By Lena Mitchell/NEMS Daily Journal
CORINTH – The secretary of state’s office has withdrawn the exemption of Union Center/Theo Volunteer Fire Department as a charity, under which it operated Corinthian Bingo.
The organization also was fined more than $350,000.
The SOS Securities and Charities Division found that the volunteer fire department had violated its charitable exemption and was not appropriately using “charitable funds for stated charitable purposes,” as first reported Thursday on NEMS360.com.
Hearing officer York Craig cited six violations of the charities law in his Nov. 12 recommendation that the department’s charitable exemption be revoked. Among them were misspending money and falsifying records.
He also recommended to Secretary of State Delbert Hosemann that an administrative penalty of $354,124 be assessed to fire department and its board of directors. Hosemann issued a final order to that effect on Dec. 1.
Corinth attorney Clay Nails, who represents the volunteer fire department, said the department probably will appeal “or do whatever is necessary to get this matter resolved.”
Corinthian Bingo’s license with the Mississippi Gaming Commission was up for renewal in June, and it submitted a renewal application in May, said Charitable Gaming Division Director Sonny Weathersby.
However, when issues surrounding their practices arose, the department withdrew its license renewal application, he said.
“This has been going on five or six months, and we’ve been working with the secretary of state’s office on this,” Weathersby said.
Under state law bingo halls may be operated to support charitable purposes, and at least 40 percent of the proceeds must go to the charity.
Findings and conclusions by the SOS hearing officer, however, listed several areas in which Union Center/Theo was not complying with the letter and spirit of the charities law.
n Between February 2007 and November 2008 the fire department paid expenses of Corinthian Bingo totaling $20,748.13, money that has not been repaid to the fire department.
– Between January 2007 and October 2008, the fire department paid almost 100 percent of accounting and bookkeeping services for Corinthian Bingo to accountant Cullen Potts, totaling $95,350.50. However, Potts spent only about 15 percent of his time on fire department accounts and 85 percent of his time on work for Corinthian Bingo. The funds have not been repaid to the fire department.
– The fire department had a verbal employment contract with Potts, and overpaid him for services by $11,649.50, money which has not been repaid to the fire department.
– The fire department falsified expenses in an effort to appear to comply with the charitable bingo law and receive a license renewal from the Gaming Commission. The fire department’s records, however, show the money was never transferred to Corinthian Bingo, but instead went to Potts, who deposited it into his personal checking account at Renasant Bank.
– The fire department used charity funds to build a new fire department building on property it does not own and for which it does not hold a lease. The property has two liens totaling $56,487.54 in the names of the two true owners.
– The fire department used funds to support Corinthian Bingo and not for its charitable purpose. It also misled the Gaming Commission with fictitious expenses and large fund transfers to Potts, that Craig concludes “evidence an awareness of the law and an intent to circumvent it.”
Whether or not Craig’s findings will be referred to the attorney general for investigation and possible prosecution has not yet been determined, said secretary of state spokeswoman Pam Weaver.
“We are evaluating our findings to determine if the case should be referred,” she said.
Questions about the Union Center/Theo Volunteer Fire Department’s operations were raised a year ago when District 5 Supervisor Jimmy Tate Waldon asked the board to approve hiring an attorney to investigate.
The attorney, Danny Lowrey, filed a report to the board earlier this year, and his findings were forwarded to the secretary of state’s office and the Mississippi Gaming Commission.
“Because a secretary of state’s investigation is confidential nature,” he said, “this is first information I’ve had that an action has been taken. It appears to show there was reason to be concerned, particularly for people in the Union Center/Theo area.”
Contact Lena Mitchell at (662) 287-9822 or firstname.lastname@example.org.