and $224,000 for fund-raising. As part of its application with the City of Los Angeles to open the bingo parlor in the Wilmington area -- which it did in 1995 after initially being rejected -- the church projected that its bingo operation there would gross $2.9million the first year, and proclaimed that it intended to devote $1.5 million of the proceeds to the church's "building fund." According to church records submitted to L.A. officials for the years 1995 through 1997, those projections didn't pan out. By its own accounting, one might wonder why the church bothered to play bingo at all. Despite gross revenues of more than $1 million a year during that period, the church -- by its own accounting -- barely broke even. The operation quickly drew the attention of police investigators. From 1995 to 1998, it was cited for gaming violations at least 20 times. And before and during that span, says Curry, the police investigator, it was warned on other occasions without being cited. Fed up with the operation, L.A. authorities finally shut it down in 1999.

But banishment from Los Angeles was hardly a setback for the church. By the summer of 1997 it already had planted a foot at Hollywood Park as one of six charities brought there by Don Havard, who heads JD Gaming, an Orange County- based bingo game supplier. Within a year, as the other charities dropped by the wayside, the Samoans, with Havard's help, were sponsoring bingo at the racetrack seven nights a week, with a matinee on Saturday. As a for-profit supplier of bingo cards and other paraphernalia, Havard's company is prohibited by state law from having a financial stake in any bingo operation. But as with similar companies elsewhere in California, JD Gaming occupies a delicate niche that -- if it is legal at all -- nibbles at the edges of the 1976 law intended to make bingo the exclusive province of charities.

At Hollywood Park, JD Gaming ostensibly is only a lease-holder. It subleases roughly 30,000 square feet to Mailo's church for its bingo game in return for about $100,000 annually, Havard says. In fact, it is one of a string of lease-holders of the bingo pavilion. Church Hill Downs Inc., which bought the racetrack and grounds in 1999, leases the space to Pinnacle Entertainment Inc., whose corporate offices are in Glendale. Pinnacle is the successor to the former Hollywood Park Inc., and is headed by chairman R.D. Hubbard. Pinnacle, in turn, leases to a facilities-management company called Century Gaming Management (which does business using the Hollywood Park name). Century leases to Havard's JD Gaming, which leases to the Samoans. Part of the reason for the multi-tier arrangement relates to federal and state laws that prohibit racetrack operators from owning casinos and casino operators from having a connection to charitable bingo. But such legal acrobatics hardly seem to explain the need for JD Gaming as a lease-holder. Critics of the arrangement, including Senator Polanco, suspect that JD Gaming plays a demonstrable -- and perhaps illegal -- role in the bingo operation, and that the Samoan church, acting as the charitable institution, helps provide the appearance of legitimacy.

State law prohibits a church that has a bingo hall from entering into an arrangement with a for-profit company to conduct a bingo operation, or from dividing the proceeds of the games between itself and the company. For that matter, the law requires that the charity sponsoring a bingo game use volunteers who are members of the charity and that it maintain an office at the location of the games to further the charity's mission. According to the bylaws of Mailo's bingo-sponsoring church, it is "dedicated to the worship of God, the seeking of an ever-growing knowledge of his will and the realization of justice, peace and brotherhood for all mankind" and considers as its mission promoting "those things which make for true community and abundant living." Its tiny office at the bingo pavilion, which is without so much as a sign on the door, overlooks the playing area through glass windows. Asked if he thought it unusual that a congregation in existence for 12 years without its own church should maintain offices in Carson and Inglewood, Havard responds, "I guess it's a question of their priorities."

Havard says the money JD Gaming receives from the church is strictly the result of its sublease, which he asserts doesn't constitute a stake in the bingo operation itself. As for the games, he says his company plays no role, although he acknowledges that it provides "advice" on bingo-management matters. "I think charitable operations such as [the church] appreciate us being there to offer our advice and expertise when they need help with something," he says. But there appears to be such a fine line between the company's and the church's respective roles that not even the authorities appear to appreciate a distinction. For example, in July 1998, the Inglewood Police Department issued a warning based on complaints of illegal activities at the bingo pavilion -- ranging from improper conduct by volunteers to allowing smoking on the premises. But instead of warning the church -- the bingo operator on paper -- the department wrote to Merlyn "Bud" Sudbeck, JD Gaming's Hollywood Park manager, who occupies an office at the pavilion. "[The department] expect[s] that you will inform [church officials] and request that the activity cease and desist," the letter says.

Just how a bingo operation that L.A. authorities viewed as renegade enough to toss out of town was able to set up shop in Inglewood and, within a year, command the entire bingo sponsorship at Hollywood Park is a question that few people in Inglewood city government seem interested in answering. Inglewood police Sergeant Tom Farrell, the officer in the department's special intelligence unit that is assigned to oversee bingo, referred all questions to the city's finance department, which is responsible for issuing bingo permits. But neither Maria Haney, the department's acting revenue manager, nor finance director Nick Rives would discuss the matter. In fact, neither would even come out of their offices when a reporter went to City Hall to contact them directly. Similarly, city administrator Joe Rouzan, the city's former police chief, did not respond to interview requests. Although insisting that it was a matter about which he had little firsthand knowledge, deputy city administrator Mark Weinberg interceded on the behalf of a reporter who had been stonewalled by city officials for nearly a week. Weinberg persuaded Rives to honor New Times' public-records request. But the finance director, citing advice from the city attorney's office, provided only a small number of documents pertaining to the church's bingo operation. He refused to provide any of its financial statements, citing a provision of the Inglewood bingo law that declares such records off-limits to the public.

One reason officials appear to be unforthcoming is that there are apparently precious few financial records to be found. A well-placed source at City Hall says that despite regulations requiring the church to submit regular audits of its bingo operation, the latest audit on file with the city is for a period that ended 21 months ago -- December 31, 1999. Under Inglewood's bingo regulations, the failure to submit an acceptable audit was sufficient ground to revoke the church's bingo permit long ago. (The city's records indicate complaints of numerous illegalities involving the church operation almost from its inception, although neither Farrell, the police investigator, nor anyone at City Hall would say what, if any, action Inglewood police took as a result.) The church is alleged to have submitted an audit for 2000 that city officials rejected based on its incompleteness and its having been prepared by someone other than a nationally recognized accounting firm, as the city requires. Bingo charities in Inglewood are also required to file monthly financial statements showing revenues and expenses, but the City Hall source says that whatever statements the church may have submitted "are so poorly put together that they're meaningless."

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