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Alcoholism Program's Bingo Bonanza Leads to Investigation

December 19, 1985|MARK LANDSBAUM | Times Staff Writer

Before it became a nonprofit corporation, Cooper Fellowship was simply Jack A. Blackburn and five or six other men sharing living expenses at a rented Santa Ana home on Cooper Street.

In two years, the "fellowship" was transformed into a $27-million gross, strictly cash operation financing one of the state's richest alcoholism-recovery programs by operating in Hawaiian Gardens perhaps the state's most lucrative bingo game.

After paying bingo winners, the organization brought in $8.3 million in revenue, according to its tax reports and accountant.

But on its road to success, Cooper Fellowship Inc. has attracted the attention of state licensing authorities, the state attorney general's office and Los Angeles County district attorney's investigators.

City, county, state and federal public records show that:

- In its first year, the Cooper Fellowship spent only a fraction of its $3.6-million income directly on services for recovering alcoholics. The balance was used to acquire property, pay off loans to start up its bingo games, pay bingo expenses or was placed in bank accounts.

- Cooper Fellowship gave one description of its operation to the Internal Revenue Service to be recognized as a charity, then gave a conflicting version to a state regulatory agency. As a result, the group avoided licensing and regulation by the state.

- The fellowship operated halfway houses for months in residential areas without obtaining necessary zoning approval. In Santa Ana, the City Council overruled recommendations of city planners and the Planning Commission and granted the fellowship the necessary variances in 1984.

- The fellowship also persuaded Hawaiian Gardens City Council members in September, 1983, to approve a bingo permit, despite the Los Angeles County Sheriff's Department's recommendation against it. (A condition of the permit provides the city with 1% of gross bingo revenues, or about $288,885 so far.)

- And now Blackburn, 48, Cooper Fellowship's founder and executive director, is being prosecuted by the Los Angeles County district attorney's office, and the group's finances are under review by the state attorney general's office.

Since shortly after its incorporation, Cooper Fellowship has, as a charity, been exempt from paying income taxes, qualifying it to run its immensely profitable bingo games. It has also remained beyond the control of state licensing authorities, escaping scrutiny, unannounced inspections and state standards of care.

To qualify his organization as a charity, Blackburn filed an application for tax exemption with the IRS on Jan. 17, 1983, saying, "The fellowship provides a program of recovery for alcoholics . . . which includes detoxification, room and board as well as individual counseling."

'Just a Rooming House'

Despite that, by October, 1984, the fellowship was telling state inspectors that it provided no detoxification, group or individual counseling, care or supervision and, in fact, was "just a rooming house," officials said.

After unannounced inspections, state officials maintained as early as March, 1983, that the fellowship was breaking the law by operating a residential alcoholism recovery house without a license and threatened civil or criminal action.

"We had been led to understand that they were going to apply for a license," recalled John Grant, the community care supervisor for the state Department of Social Services.

Despite its later representations to state officials, the fellowship's own documents and government inspection reports show that Cooper Fellowship provided many services and made many requirements of its resident alcoholics, leading state officials to determine that care was being provided and a license required.

For example, Antabuse, a medication used in the detoxification of alcoholics, was stored and "controlled by the facility," according to a state inspector's report. The presence of Antabuse is "an indicator that care is provided . . . if it is centrally stored in the facility," Grant said.

Group Meetings Listed

The documents also show that there were provisions "for group meetings, and individual therapy and counseling facilities . . ." and that overnight passes had to be "cleared by Jack B. (Blackburn) in person."

The rules stressed: "We at Cooper Fellowship have a program and you are required to comply."

But by September, 1984, Cooper Fellowship "denied all that, saying this is just a rooming house, so to speak," Grant said. Next, Grant said, fellowship officials asked state officials what specific activities required a license.

After that--despite what Cooper Fellowship had told the IRS--the fellowship convinced the state that no detoxification or group or individual counseling was provided, and that the fellowship was putting a halt to other practices that, if continued, the state believed would require a license.

Grant wrote to the fellowship's attorney on Oct. 31, 1983, that ". . . so long as Cooper Fellowship does not provide care, licensure would not be required."

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