Somebody Threw a Screwball

The Southwest Denver Little League should have made money with its bingo fundraisers. So why is $250,000 missing?

Nonprofit organizations make their money by buying the pull-tabs in large lots. For example, bingo groups buy a version of Pickles called Colorado Diamonds in lots of 4,440 tickets for $110. Like blocks of lottery tickets, the lots contain a certain number of winners, and winning tickets within the lot pay out a total of $3,792. That leaves a guaranteed profit margin of $538 ($4,440 in $1 Pickle sales, minus the prize money and the cost of the lot).

The easiest way to work the system is also the simplest.
Cash prizes awarded to Pickles players must be recorded and reported. Since he knows each lot contains so many winners, an unscrupulous games supervisor could score some easy money just by paying attention. For example, by watching his books closely, he could determine that $600 worth of winning tickets in a particular lot hadn't been sold and that only 400 pull-tabs remained of the lot. He could then buy all the tickets with the inside knowledge that he was guaranteed to win the $600 prizes--a quick $200 profit. "It happens," says Lambrecht. "It happens a lot."

Relatively loose state laws also provide enough opportunity for a less-than-honest bingo games manager to peel off a few dollars here and there.

Although a number of more sophisticated games of chance in Colorado have come to be known as bingo games--many of them are electronic, some look like slot machines--the actual game of bingo is pretty much the same as it always was. Players purchase a packet containing grids, usually for $6. As numbers are called out, the players try to fill an entire row. The first person to do so wins. (A typical prize these days is $1,500, the maximum amount permitted by state law. Bingo halls may choose to offer lower prizes, but by doing so they risk losing players looking to win the highest amount possible to other bingo halls that do offer the larger jackpot.)

Nonprofit organizations hosting bingo games hope to earn their money by selling more packets than the number it takes to cover the prize money. The organizations buy packets in lots of 1,500 for anywhere between $150 and $185. At $6 a packet, they need to sell 250 of them to raise the $1,500 prize money, and a few more to cover the cost of buying the lot from the supplier. After paying expenses--security and hall rental--the rest should be profit.

The easiest way to game the bingo system comes courtesy of a state bingo-law loophole. All sales of bingo packets must be recorded and reported to the secretary of state's office. But all an unscrupulous games manager has to do to make a profit is "lose" some packets. Say, for example, a games manager for a nonprofit sports league sells all 1,500 packets in a lot. In theory, he collects $9,000. But what if he sold 1,500 packets and only reported that he sold 1,200? That means $1,800 is "missing."

Fortunately, it's not quite that simple: The lots are tracked by serial number and reported to the secretary of state's office, so if any state inspectors came nosing around, the dishonest manager would have to come up with a reasonable explanation for the missing packets. In Colorado, though, that would be easy.

Maybe they got lost. Perhaps coffee was spilled on them and they were ruined. Some states get around this by requiring that the damaged tickets be kept to prove to state inspectors that nothing has been swiped; once that's established, the ruined tickets are destroyed. But in Colorado, the games manager's word is all an inspector needs.

"A lot of money can disappear that way," says Lambrecht. At the very least, the system can result in extremely loose accounting, with an organization appearing to handle a range of money rather than a specific amount.

According to a lawsuit filed recently in Denver District Court, Michael Sedillos is a selfless Little League hero. According to the same lawsuit, he is a ruthless bingo shark who deprived baseball-playing kids of hundreds of thousands of dollars.

Mike Duff is probably the one who first raised that question legally. Duff is a solid-looking guy who works as a maintenance man for an office complex south of Denver. He joined Southwest Denver Little League's board of directors in 1996. He explains why:

"I had two kids playing in the league then, fourteen and eleven. They'd been playing since the age of six, but I didn't like the direction of the board. The league seemed to be going downhill; a lot of things just weren't right. Parents were fighting in the stands--the police had to be called. Not often, but it happened. You know what they say: Get rid of the parents, and Little League would be great.

"Anyway, I decided I either had to put up or shut up."
Duff ran for the fifteen-member board and was elected. Soon after that, he was appointed to the position of assistant director of fundraising. "We usually have one major fundraiser during the season--a casino trip or candy sales," he says. "But the main way we raise money is bingo."

By the time Duff decided to get his hands dirty running it, the league had pretty much become synonymous with the Sedillos family: Mike, a single Denver Public Schools teacher; his father and mother, Ray and Linda; and his sister, Michelle.

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