Back in the 1990s, "Miami Vice" didn't have a lot on the Charitable Enforcement Division of the Mississippi Gaming Commission—even if the "vice" the agency was busting was less sexy than Colombian drug lords.
For five years, a determined agency racked up a who's who list of startling arrests of bingo criminals—a Desoto County supervisor, a sheriff's dispatcher, a head of a youth agency, among them—people whose neighbors never expected to see them in handcuffs.
With agents determined to expose fraud and corruption in the state's popular bingo world, the commission made six arrests in 1998, mostly for application or mail fraud, 16 arrests in 1999 and a total of 20 arrests in 2000. The commission made another two arrests in the years 2001 and 2002.
The agency would soon go soft on bingo crimes, though.
After a relative flurry of arrests and an unbroken record of convictions, commission records requested by the Jackson Free Press reveal that agents have not made a single arrest for state charitable gaming violations in five years, despite more than 70 potential criminal violations outlined in the Mississippi Gaming Act.
One former agent says the agency ceased enforcement due to pressure from on high.
‘Lighten Up'
Rick Ward, former director of the Charitable Enforcement Division—and arguably one of its most bloodthirsty enforcers—claims the director of the commission caved into pressure from legislators and others tied to the bingo industry to abandon investigations and arrests for many incidents of bingo application and mail fraud.
"When I was working there, I found that a number of influential people were all involved in these bingo organizations, and the pressure started coming down from them to the gaming commission heads to halt the arrests. I was told not to make any more arrests, and that's when I resigned," said Ward, who said he abandoned the commission in disgust in 2000 after being told to "lighten up" on bingo enforcement.
The Jackson Free Press interviewed Ward, now a government contractor, after requesting and receiving information revealing the Charitable Enforcement Division's nonexistent arrest record since 2002.
Ward, and the agents under him, had been responsible for the majority of charitable enforcement arrests during the division's relatively short history of conducting them. Ward is also known for being the public integrity investigator who pursued a felony perjury case against former State Auditor Steve Patterson. Patterson, represented by attorney Joey Langston (later indicted for his part in a 2007 judicial bribery case involving Patterson), resigned from the office after pleading guilty to a reduced misdemeanor charge.
"At the very end, when I left, there was a person in Hattiesburg we were getting ready to arrest, and Larry Gregory came in and said, ‘You're not going to be able to arrest this person.' I said, ‘Why not,' and he said, ‘His friend is a former legislator, and I've been getting calls from legislators and we've got too much pressure on this. We've got to back off from it.'"
Gregory, the Commission executive director since December 2001, said he did tell Ward to back off, but only because the crime didn't fit the treatment.
"The case I got involved with was a lady, I think in her 60s," Gregory told the Jackson Free Press.
"I'd gotten a call from an attorney that worked next door to her. She worked in the bingo hall, but she was a waitress in Hattiesburg, and if I'm not mistaken, her husband was dying. They'd given him three months. He had cancer, and Rick was going to come down to arrest her over a misdemeanor charge. We're talking about people not putting addresses on their application, that type of thing. ... Of course, the director makes the calls, but he felt we were going too far with this, arresting individuals for not putting in their correct address."
Ward responded that the arrest, to his memory, involved the defendant "lying about two prior arrests," not an inaccurate address. He accused Gregory of mischaracterizing the situation and described the executive director's "downplaying the charge" as "humorous."
Gregory later confirmed that the suspect's prior arrest record was the issue behind Ward's pursuit, but minimized the suspect's prior crimes, pointing out that the arrest entailed a charge for disturbing the peace.
Ward countered that the offense was not the person's prior record, but their act of lying about it.
"It doesn't matter what you were arrested for. If you're ever put in handcuffs and taken to jail, it is an experience that you will never forget," he said. "The question on the bingo license application is whether or not you have an arrest on your record, and this person knew they were being dishonest when they wrote ‘no.'"
Gregory defends the agency's pallid post-2002 arrest record saying the commission has refined its enforcement process. He said the commission, these days, prefers enforcement through fines and license revocation over indictments.
"Violations are still happening, but they're being handled in a different way. If there's a serious crime with people stealing money, we're going to seriously prosecute, but on these regulatory issues, we're looking at them and getting the people out of the business," Gregory said.
"If we find someone lied on their application, we just get them out. We don't spend two years in court over somebody falsifying an application."
Pressure from on High?
Ward, though, is convinced that the heat to halt enforcement was coming down from high places. He had arrived at the commission in 1998 after building a reputation as a squinty-eyed muckraker at the attorney general's office. But after he hit the scene, he said politicians and affluent people in touchy places soon realized that the agency was busting people they'd never expected to be dealing dirt.
"In my opinion, the Legislature catered to the industry in purposely making all bingo violations misdemeanors (in 1992). I arrested policemen, deputies, county supervisors and former justice court judges on charges involving bingo charities outside the Gaming Act to include embezzlement. I found senators, representatives, sheriffs and the lieutenant governor on their boards. That is when legislative pressure came down on Larry," Ward said.
Gregory vehemently denies Ward's accusation, saying he told Ward "no more arrests" because of "limited resources and agents."
The commission director does admit, though, that Petal attorney William "Bill" Jones called him to complain about the agency's handling of the Hattiesburg case. Jones may not have been an elected official at the time of his call to Gregory, but he previously had served as a House representative for 13 years. Jones emphasizes now that he was not an attorney representing the accused in any official capacity at the time of his call, and that he had no vested interest in the Petal Moose Lodge gaming hall. But he said he saw Ward's prosecution as "over the top."
"This guy was really out of control, in my opinion," Jones said. "The lady was 60-something years old and she wanted to work bingo. (Ward) was threatening to shut the Moose Lodge down, to take away their bingo license because of this. I knew all those people down there, so she called me, and the manager called me and told me they were about to lose their license. ... I called up there (to the gaming commission) and raised hell about it."
Jones admits that he revealed his ties to the Legislature during his call, but only to prove a point, not to push influence.
"I probably did tell him that I was in the Legislature a long time, saying (I helped write the bingo law) and that it probably needed changes ... but that does not defend poor-ass decision-making," Jones said.
Gregory said the commission never pursued the case involving the Petal Moose Lodge after Ward threw in the towel. He said little information on the case was available because his agency never chased the case.
Still, Gregory points to an infamous 1999 case to prove that he has not backed off on prosecutions of powerful people. "Not one time did we tell him to back off on anything big like the McBrayer case."
In 1999, agents charged George McBrayer, chairman of the Recovery Lodge charity, and his wife, Ruby McBrayer, with 14 counts of conspiring to misuse charitable moneys. Agents charged McBrayer's son, a bingo supervisor at Brookhaven's Bingo Haven hall, with 10 counts of receiving additional compensation, other than his salary, from charity funds. Agents believed the McBrayer family paid themselves up to $129,000 a year with money slated, by law, to their charity beneficiary.
"That was a big case, right here in town. It involved a deputy sheriff; (Sheriff) McMillin was sitting on the board, Ed Peters was (involved). It was a politically charged environment, a very controversial case. We aggressively went after that. ... They took it to federal court and we were right there along the way. Not once did we tell (Ward) to slow down. ... No member of the Legislature or any politician ever told us to back off," Gregory said. "Not one."
The McBrayer case was the only one during that period that did not end with a state conviction; federal authorities took it over and successfully prosecuted it.
A Dog With No Bite
Committing fraud on a hunting or fishing license application is considered a felony in Mississippi, even though the violation will likely only bag the applicant an illegal buck or two. But lying on a bingo application—which can potentially net the applicant thousands upon thousands of an entirely different kind of buck, according to bingo industry reports—is only a misdemeanor, punishable for up to a maximum fine of $5,000 or one year imprisonment.
State law wields a soft hand for fraudulent applicants and charity thieves. But agents like Ward were determined to milk what they could out of the law in order to stop abuses in the state's charity gambling industry.
In 1998, commission agents arrested Desoto County Supervisor Jake Pearson and his wife, Anita, for claiming that several bingo workers were working for free when they were actually paying them out of bingo proceeds.
Boliver County sheriff's dispatcher Joe Phillips pled guilty to mail fraud in 1999 after he misused bingo revenue money slated for a charity to buy himself a motorcycle. The same year, the agency took down Mississippi Voices for Children and Youth Executive Director Sue Hathorn, whom Commission officials charged with using charity money to invest in more bingo halls and property.
The agency went into overdrive in 2000. Agents arrested Memphis resident Debbie Emmerson in 2000 for refusing to cooperate with a gaming commission audit of an Olive Branch bingo hall. The hall had been donating money to local political campaigns and local and state agencies. (The commission also revoked the hall's license, determining that the bingo hall itself was in Memphis, not Mississippi.)
In April 2000, the commission fined former Pearl River County Justice Court Judge Hayward Lamont Tate for falsifying an application to obtain a license to operate a bingo hall benefitting the Picayune Shrine Club. Tate, a judge in the 1970s, had a 1979 federal loan-sharking conviction on his record, but withheld that little detail from commission authorities when he filed his application—a definite no-no in the eyes of the state.
That same year, the commission busted Louisville policeman Jack McCart on two felony counts of false pretense. McCart was on the clock for running the cash register at the Greater Columbus Lions Club, where he drew $40,000 a year, even though he was actually out on patrol, according to radio logs and other records from the Louisville Police Department.
Coastal residents Paula Wright and Charles Nilges soon pled guilty to shortchanging winners and making false reports to state regulators. The two were skimming money off bingo proceeds. But under state law, they only faced a $500 fine.
"I think greed is everywhere," Commission spokeswoman Ashley Skellie told the Sun-Herald at the time of the Gulfport arrests. "I don't think it's anything that's going to be confined to one part of the state or the other. There are equal chances of crime in bingo everywhere in the state."
That burst of energy might have come from an investigation of the Commission by the state Performance Evaluation and Expenditure Review Committee, which resulted in three critical reports in 15 years. The scathing Sept. 11, 1996, PEER report criticized the commission for not assuring "proper monitoring of a majority of high-risk organizations or the remaining organizations not considered to be high-risk."
The report found that bingo enforcement agents had neglected to inspect 30 of the state's 146 bingo organizations operating in 1995. It also found that agents only visited 52 percent of the inspected organizations once a month, and that the Charitable Gaming Division conducted only one in-depth financial record review of only one bingo hall per month. It further concluded that the commission did not have the bean-counters to assure a proper investigation of a bingo hall or charity's financial records.
"We're looking at ways that bingo halls are trying to circumvent (state law), if they are. If we think it's criminal, we'll pursue criminal charges," said then-Commission Executive Director Chuck Patton, who positively beamed when confronted by reporters after the arrest of James and Anita Peterson.
That 1996 report happened 12 years ago, and Patton retired from the commission around the turn of the century.
Preying on the Poor
The new anti-arrest tactic seems to mirror the commission's philosophy in 1996 and 1997: two other years when the agency's arrest record was zero. The numbers suggest that either the method is working, or that saints ran the $112 million bingo industry in Mississippi during all but five years since 1996.
With an industry as lucrative as this one, it's hard to imagine it being the exclusive domain of saints.
Some charitable bingo halls rake in thousands of dollars a night, netting millions of dollars a year. Iuka's Tishomingo Bingo, a hall generating money for Bell's Educare Pre-School and Day Care Center in Madison, made almost $4 million in 2001. Magnolia Bingo, a hall representing His Way Inc., made about $6.3 million in fiscal year 2001.
The potential for revenue is enormous, and loopholes in state law make getting your hands on an unseemly percentage of that money easy. The state demands that every bingo hall dedicate 60 percent of its adjusted gross revenue to a charity organization—which means that the bingo halls can pay themselves before the 60-percent rule kicks in. Magnolia Bingo made $6.3 million in 2001, according to information from the Mississippi Secretary of State, but only $512,003 of that went to charitable purposes. Bingo hall administrative expenses ran more than $734,000, which includes employee salaries, but does not include prizes and payouts, which are also "adjusted" out of the total before the charity money is calculated.
Magnolia Bingo did not return a phone call for comment.
Thanks to the law's distinct lack of salary caps for people running the bingo hall or charity organization, a director can dole out any amount of money to himself or favored employees with no legal risk.
The only thing stopping a charity or bingo hall director from paying himself $100,000 a year out of the bingo hall's gross revenue are the charity's board of trustees. And people on charity boards may have little vested interest in policing such action, because their ties often lie more with the directors than the beneficiaries. In many cases, the same collection of people created the charity and the bingo hall at the same time.
Gregory readily acknowledges the legal loophole. "That charity has a board of directors, and if that board of directors decides to take $25,000 more to pay their director, and that means $25,000 less going to charity, as long as they stay within the law, that's the board's prerogative. There's no illegality to it. That's just the way it is," he said.
That isn't the case in other states, like Missouri, for example, where operators can derive no financial benefit from the hall.
"All proceeds, above the cost of conducting the game, have to be dedicated to charitable, religious or philanthropic purposes," said Jane Bax, charitable games manager for the Missouri Gaming Commission. "No member can (receive) any benefits from the proceeds of bingo, so none of the members or workers can get any benefit from what they make from bingo. We're very strict."
Former Rep. John Reeves, a Jackson Republican, chaired a House Ways and Means subcommittee examining the state's bingo laws in 1998. Reeves said he is convinced, both then and now, that the bingo industry exists almost exclusively to "victimize the poorest" of the state.
"Bingo in Mississippi simply preys upon the poorest of the poor and needed to be abolished. They were holding bingo games purporting to help charities like crippled children or battered women and it was a farce. By the time the high salaries were paid to the so-called charity administration and the people who ran the games, pennies on the dollar wound up going to the charity itself," Reeves said.
"As far as I can tell, there were only two legitimate bingo organizations run by volunteers: The VFW and the Catholic church. That's it. The rest of them were industries using charities as a front for making high salaries."
Flawed Laws
Mississippi's "take your cut first" loophole is not the only chink written into the state's gaming laws.
Nothing, for instance, prevents a bingo hall organizer from skimming enough cash off the revenue to run the whole organization into the ground and then declaring the hall bankrupt and keeping whatever property—such as vehicles or buildings—the hall happened to finance. State law currently offers no reliable way for charity beneficiaries to recoup money and property raised in their name, but lost to disreputable directors who drive off in snazzy convertibles after the bingo hall goes under.
Of course, there's no reason to wait for the hall to go belly-up in bankruptcy to get a bigger chunk of pie. Duped beneficiaries, be they disabled veterans or underprivileged children, are unlikely to complain if a $40,000 hit to their fund that year suspiciously coincides with the arrival of the bingo director's new $38,000 Hummer.
Beggars often can't afford to be choosers.
The 1999 bust of Sue Hathorn touched on her purchase of a $358,000 home, but officials dug around until they'd discovered that Hathorn also used charity money to fund a private-school education for one of her grandchildren and even used it to pay off a parking ticket.
Hathorn ran five charities and bingo halls featuring celebrity charity board members like former Lt. Gov. Amy Tuck and Hinds County Sheriff Malcolm McMillin. Hinds County Sheriff's Deputy Jeff Johns also headed Hathorn's charities, and was also under investigation, though Johns later helped with agents' investigation of Hathorn, which ultimately helped do her in.
McMillin fired Johns from the sheriff's office in 1998 for reasons unrelated to the investigation.
Some violators have foregone undue property and amenities and merely reached for the money. Another local bingo supervisor, Donna Yoakum, at Jackson's 51-Bingo Hall, got hit with four counts of receiving additional compensation in 1999.
The state's bingo industry does seem to have an uncanny characteristic of stretching web-like over the state's affluent, who, like attorney Jones, get caught up in the mechanics of the industry's enforcement. It's a characteristic that could rouse suspicion in anybody questioning how big a role influence plays on the commission's business, particularly when it comes to prosecuting cases.
Prosecuting the McBrayer case, for example, was no easy feat, despite piles of paperwork ensuring a grand jury indictment. McBrayer was a Hinds County sheriff's deputy, and Gaming Commission agents failed to get the case past county court.
Strangely, the commission immediately hit pay dirt when it cut the case's local ties and turned the investigation over to the FBI, which easily indicted the McBrayers within weeks for conspiracy and mail fraud in 2001—using the same information the gaming commission had gathered.
Both George and Ruby McBrayer were convicted and served time in federal prison.
Like Ward, former Rep. Reeves is convinced that the gaming commission still is being steered by people affiliated with the gambling halls, and described the division as a waste of taxpayers' money if it will not do its job.
"Ward told me about his situation years ago. He told me that the powers-that-be didn't want to upset the apple cart, and I believe him," said Reeves, who had advocated draconian new regulation on the industry during his tenure in the House.
"They'd go out and arrest some bingo guy in Tupelo, and that guy calls a senator or somebody and gets the investigation squelched. They backed off a lot of stuff because of politics."
Reeves added that it would take legislative action to repair the malfunctioning Charities Division, but said he doubted legislators would take action.
"I just don't think they're going to upset the apple cart," Reeves said.
Ward said he believed the issue may have to be settled in court, explaining that "a million sordid little evils" connected to the gaming commission could only come out through subpoenas and sworn oaths. He added that he would take his information straight to a grand jury if called upon to do so.
"(I say) empanel a federal grand jury, subpoena past and present members of the Charity Division to investigate (accusations of) obstructing justice and intimidating their own agents," Ward said.
"That is when the truth will come out," he added.
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