Supreme Court says state can sue charitable gaming managers

Posted: Sunday, June 24, 2001

ANCHORAGE (AP) -- The state can sue charitable gaming managers who overcharge charities or withhold minimum proceeds -- even if the charities don't want the case to proceed.

The state Supreme Court ruled Friday that the attorney general's authority to enforce charitable trusts gives him the power to sue on their behalf if a charity's officers dismiss a claim for less than the amount it is owed.

The decision allows a lawsuit to continue against Mark and Sue Griffin of Anchorage, whom the attorney general says shortchanged nonprofit organizations by nearly $500,000 when the Griffins conducted bingo games or sold pull-tabs on behalf of the groups.

The suit also accuses the Griffins of charging groups excessive fees and rents.

''This decision makes it clear we can take action against problem managers if we need to,'' said Department of Revenue Commissioner Wilson Condon.

The suit focused on a pair of ''multiple-beneficiary permittees'' that, under state law, are allowed to operate charitable gaming for up to six nonprofit organizations. Frontier Bingo Joint Venture, later renamed Alaska Sports Joint Bingo Venture, and Northern Lights Gaming Co-op, both were formed in 1995.

Sue Griffin was manager of the gaming operations. The permit holders purchased gaming supplies and leased facilities from Alaska Bingo Supply, then owned by Mark Griffin.

Under state law, a gaming manager's authorized expenses must be necessary and reasonable. They may not exceed 70 percent of the adjusted gross income of pull-tab games or 90 percent of the adjusted gross income from bingo.

The state's suit contends that groups in the gaming cooperative, financially dependent on a stream of gambling income, feared pursuing legal action to obtain their full share of bingo and pull-tab profits because they could be booted out of the organization.

''They do not want to be in a position where they bite the hand that feeds them,'' Condon said, and getting some profit was better than no money.

''One could draw that inference from the evidence at hand,'' he said. ''We obviously haven't proved that fact. We've certainly alleged it.''

The Griffins' attorney, Laurel J. Peterson, said testimony at trial by representatives of the nonprofit groups will vindicate the Griffins.

''We're finally going to get a day in court,'' Peterson said. ''That has never happened.''

He said the groups have been hurt by having to pay legal fees to review the state's allegations.

''That's the sad part. It hurts the charities involved. They don't care,'' Peterson said of the state officials pursuing the case.

The state filed suit against the Griffins in September 1998.

Most of the affected nonprofit groups, which included various Anchorage sports booster clubs, a dance theater, a darting club, and others, asked to be dismissed from the lawsuit.

In response to the Griffins' attorney, and citing a previous Alaska Supreme Court decision, Superior Court Judge Dan Hensley ruled that the attorney general was barred from seeking monetary damages on behalf of any charity that had not given its consent to the suit.

The Supreme Court disagreed.

The previous decision concerned individuals, not charities, justices said. If a charity's officers fulfill their legal obligation to safeguard the interests of beneficiaries, the court said, there is ordinarily no need for the attorney general to involve himself in a charity's suit against a third party.

But if a charity's trustees compromise a claim against a third party for less than the charity is due under the state's gaming laws, the trustees are, in effect, disposing of the charity's property.

''To prevent charitable trustees from improperly disposing of a charity's cause of action, the attorney general must be allowed to intervene to ensure adequate advocacy of the charity's claim,'' the court said.

The attorney general does not act as a representative of group's officers but of its beneficiaries and the state's power to sue is not dependent on the charitable trustees' consent, the justices wrote.

Mark Griffin no longer owns Alaska Bingo Supply and Sue Griffin is no longer a multiple-beneficiary permit manager.

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