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"Even the categories of information that we were requesting were not showing where funds were really going," she said at the meeting. One example that really stood out, she said, was the excessive rents. "Durant Square charges in excess of $50,000 per month, and Foothill Square, which is Mr. Casteel's facility, approximately $70,000 per month to the two organizations there."
The two operators made it explicit that they didn't want the information widely shared, she said. Casteel's attorney had objected to the city looking at Casteel's Foothill Square financial records, Killey continued, and told the city that commercial rents are not controllable by jurisdictions. "So I have not felt that they were interested in working on the proposal," Killey said. While she spoke, Casteel stood behind her with lips pursed, clutching a mess of papers to his chest.
Councilwoman Pat Kernighan said at the meeting that it sounded to her like a "racket," but that there's nothing the council could do if it's not illegal. Killey pushed for the council to set a limit on overhead that charities would have to pay, or at least require the landlords to show that they are charging fair-market rent at the halls.
For her part, Quan appeared to be the fiercest critic of the bingo operations. "Out of $15 million that's coming mostly out of low-income people in East Oakland," she said, "only about half a million, or 3 percent, is going back to any kind of charitable institution."
In 2009, city officials finally approved a watered-down revision of the city's bingo ordinance that requires landlords of bingo halls to submit their financial documents to city officials. Officials said they hoped this requirement would cap the amount of overhead the nonprofits were paying. The proposed revised ordinance implied that city officials would be looking into whether nonprofits were paying fair-market value for rent.
Casteel appeared at a July 2009 public safety committee meeting to oppose this revision, too. "The purpose of this, of course, is to assert some kind of local control over the amount of rent that's charged," Casteel said at the meeting. He also said he charged 21 cents per square foot less than what the landlords charge at the Durant Square bingo hall – his competition. In addition, Casteel told council members that it would be a violation of California civil law to impose any form of commercial rent control. "This will result in litigation if it's pursued," he warned.
But Killey said that the revised ordinance would help allay concerns about not enough bingo money going to charity. "Certainly we're not permitting bingo for private gain," she said.
The new ordinance went into effect in August 2009. But since then, not much has changed in Oakland's bingo scene.
Nonprofits running bingo in Oakland are still paying sky-high overhead charges. The only thing that has changed is that one of the nonprofits that had been operating out of Casteel's Foothill Square hall, Breast Cancer Development and Research Society (BCD&R), which also has ties to him, is no longer operating bingo games there. Instead, Kids Educational Development Scholarships (KEDS), which ran bingo games at Gilman Street and also is linked to Casteel, now operates out of his Foothill Square hall seven days a week.
Daniel's year-long bingo hall investigation and follow-up actions in Berkeley occurred at light-speed compared to Oakland. And with their revised ordinance, Berkeley city officials have effectively shut down the possibility that the city will host another large-scale bingo parlor in the near future. Nonprofits that have proven to be well-established in the Berkeley community can apply for a permit to run bingo games as a supplementary form of fund-raising. But there will be no more bingo parlors run by elusive nonprofits that don't necessarily conduct charitable activities and instead dole out bingo proceeds for "overhead" costs.
The fortitude of Berkeley's revised bingo ordinance relies on a key provision that limits nonprofits from spending more than $2,000 of the bingo game proceeds on overhead costs. The rule looks a lot like a state law that requires the overhead cap for certain nonprofits – specifically, those that don't make political contributions. For Berkeley, the rule applies to every nonprofit looking to run a bingo game.
Of course, this particular provision existed in a similar form before the recent revisions. But it wasn't enforced. Daniel said that's all about to change. "We're going to enforce the entire ordinance," he said, "and we're going to enforce it aggressively."
Tougher restrictions and more oversight of Oakland's bingo operating nonprofits also might reveal potential illegal activities that could force the city to shut down its bingo halls. For instance, BCD&R Society donated $5,000 total to former state Assembly Speaker Fabian Nunez in 2005 and 2006. According to state law, nonprofits operating bingo are not supposed to donate to politicians or political interests unless they spend just $2,000 or less of their bingo proceeds on overhead charges. Community Charities, which operates out of the Durant Square bingo hall, donated over $15,000 to a charity that allegedly disbanded years before those donations were made.
But unlike Berkeley, Oakland appears less willing to see its bingo halls go down. That's at least in part because even with high overhead, bingo can be a big moneymaker for charities. Just 3 percent of the total revenues from a large-scale bingo operation can mean hundreds of thousands of dollars for charity. Plus, nonprofits running games out of Oakland's bingo halls have donated to the public schools and the Police Activities League. According to tax records, BCD&R Society donated $50,000 in 2008 to then Mayor Ron Dellums' summer jobs program.
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