Bingo Halted at Rincon Reservation; Workers Go Unpaid

Bingo operations at the Rincon Indian Reservation northeast of Escondido have been halted, and the payroll and prizes have gone unpaid, amid concerns about the accounting for $10 million in revenue.

The state attorney general’s office in San Diego says it is investigating accusations of mismanagement and there is talk on the reservation of impeaching the tribal leadership for being unaccountable for the bingo books.

“The tribe’s on the warpath. They want to kick us out,” said Max Mazzetti, vice chairman of the Rincon Tribal Council. “And we’re very much concerned” about the books too, he said.

But the Orange County man retained by the Indians to manage the bingo games said Thursday that the problem is simple: The games are not paying for themselves and nobody--neither the Indian hosts nor the non-Indian investors--has made any money over the 1 1/2 years since bingo made its debut at Rincon.

The last bingo game on the reservation, one of three in San Diego County that offer high-stakes bingo, was played June 9. The following Monday and Tuesday nights were dark in accordance with the regular schedule, but when players showed up June 12, they were met by locked doors and a handwritten sign that read:

“Closed for 2 weeks only. Regrouping--we are looking forward to bigger and better things. Please stay in touch.”

The 60 or so bingo hall workers learned June 11 that the games would not be played the following day, and a scheduled $12,000 payroll last week went unpaid.

In addition, a Vista automobile dealership is waiting to be paid for two 1985 Chevrolet Sprints that were awarded as prizes.

Charles Schlegel, managing partner of S & G Associates in Santa Ana, which operates the games in return for a 65% split of the net profits, said the games may be resumed next week if a new investor is found to infuse additional capital.

He denied reports that S & G has filed for bankruptcy but conceded that in addition to being behind on payroll and in paying for the two cars, the company is delinquent in forwarding to the appropriate government agencies unemployment, disability and personal income tax contributions withheld from employees’ paychecks.

He said the bingo games have lost $500,000 over six months, and that the games were shut down last week because “it would have been a real insult to open if we didn’t have the cash on hand to guarantee the prizes that evening. I wasn’t going to have the games played if we weren’t sure we could pay our prizes.”

Schlegel said bingo was losing money because the amount of guaranteed prize money on any given evening has exceeded the income generated that night. The cash flow was worsened by the cost of chartering eight to 30 buses to transport players for free to Rincon from a staging area at Interstate 15 and California 76, 17 miles west of the reservation.

A $640,000 bingo hall, financed by S & G, was constructed last summer to accommodate as many as 1,800 bingo players, but crowds of late have numbered about 400 “because of the bingo wars,” Schlegel said. At least 500 customers are needed to break even, he said.

He noted that high-stakes bingo is played at the Barona and Sycuan Indian reservations in East San Diego County as well as at the Soboba Indian Reservation at Hemet and the Morongo Indian Reservation at Banning in Riverside County.

“If we guarantee $60,000 in prizes, we’ve got to pay it, whether we’ve got 500 people or 1,500,” Schlegel said. “If you advertise a $30,000 payoff and the crowd only pays in $20,000, then we lose $10,000. It’s as simple as that.”

He said the bingo games have generated more than $10 million since their inception, but that operating costs accrued by S & G have exceeded that by about $400,000, above the cost of constructing the building. Among the big-ticket costs were about $6 million in prizes, $1 million in payroll and $2 million for the buses, he estimated.

“People thought that because we had bingo, we’d be making a lot of money. And we thought it would do a good business at Rincon too. But we didn’t anticipate all that competition (from Hemet and Banning) coming up,” he said. “Neither the Rincon tribe nor the investors have received any profit from this so far.”

He said audits and ledgers showing the figures are available to the tribal officers for their inspection and that, in fact, the accounting is done by Indians on the payroll of Rincon Tribal Enterprises, which was established to oversee the bingo games.

Rincon’s tribal attorney, Richard Sola, said Thursday that the tribal council’s immediate concern is not to inspect the ledgers but simply that the late payroll be paid.

“I think everybody has hoped there would be money by now, but that’s not the real issue,” Sola said. “The issue is, the bingo operation has stopped, and it owes employees some money, and the tribe wants the employees paid.”

On that point, tribal Chairman Don Calac sent a letter Monday to Schlegel, notifying him that S & G is in “material breach and default” of the management agreement by having closed the games and having not met the payroll. The letter also noted S & G’s failure to make the tax and benefit withholding deposits and to pay outstanding debts.

If S & G does not cure the ills within 30 days, Calac wrote, the tribe will consider legal action.

Sola said that tribal leadership and he have not discussed concern about the lack of bingo profits. “But part of the dispute within the tribe, going back several months and including talk of possible impeachment of the tribal council, has to do with suspicion that the tribe should be getting more money,” he said.

Among those who are critical of the tribal leadership is Patty Duro, a former tribal chairman who was the tribal administrator until she was fired from the job by the tribal council May 15.

“Some of us have been asking the questions for more than a year--where’s the money?--and we haven’t gotten any answers,” Duro said. “The tribe has petitioned the council for answers, but nothing has come.

“And many times we have asked Schlegel, but he’s such a numbers man and such a poet that he mesmerizes everyone in his path.”

The suspicions about the operation of the bingo games have divided the Indian community, she said.

Rudolf Corona Jr., a deputy state attorney general in San Diego who specializes in Indian affairs, said “We’re curious too” about how a $10-million operation would not generate any profit for the Indians.

His office is frustrated in the ways it can investigate bingo operations on Indian reservations, because those operations are immune to many of the regulations that are applicable to non-Indian operations, including the new state lottery.

“We are monitoring the situation out there, but we have to give deference to the (autonomous) status of the tribal government in respect to how it conducts tribal business,” he said. “Our investigation is extremely hampered since the normal procedures aren’t available to us in this case. We can’t compel the Indian tribe to disclose its records--if it even has access to them itself.”

Because of the many concerns, a hearing requested by U.S. Rep. Jim Bates (D-San Diego) is scheduled Sept. 13 in San Diego. Representatives of the U.S. House Committee on Interior and Insular Affairs will hear testimony on problems with Indian-sponsored bingo games in California.

Randy Hollingworth, sales manager at Security Chevrolet in Vista, said his dealership had sold about a dozen cars to the bingo operators to be given away as prizes, but that the last two cars were given to their new owners before they had been paid for.

“We haven’t had any problem until the last two,” he said.

One of the winners was Caroline Boden, a Poway resident who admitted Thursday she has hidden her car until the matter is cleared. “They (Security Chevrolet) have said they want the car back, but I said it’s mine and I’m not giving it up,” she said.

It wasn’t the first time she had a problem cashing in on a prize at Rincon, she said.

“I won a $3,000 prize on May 4. They gave me $1,000 in cash and wrote me a check for $2,000--but it bounced,” she said. “But later they made good on it.”

PH