HAWAIIAN GARDENS — A Santa Ana alcohol rehabilitation center that runs a multimillion-dollar charity bingo operation in this tiny city illegally paid nearly $100,000 in wages with money it made from the games, the state attorney general's office has charged.
Attorney general officials contend state law prohibits charities such as Cooper Fellowship Inc. from paying their employees with bingo proceeds, although the profits can go toward other operating expenses of the charity.
In a March 1 letter to Hawaiian Gardens officials, Deputy Atty. Gen. James Cordi outlined five specific charges detailed in an audit of the nonprofit alcohol rehabilitation center and the bingo hall it operates to raise funds. A copy of the letter and 18-page audit report were obtained by The Times.
Besides the wage dispute, the letter alleges Cooper Fellowship broke the law by borrowing about $200,000 to set up the bingo parlor and using $70,000 in profits to repave a parking lot outside the Hawaiian Gardens facility. In addition, it alleges about 30% of the bingo workers are not members of the charitable organization, as required by law. Finally, it criticized the group's bookkeeping practices, saying they make it difficult to control skimming.
Say They've Been Singled Out
Cooper Fellowship leaders countered the charges and denied any wrongdoing, saying attorney general officials have misinterpreted state laws and singled out their bingo operation simply because it has been successful.
The group made a point-by-point denial of each of the allegations through its lawyer and in a five-page public statement from executive director Jack Blackburn.
"I honestly think they have strong feelings about a big bingo game," said Ronald Davis, a Santa Ana attorney who represents Cooper Fellowship. "They have a concern that other small cities who need to raise money will see this as a viable way of raising revenue and bingo will spread."
Cooper Fellowship's charity bingo operation in Hawaiian Gardens--a mile-square municipality that is the state's smallest city--is believed to be the most profitable bingo operation in California, with gross revenues exceeding those of even the largest poker clubs in the state, law enforcement officials say.
The bingo parlor, which opened its doors in February, 1984, grossed more than $11 million last year. In recent months, the operation has been even more profitable, grossing about $1.5 million a month. The city gets 1% of the receipts, which amounts to about $15,000 a month.
600 Players Nightly
As many as 600 people flood the Hawaiian Gardens bingo hall where the games are held nightly. A $250 prize is awarded the winner of each game, with 60 to 100 games a night. The bingo parlor is operated out of a single-story commercial shopping center on Pioneer Avenue; inner walls of several small shops were torn down to create the hall.
"It's a very big operation," said Cordi, who oversees the Los Angeles division of the attorney general's charitable trust section. "In fact, Cooper's the biggest bingo game I know of in the state."
Under California law, the city has the power to revoke the bingo parlor's business license and shut down the games. Although the attorney general's office can file a civil suit in Los Angeles Superior Court asking that the bingo parlor stop paying wages or that it be shut down, Cordi refused to speculate whether his office would take action.
"The city is taking the allegations seriously," City Manager Douglas Dunlap said. "It's pretty clear to me that the attorney general wants us to shut them down."
Dunlap said the city may hire an accounting firm to conduct an independent audit of Cooper's operations.
For Hawaiian Gardens, bingo has been an economic bonanza. The city's 1% take of the gross receipts amounted to about $117,000 last year, or 10% of the general operating fund, officials said. In addition, Cooper Fellowship has been giving the city an extra $2,500 a month to fund a food bank program. The City Council approved a business license for the parlor in September, 1983, on a 3 to 2 vote.
Cooper Fellowship officials say profits from the bingo parlor are the major source of operating funds for the alcohol rehabilitation center, and acknowledge that the game is a pivotal part of the fellowship's operations. They would not, however, supply a financial breakdown of their operation. Nor did the audit separate the revenues and expenses of operating the bingo game from those of the alcohol rehabilitation activities of Cooper Fellowship.
Davis, the group's attorney, said the center is the largest nonprofit alcohol rehabilitation facility in California that is run solely on donations and bingo proceeds.
"They have a fantastic program and nobody is focusing on that," he said.