Club operated slots to compete with others

Forced out of office, Union Club trustees say, ‘All we’ve done is give’

“We only did what everyone else does,” longtime trustee Sherri Donahue said.

The 80-year-old social-charitable organization ran the fifth-most profitable charitable bingo operation in Ohio in 2012 — a $665,132 profit on $3.1 million in gross revenue, according to state records. It ran afoul this month of the attorney general’s office for the second time in as many years.

In a 15-page settlement agreement, DeWine alleged that the tax-exempt downtown club, now with about 4,000 members and assets of $4.6 million, violated the law and a 2011 settlement by operating electronic gaming machines that rewarded players with cash and by paying bingo workers.

The state also alleged that the Union Club’s six trustees breached their fiduciary duties to, among other things, not waste charitable assets.

As a result, those six trustees — Donahue, Jerry Adams, Tom Horne, Jerry Bowen, Marie Stewart and Edward Strader — will be replaced Tuesday by a state-ordered emergency election that will split the club into two distinct organizations. One will oversee the club’s charitable giving, which includes thousands annually to Clark State Community College and others for scholarships, and one will run the social club.

Three of the outgoing trustees admitted to the Springfield News-Sun they violated the previous settlement agreement with gaming machines that gave cash payouts and by paying bingo workers.

Initially, they said, their gaming machines only awarded gas cards, but people went to other establishments to play machines where they could win cash, even though it’s a violation of state law.

“We followed suit,” said Adams, 73, “and got busted for it.”

But they say the club, founded in 1933, has never shirked on its charitable mission.

“What they’re saying is true. We didn’t give it to the educational factor,” Horne, 61, said.

“But,” Adams added, “we did give it to the community.”

By law, the club is required to give 51 percent of profits from its lucrative tear-off bingo operation to education only. Instead, the club mistakenly was donating the money elsewhere, they say.

“They’ve done many good things for people in this town,” said Jerry Heck, commander of Veterans of Foreign Wars Post 1031 and a Union Club member since 1983. “They were always there for us.”

The club, he said, gave upwards of $8,000 about a decade ago to help the VFW purchase a transport vehicle used to take local veterans to the Dayton VA Medical Center.

More recently, the club donated money to the German Twp. Police Department for body armor, Chief Mike Stitzel said. The club also gave $1,000 donations to the Summer Arts Festival, said Chris Moore, director emeritus of the Springfield Arts Council.

“One year,” Horne said, “we sponsored the whole Little League in Springfield.”

The Union Club’s 2011 tax return showed that the club took in $505,243 in revenue and paid out $339,218 in grants. But, in 2010 and 2009, the club took in almost $1.5 million in combined revenue, according to tax filings, but paid out less than $245,000 in grants.

The state eventually determined that the club hadn’t paid $261,918 to education in 2008 and 2009, resulting in the 2011 settlement requiring it to pay that same amount to local high schools, colleges and scholarship funds.

“We took it out of our savings and paid it,” Horne said. “We lose our (bingo) tickets, we lose our business.”

Trustees say they sought information from the state for who to pay the money to, but received none.

“We spent $69,000 of that money waiting,” said Donahue, who first went to work for the club as a bartender in 1980 during an International Harvester strike.

The club then had to pay an additional $69,000, according to the state, because payments weren’t made to the correct schools and scholarship funds. DeWine spokesman Dan Tierney said it was determined the club had paid $69,000 to entities not eligible under the settlement.

“I truly in my heart believe it’s a misunderstanding,” Horne said.

DeWine seems to agree, issuing a statement on Feb. 6 that read, “This appears to be a case where the board’s failures were not intentional. However, we expect state law to be followed.”

Jimmie Howard, a suspended trustee who sought the resignations of four trustees right before his suspension last year, disagrees with the attorney general’s assessment.

“When you read the entirety of the settlement, a ‘misunderstanding’ is a total understatement of the facts,” Howard said.

He’s satisfied that the current trustees will be forced from office, but he believes the new settlement should have removed them immediately. As it stands, the current trustees will conduct Tuesday’s election of their replacements.

“I don’t think the people you’re taking out of office should be part of it,” Howard said.

“I’ll quote a lawyer,” he added. “It’s not a very well-written document.”

However, on the plus side, he said, the Union Club’s large membership has now been made aware of problems at the club.

“I’m glad we hit the front page of the paper, but it was in a bad way,” lamented Doug Lafferty, a member of the club for 21 years. “This club has done a lot of good, and still will.”

Among the most bluntly worded allegations in the new settlement is that the six trustees knowingly misled potential donors into giving money to charity that didn’t go to a charitable purpose.

The trustees are confused by the charge.

“Nobody donates to us,” Horne said. “It’s all made from the tickets. All we’ve done is give.”

“Is that because we gave it to the wrong charities?” Donahue wondered. “We did give it away, but we didn’t give it to any Joe Blow walking down the street.”

In addition to the ousting of current trustees, the club has been forced to suspend bingo from Feb. 15-24. The club also has been ordered to conduct an independent audit and to no longer pay officers and employees in cash.

Current trustees will be barred from ever again holding office or even volunteering with a charitable organization in Ohio, and new trustees will be sent to board governance training and bingo school.

Larry Vince, a club member since the 1980s, is among the candidates running Tuesday for two of 14 trustee positions.

“I want to save the club,” Vince said. “I want to put some integrity back into it.”

He read the latest settlement agreement — which doesn’t amount to an admission of guilt and is in lieu of prosecution — determining the current board mismanaged money.

“When I read through the settlement, I thought, ‘Man, they have a lot to straighten out,’ ” he said. “Keeping the club open is the main thing.”

Steve Wiederkehr, a club member for more than 20 years, has one wish for the new trustees: “Run it legally.”

“They’ve got plenty of money to pay their fines and get back on track,” Wiederkehr said, “which is what they need to do.”

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