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Western Enterprise Fire Co. investigated for possible gaming law violation

For-profit cheer and dance business has been getting monthly check for work with operation

December 21, 2011|By ARNOLD S. PLATOU | arnoldp@herald-mail.com
  • Western Enterprise Fire Co. has been writing checks to a business that provides workers to sell tip jars in the volunteer fire company's gaming operation, a revelation that has sparked a request for a police investigation.
Herald-Mail file photo

The president of a for-profit cheer and dance business told The Herald-Mail that the volunteer fire company in Hagerstown had been sending a monthly check to his business in return for the parents of youth cheerleaders working in the fire company's gaming operation.

The money was used to help families offset the cost of cheer and dance training and competition, said Scott Braasch, president and co-owner of the Pennsylvania-based Cheer Tyme Inc.

Jim Hovis, director of the Washington County Office of Community Grant Management, said he began a preliminary investigation into the matter about three weeks ago after The Herald-Mail asked him about the situation.

Hovis said he wanted to determine whether Western Enterprise was violating Maryland's gaming law by paying people to help conduct gaming, and whether individuals were profiting from the gaming.

"Any gaming activities must be conducted by the members of the organization holding the license," said Hovis, whose office issues gaming licenses. "Now, we're not going to say that a person who's not a member, can't come in and help out, but they need to do so free of charge."

According to state law, an organization, such as a volunteer fire company, that is qualified to conduct gaming "shall manage the gaming event personally through its members."

To sell tip jars and/or offer bingo for prizes in Washington County, an organization has to be nonprofit and obtain licenses from the county Office of Community Grant Management.

Under the law, gaming may be held "for the exclusive benefit of a qualified organization if an individual or group of individuals does not: (1) benefit financially from the gaming event under this subtitle; or (2) receive any of the proceeds from the gaming event under this subtitle for personal use or benefit."

That means "no one can personally benefit from the proceeds of a gaming event," Hovis said. "And, it also says that charitable gaming events must be managed and operated by the members of the charity for the exclusive benefit of that charity."

Hagerstown Police Chief Arthur Smith said Hovis told him it appeared further investigation was needed. So, on the advice of the county state's attorney, Smith turned to the Maryland State Police on Dec. 16.

Lt. Tom Woodward, commander of the state police barrack in Hagerstown, said his agency was asked to investigate "possible improprieties" involving gaming at Western Enterprise.

Woodward said Smith's request didn't detail the allegations.

Scott Braasch, president and co-owner of the Pennsylvania-based Cheer Tyme Inc., said Tuesday that because of the ongoing questions, he has suspended the fundraising program under which his business helped the fire company in its gaming operation.

He said the parents of his youth cheerleaders would no longer help the fire company unless "whatever's in question, that it comes out to be kosher."

Braasch said the arrangement his company had with the fire company was a "hand-me-down" from a similar deal he's been told Western Enterprise had with a youth cheerleading and dance group affiliated with the Hagerstown Area Police Athletic League.

Braasch said HAPAL is a nonprofit 501(c)(3) organization, while Cheer Tyme is a for-profit business. Braasch said Western Enterprise was aware that Cheer Tyme is a business and not a 501(c)(3) organization.

Despite that, Braasch said the fire company told one of his key employees that the arrangement would be acceptable. Braasch said he approved of it, thinking it was a longstanding fundraiser in Hagerstown designed to help families afford cheer and dance training, and competition.

Braasch said the money Western Enterprise gave to Cheer Tyme every month is credited against the bills owed to his company by the parents who work in the fire company's gaming operation.

Outgoing fire company President James Schaffer couldn't be reached for comment Friday, Monday or Wednesday.

Mike Kline, who said he's been the vice president of Western Enterprise for two years and defeated Schaffer in his re-election bid earlier in December, deferred comment to Schaffer. Kline will take office in January.

Kline said Schaffer handled the arrangement with Cheer Tyme. Kline said his only role has been to give Cheer Tyme the checks from Western Enterprise.



Getting some help

In an interview Nov. 28, Schaffer was asked about the financial report Western Enterprise, as a 501(c)(3) organization, gave the Internal Revenue Service for 2010.

The report shows that during that year, the fire company took in a total of $300,424 from bingo, paid out $173,584 in cash prizes and $83,316 in other expenses, leaving a net profit of $43,524.

Schaffer said the bingo amounts include revenue and expenses from tip jars — slips of paper, each bearing printed numbers, some of which win cash prizes.

In the report, Western Enterprise said that the labor in running its bingo games — and what Schaffer said also is tip jars — was 80 percent volunteer.

Normally, Western Enterprise and the other local fire companies that have bingo and tip jars report that 100 percent of their gaming workers are volunteers.

Asked if listing 80 percent in the report means that Western Enterprise was paying 20 percent of the workers, Schaffer replied: "Nobody gets paid. Well, we have a group that comes in and does tip jars for us, and they get paid. Their organization is a 501(c)(3) corporation. We give them money because we just don't have enough people to help."

Asked what organization that was, Schaffer said he's "not at liberty to tell you right now." He said that "at this point, I don't know if they would want everybody to know."

Asked what the organization does for the fire company, he said: "They call back bingo, sell tip jars and do different things on the floor for us."

The term "call back bingo" generally refers to the process of checking whether someone who has declared "bingo!" really did have the winning number combination.

Schaffer said the organization has been working for the fire company for "a lot of years. If you don't have help, you find it somewhere."

"An organization can pay someone to do work associated (with gaming), but normally that type of work would be food service, set up, tear down — not to pay them to actually sell the tip jar," Hovis said.

And, he said an organization can pay the person who calls out each bingo number as it is drawn, because that's considered a skill that not every volunteer would have.


'Donations' to HAPAL

Brian Burke said he thinks the nonprofit organization to which Schaffer referred is the Hagerstown Area Police Athletic League.

Burke, a local police officer who began volunteering as HAPAL's treasurer this past summer, said Western Enterprise in the past had issued checks to HAPAL in connection with its gaming operation.

The checks were "donations" to HAPAL in return for the work done for the fire company by parents of youths in a HAPAL cheerleading and dance program, according to Brett McCoy, a local police officer who co-founded HAPAL in the late 1990s.

The fire company's payments were used to pay cheerleading expenses, he said.

The cheerleading group, known as Hagerstown Outlaws Allstars Cheer and Dance, became associated with HAPAL about six to eight years ago, training in a building under the grandstand at Hagerstown's Fairgrounds Park, McCoy said. Until last summer, it was one of several programs in which about 250 youngsters were involved, McCoy said.

The local Police Athletic League is part of a national organization begun nearly a century ago with the idea that police officers can help youths help communities.

From about 2008 through mid-2011, the Outlaws group was led by volunteer coach Kim Drees, a former cheerleader at Williamsport High School whose daughter had enrolled in an earlier cheerleading program at HAPAL. When the leaders of that program left, McCoy asked her to be the coach, Drees said.

Cheer competition is expensive, and the deal with Western Enterprise was a way to help parents of the children involved to offset that cost, McCoy and Drees said.

Soon after the group was started, McCoy said that Drees told him that Western Enterprise Fire Co. was willing to pay cheer parents and coaches to work in its bingo hall on gaming nights.

He said Drees said: "If the parents of the Outlaws cheerleading would work the gaming, Western Enterprise would give the cheerleaders a donation every month."

"It was a way to generate more income," in addition to money raised by food sales, pizza kit sales, bake sales, and car washes the group already was doing, McCoy said.

Drees said the fire company wanted her group to show proof of HAPAL's 501(c)(3) certification. Drees said she didn't know why, but every year, she had to show the certificate to James Schaffer or his wife, Gloria.

Drees said under the arrangement, the fire company would pay the group $50 per parent or coach who worked at the firehall's Saturday night bingo games.

"I had to have six parents of my children" or six adults in all, including any coaches, Drees said.

In February 2008, "when we first started out, we just called bingo back, and some other group sold the tip jars," Drees said.

Drees said her understanding was that the other group also had a 501(c)(3) certification.

Is a nonprofit organization that holds a gaming license allowed to donate some of its earnings to another nonprofit organization, such as HAPAL?

Hovis said the IRS case opinions he's read seemed to decide that question based on the similarity of each group's mission.

While not addressing this specific situation, Hovis said: "An arts council could donate to an arts museum. But a fire department, which is granted its nonprofit status for fire protection services, could not give to a museum."

The fire company doesn't offer bingo over the summer, Drees said, so when its bingo was about to resume in September 2008, the other group had gone and her cheerleading group began providing all six workers every Saturday night.

Two of them did the back calling "and four (were) running jars — selling the tip jars," Drees said.

In the meantime, "at least seven or eight" fire company and women's auxiliary members "got the jars for you" and received the money after the jars were sold.

"Jars," as they are called, refer to the little game cards as well as the large containers that each hold 100 or 200 or more of the cards, that can sell for $1 each.

The fire company's first "donation" to HAPAL for its cheer group that fall was given to her or another member of her group at a Western Enterprise meeting in October for the work done in September, Drees said.

She said the fire company's yellow business check was always provided, usually by Schaffer or his wife, at the meeting that followed a month of gaming work.

A check could have been for as much as $1,500 — $50 for each of six workers on a Saturday night, or $300 times five Saturdays if the month had that many, she said.


Stretching exercises

The cheerleading group's work for the fire company continued through 2010, although that summer the Outlaws began participating at Cheer Tyme in Greencastle, Pa., according to Drees.

Drees said the 30 or so girls in the Outlaws at the time enrolled in Cheer Tyme's training program. At first, Cheer Tyme set up a more limited competition program so the families could afford it.

To keep the nonprofit connection, Drees said she kept taking the girls back to HAPAL's training area to do stretching exercises.

The arrangement drew no objections from HAPAL or from Western Enterprise, she said. The fire company continued to give the cheerleader group monthly "donations," which Drees deposited in HAPAL's bank account.

Cheer Tyme began submitting invoices to HAPAL for cheerleader uniforms, competition fees and other expenses, and HAPAL used the cheerleaders' fund balance to pay the bills.

But this past summer, HAPAL's board of directors decided to end its connection to the cheerleading program, Burke said.

"June of this year ... they (cheerleaders) weren't really utilizing our building, so the board of directors decided to terminate the program," Burke said.

Drees said that by summer, the number of former Outlaws in Cheer Tyme's program had dwindled.

"Anybody that's there now, is strictly Cheer Tyme the way it's run now," she said. "There's no nonprofit, there's none of that. Well, they (Cheer Tyme) still fund-raise, but I don't take care of that."


'We're good'

April Tomlinson, Cheer Tyme's office manager in Greencastle, said that as time drew near for Western Enterprise's bingo operation to resume this past fall, fire company President Schaffer and someone she remembers only as "Mike" asked her "if we still wanted to continue working bingo."

Tomlinson said she can't remember whether "Mike" was company Vice President Kline. Asked whether it was him, Kline said Schaffer would have handled such matters.

Tomlinson said that when she told Schaffer and the other man, yes, "they told me, you have to be a 501(c)(3).

"I said, 'Well, we're not affiliated with the Police Athletic League any longer. We don't have a nonprofit (status),'" Tomlinson said.

By September, Tomlinson said the parents of several cheerleaders began working in the fire company's gaming operation again — because she and the fire company had thought their arrangement would be worked out before October, when Western Enterprise would send its usual donation.

Tomlinson said she rotates people from a list of about 40 parents to work the gaming operation.

One Saturday night, Tomlinson said she went to Western Enterprise and met with Schaffer and "Mike" again. Not finding a solution, Tomlinson worked that night's gaming operation with some of the parents.

She said she's done that several times.

"Then, at the beginning of October, they (fire company) were ready to cut us a check," Tomlinson said.

On Oct. 4, Tomlinson said she "sat down at the firehall with Mike and Jim, and I said, 'We've done everything we can to brainstorm. ... There's no way for this to work. There's no way for the girls (parents) that are with Cheer Tyme (to do this) because Cheer Tyme is profitable. I'm not willing to do anything that's not straight on.'

"I said: 'Do you have any other options?' If not, we don't work bingo,'" Tomlinson said.

At that point, Schaffer phoned someone she assumed was a lawyer and explained the situation, she said. Then, Tomlinson said Schaffer asked her: "'Is Cheer Tyme incorporated?'"

When she said yes, Schaffer "hung up the phone. He said we're good," Tomlinson said. She said he didn't explain, but she felt assured the arrangement was legal.

"So he wrote out that first check to Cheer Tyme Inc. and, ever since, it's been made out to Cheer Tyme Inc.," Tomlinson said. "So my understanding was, we're being paid basically to work, to assist them with the bingo. There was no assumption we were anywhere near nonprofit. We never even claimed to be a 501(c)."

Asked whether he was present when Schaffer made the phone call, Kline said he was there.

"I was there when he asked about the 501(c). I don't know who he called," Kline said about Schaffer.

After that, when Western Enterprise's monthly checks arrived, Cheer Tyme kept the money but credited it against the debts owed by whichever parents worked how many nights at the gaming operation, Tomlinson said.

Tomlinson and Cheer Tyme co-owner Braasch said that they are saddened to hear now that enforcement officials in Washington County were questioning the arrangement.

"It's just disheartening 'cause we're trying to do good,'" Tomlinson said. "I'm wondering, are we supposed to not be doing this? We do try to do everything by the book."

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