Who Gets the House that Bingo Built?

An Ohio judge rules that police and prosecutors are not entitled to the proceeds from the sale of a building owned by a charity that violated bingo rules. 

The Cleveland Plain Dealer (Karen Farkas) reports that an appeals court overturned a decision to hand over $234,000 from the sale of a charity-owend building to police and prosecutor agencies who pursued the charity for violation of charity gaming rules.  The charity was supposed to help people with learning disabilities, and the proceeds should be used for that purpose. 

The prosecution was for paying volunteers $50 a night at bingo events.  The bingo operation was shut down in 2003.

But a glance at the IRS filings of Learning Development and Advocacy of Lake County Inc. (EIN 34-1566613) shows what a peculiar charity this was.  The Form 990 for 2000 shows that more than 90% of the organization's operating income was the proceeds from events.  Nearly $1.7 million in gross income from events yeilded $255,859 to the charity.  The detail (on page 13 of the report) shows that all of this income was from bingo events, about $1.4 million from instant bingo and only $247,024 from regular bingo. 

The charity work consisted of advocacy for children and adults with learning disabilities and $20,765 in scholarships.  A staff of four was paid a grand total of $114,997 in salaries.  Though the organization claimed $761,154 in land, buildings, and equipment, it nevertheless lists $39,325 in occupancy expenses. 

We may agree with the appeals court that, in principle, the intended benficiary group should receive the proceeds from shutting this operation down.  But it still looks like the charity purpose was really a pretext for a gambling operation.  We are left to wonder how common this is among the hundreds of thousands of charities that are registered by the states and the IRS.