Friday, March 5, 2010

Gaming Commission denies license for FAIM

The saga of Boxcar Billy Murphy and his Fine Arts Institute of Mississippi continues. Mr. Murphy operates the Ridgeland charity for the purpose of promoting the arts in Mississippi and funding scholarships for students according to his website and numerous public statements. FAIM is funded by his bingo operation, Boxcar Bingo. Funding a charity with a bingo operation is challenging at times as the charity must operate under the rules of two state agencies: the Secretary of State (charities regulation) and the Gaming Commission (bingo regulation). FAIM was formed in 2001 but did not obtain a charitable gaming license until 2006.

The charity has drawn controversy after the Clarion-Ledger reported "According to the secretary of state's office, the institute in 2007 posted revenue of nearly $4.5 million. It spent nearly $173,000 on programs, just shy of 4 percent of its total revenue. In 2006, the agency collected nearly $1.3 million in revenue and paid out $1,000 on programs, less than 1 percent of its budget."

The state investigated the charity's finances and sought to deny the renewal of its charitable gaming license. The Gaming Commission suspended the license several weeks ago but allowed Boxcar Bingo to continue operations while it appealed the decision. The suspension was based on three issues: Mr. Murphy spent $7500 of bingo receipts for software to track and report revenue and expenses for complying with state regulations, paid Madison County Supervisor Tim Johnson a monthly fee to lobby the legislature, and did not disclose a loan from another charity operated by Tim Johnson's wife when it applied for a bingo license.

FAIM/Boxcar Bingo presented its appeal at a hearing held at the Commission several weeks ago. Mr. Murphy and his attorney Eric Hamer (Attorney for the Madison County Board of Supervisors) vigorously defended his case. A razor-sharp Hamer ran rings around the lawyers for the Gaming Commission that day as he used every argument and trick possible to defend his client. One Commission attorney looked like a linebacker going to a funeral as he fumbled around from point to point while the other looked like he just learned how to shave as he feebly argued the state's case. Ms. Myers was the only one that asked tough questions and seemed to have a good grasp of the case as she grilled Mr. Murphy at the end of the hearing in a manner that was tough but allowed Mr. Murphy to answer the questions in full.

Meanwhile, the media was in attendance: MC Journal, The Monica Hernandez from WLBT, later Ballou the Bear, and even Ms. Laraye Brown of the Clarion-Ledger who arrived fashionably late (thirty minutes) in typical sorority girl fashion: coffee in hand, sunglasses on head, you get the idea. Ms. Myers at first banned cameras from the hearing and relented after Ms. Hernandez repeatedly challenged her decision during a break. Credit must also be given to Ms. Brown who strongly objected to an attempt to seal many of the documents filed in the case. Ms. Brown did so in the middle of the hearing and Ms. Myers was forced to concede the point to the young intrepid reporter.

Mr. Murphy claimed a Doug Tyrone of Charitable Gaming called him and asked him if was interested in starting a bingo operation to fund his charity. He said there was no training for running a bingo hall and it was difficult to follow two different agencies with two sets of rules that he said at times conflicted with each other. He claimed he purchased the software because he paid a CPA $1500 a month to provide reports to the state. He argued the software gave him the ability to compile the reports without a CPA and thus save money for the charity in the long run (I actually thought this was a good point).

However, Mr. Murphy complained about the strict rules imposed upon him by the Gaming Commission. The Commission requires Boxcar Bingo to send 40% of the net proceeds to the charity, FAIM. Murphy said it was "arbitrary" and "antibusiness" and was the reason he hired Tim Johnson as a lobbyist. It was stated Mr. Johnson was hired to get the legislature to allow him to raise employee pay, increase the maximum payout per bingo session to $10,000 and relax the 60/40 rule (He claimed the rule was too strict and few charities could adhere to it.).

Well....you long time readers of JJ know what is coming next: I filed a public records request with the Gaming Commission asking how many charitable gaming licenses were denied over the years for violating the 60/40 rule. The Commission stated it was 13 since 2002: 5 in 2002, 5 in 2003, and only three since 2004. The Commission testified there were 87 bingo halls in Mississippi. Thus, the Commission has only denied said licenses three times in the last six years, thus belying the claim that the rules were too strict as few charities seem to get in trouble over this particular regulation. Mr. Murphy even went further and said the Secretary of State's office told him to hire a lobbyist in a letter, a letter he never produced (He repeated the claim at the SOS hearing this week). The SOS office told this correspondent it never sent Mr. Murphy such a letter or told him to hire a lobbyist.

Ms. Myers recommended the charitable gaming license not be renewed last week (It must be noted the opinion here came from the Clarion-Ledger article last Saturday and that it is not signed.).

Ms. Myers also denied Hamer's motion for recusal. Hamer argued she had a conflict of interest since the hearing examiner and prosecutors both worked for the Attorney General's office. Mr. Hamer know this is a fundamental part of administrative law and few courts are going to grant such a motion (Indeed, Mr. Hamer should adopt that defense the next time he answers a bar complaint and see how far he gets as the Bar uses the same practices in um, disciplining wayward lawyers.).

Ms. Myers ruled the software purchase violated Commission regulations as the purchase was paid out of a charity bank account and thus grounds for denial as bingo expenses are to be paid out of a separate account for said expenses. Paying such expenses out of the charity account thus prevents the commission from accurately determining whether Boxcar Bingo is spending more than 60% of bingo income on expenses.

The hearing officer then ruled the hiring of Tim Johnson as a lobbyist violated Commission regulations as well as Mississippi Code section 97-33-52(2) stating all net proceeds from bingo "shall be expended only for the purpose for which the charitable organization was created" and was grounds for denial as well.

FAIM paid $24,500 to Tim Johnson for lobbying services pertaining to "gaming reform". Mr. Hamer repeatedly argued Murphy had a constitutional right to free speech. Ms. Myers stated he indeed had a right to free speech but not a right to use "net proceeds from bingo to pay a lobbyist". Ironically, Mr. Murphy told the Commission he still employed Johnson at a salary of $3,000 a month for "marketing" services.

The final issue adjudicated by Ms. Myers was whether some dealings between MYART and FAIM consituted a violation. MYART, Mississippi Youth Activities & Recreation Team, is a nonprofit operated by Tim Johnson's wife. It apparently loaned $25,000 to FAIM. Mr. Murphy called the loan a "donation". MYART and FAIM entered into an "asset-sharing agreement." Under the terms of the agreement, FAIM was required to repay the $25,000 within 90 days of denial if it was unable to secure a charitable gaming license. The agreement had a fixed term: five years (Thus, does FAIM have to repay $25,000 to MYART if its appeal fails?). The opinion states this was a loan, not a contribution even though FAIM reported it as a contribution on its tax returns.

FAIM had a duty under the law to report any loans or asset-sharing agreements to the commission. The asset-sharing agreement also stated FAIM was to give 70% of the "net assets received from FAIM's bingo operation" to MYART. While such payments would have been a violation, Ms. Myers found that no payments were made to MYART and thus no violations occurred.

However, she did state "Regulation L, Section 12 (the 60/40 rule) requires that a charitable bingo lincee's 'net proceeds' from bingo must be at least 40% of the licensee's adjusted gross receipts from bingo and must be devoted to the specific purpose for which the charity was created." The opinion also states "at the hearing Murphy testified that in FAIM's first year of operation, it was able to spend only about 7% of its net bingo proceeds on charitable programs. The rest of the net proceeds (about 93%) was used for its administrative expenses. The next year it spent approximately 13% or 14% on charitable programs, with more than 80% used for administrative expenses; and in 2009, it spent about thirty percent (30%) on charitable programs, with about seventy percent being used for administrative expenses."

Be that as it may, Ms. Myers ruled "FAIM was deceptive in failing to disclose to the Commission the Asset Sharing Agreement executed between FAIM and MYART. However, she states in her conclusion it was not a violation but the "deception" did bring "into question the general character of the FAIM charity."

Mr. Murphy is appealing the decision to the Gaming Commission board. The Secretary of State held its own hearing this week and a decision will be announced in the next two weeks. The Madison County Journal reported the parties were discussing a possible settlement of the case.

Copy of Recommendation of Denial by Hearing Examiner, 2007 Form 990, 2006 Form 990, 2005 Form 990, Copy of SOS order

9 comments:

Burke said...

Well done. Your career in forensic journalism is coming along beautifully.

I happen to know Eric Hamer. He is a class act and a first-rate lawyer. It's great to see him get this recognition for his considerable skills.

Anonymous said...

I think this has been mentioned before, but, it appears that most of this story AGAIN points to how thick as thieves these people are. I was waiting for Two Lakes to come up in conversation, the dismissal of the recent supervisor, etc. etc. etc. Its like a fraternity/sorority party around here.

Anonymous said...

Damn Burke. Do you happen to know Bill Murphy? This ain't about Hammer, it's about a disingenuous charity that got caught and is back-ending their story.

Anonymous said...

There are always bad apples in the bunch. Hopefully this won't hurt the legit charities who are doing things right.

Anonymous said...

I have an idea lets start The MSDA, Mississippi Swamp Draining Association. These pols would be running like a small town mayor caught by his brother in law the ploice chief in a cat house.

By the way I think JJ is a charter member of MSDA

Ironghost said...

In other words, it's still legal to start a bingo operation to fund my exotic car habit?

Burke said...

Sorry, 10;37, if it sounded like I was saying anything one way or the other about Eric's client. The client may be way over on the wrong side, but that would not diminish the value of what Eric can do as a lawyer. Mainly I was happy to see Our Beloved Leader (aka Kingfish) recognize Eric's abilities.

Anonymous said...

Best fact not discussed:

"Ironically, Mr. Murphy told the Commission he still employed Johnson at a salary of $3,000 a month for "marketing" services."

The flagrant and insolent audacity....

Anonymous said...

WOW! Murphy has not ceased in amusing me when it comes to his imbecile comments and his rant and raging over who shot john attitude. If you ask me Bill Murphy is a crook, Tim Johnson is a crook, Eric Hamer is a crook for defending and being friends with crooks, and Rudy Warnock is cry baby, cry baby suck your momma teets crook.But what do I know; I am just a Madison County Taxpayer that is watching as it is being ran by thieves and defended by crooks. what a disgrace!



Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel

Archives

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.