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Cops say nonprofits and their landlord were gaming the bingo laws.

Wednesday, Dec 24 2008

Most nights and weekends for the last 15 years, steady crowds of retirees and working folks have uncapped their daubers in a nondescript office building on an industrial stretch of César Chávez, hoping the numbers and letters will align and "Bingo!" will be theirs.

The players at Army Street Bingo have given a steady tax-free income to charitable nonprofits that serve the city's disadvantaged, including a track and field club for at-risk kids and newcomer services for Japanese immigrants. Some of the nonprofits, such as Acción Latina, the Mission-based organization that publishes El Tecolote newspaper for the Latino community, exist almost entirely thanks to bingo. Tax forms from 2006 show 76 percent, or $240,000, of Acción's revenue came from operating its weekly four-hour sessions at the 450-capacity hall. That's, of course, what's left after paying out for prizes, supplies, and hefty rent to the building's landlord, Tom Rosenberg, a Sacramento-based bingo entrepreneur who has been known to kick out charities he suspects of jeopardizing his reputation of running a "clean hall."

But the days of the nonprofits' (and Rosenberg's) cash cow may be numbered. San Francisco police denied eight charitable nonprofits their 2009 permits at a hearing last month, finding them in violation of multiple local bingo laws. Absent an 11th-hour pardon from Police Chief Heather Fong, the hall's doors will shut on January 1, whisking away "irreplaceable" revenue from nonprofits that claim they've been given no chance to correct their actions. With the groups crying that some of the alleged violations are common practice at parlors run by other nonprofits and churches in the city, the law enforcement net may snare more bingo operations in the future.

A sampling of the alleged violations at Army Street Bingo:

• To attract players, prizes were offered over the legal limit of $250 per game, sometimes up to $1,199.

• Nonprofits pooled money to pay the prizes (illegal) and deposited profits from electronic bingo into the same account, from which all nonprofits took an equal cut (also illegal).

• The bingo hall operated for more than the allotted six hours per week.

City law caps the amount nonprofits can spend on bingo overheads at $500 a month. Police say the charities paid "excessive" $1,550 weekly rent , sometimes more than half their revenue. While still waiting for clarification from the city attorney on whether the cap applies to the Army Street nonprofits, police suspect nearly $700,000 a year that should have been going to charity went to landlord Rosenberg instead.

"At the end of the day, it amounted to a bingo casino," says Sgt. Bill Coggan, the supervising sergeant of permits. "I don't think there's much that goes to the kids for their running shoes or the little old ladies with their Meals on Wheels lunches."

Appealing the decision at last week's permit hearing, the nonprofits charged that they were unfairly singled out for breaking outdated laws. With only one charity denying it violated the law, most resorted to painting the SFPD as the Grinch with a heart two sizes too small — snatching money from a bilingual newspaper and Japanese street fair on its rickety sleigh, all in a dismal economy with budget cuts nipping at nonprofits' heels.

"This whole situation couldn't have come at a worse time," says Jon Osaki, the director of Japanese Community Youth Council, one of the groups denied a permit. "To lose any source of fund-raising is going to hurt a lot right now. For some, it's going to be devastating."

Among the hardest hit will be Renaissance Parents of Success, a job training program for Bayview youth, which received nearly one-third of its revenue in 2006 from bingo. Others include Nihonmachi Street Fair; Nobiru-Kai, a Japanese immigrant outreach service; San Francisco Striders Youth Program; the Japanese Cultural and Community Center of Northern California; and Morrisania West, which runs substance abuse and ex-inmate re-entry programs.

The nonprofits complained that enforcing the bingo law by denying permits was draconian, but Coggan argued that they received copies of the law at their permit hearings in 2006 and 2007. In early 2008, police had the groups write a statement that they'd obey the law, and even typed some laws onto the permit itself. Indeed, the minutes from a bingo managers' meeting in October indicate they were aware of at least one law, stating, "The legality of paying up to $3,000 on Black Jack Pick-Em was also raised."

With the yea or nay on the permits falling to Chief Fong's discretion, San Francisco's top cop is in a tough spot. Will she ignore the alleged bad deeds if the do-gooders promise to do better next time? If she upholds the permit denials, the nonprofits can appeal to the San Francisco Board of Appeals, then Superior Court.

Coggan seemed to hint at the possibility of redemption at last week's hearing, saying that any possible permits would be conditioned by requiring the charities to create a business plan on how they will run legally. But he said that operating within the current law has been nearly impossible under the setup at the hall managed by Rosenberg. "I quite frankly think the charities are doing the best they can with the hand they've been dealt," Coggan says.

Rosenberg, who fled Nazi Germany as a child, is a salty former campaign consultant who has managed four halls in Northern California. He lurched forward in his seat when questioned by a reporter about his profit from the bingo rent, barking, "They couldn't make a fucking dime if I weren't here!" He says he provides a clean, fully equipped space with ample parking, plus security and maintenance staff. Indeed, the nonprofits seem to benefit from the high-capacity property, making more than twice the $80,000 St. Paul's Church in Noe Valley reports making annually from weekly games at the parish hall.

Police say Rosenberg's role goes far beyond that of landlord. He and his lawyer made a presentation to the SFPD asking for permission to install electronic bingo machines, which Rosenberg says brought in additional hundreds of thousands of dollars for two years until police told him to stop late last year. (The type of e-bingo played at Army Street will be illegal in California starting January 1.) He was the trustee of the account into which the nonprofits paid their e-bingo earnings, from which he says he later cut them equal checks. Commingling funds and sharing the profits from other nonprofits' sessions is prohibited. By law, only nonprofits can handle bingo accounts.

The city attorney is reviewing a 1991 letter from that office to the then-police chief, which the nonprofits say excuses them from the $500-a-month cap on overheads. But if that cap stands, many other bingo operators in the city are in violation of the 1970s-era law, and argue it would be impossible not to be. Father Mario Farana of St. Paul's says the supplies for the games cost about $2,000 a month. Coggan admits that maybe the law should be updated, but says that the police's job is to enforce the existing statutes.

The limit on overheads is not the only example of what the Army Street charities call "selective enforcement." While the charities say they've lowered their prizes to the legal limit of $250 since the November hearing, other nonprofits and churches in San Francisco who received 2009 permits without a problem were advertising prizes of up to $2,500 in December's issue of the Bingo Bugle, the bingo community newspaper. Informed of this by a reporter, Coggan's response was a baleful "Oh, man."

About The Author

Lauren Smiley


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