WATERLOO -- The beleaguered Boys & Girls Club of Black Hawk County will be able to resume bingo operations in a year as a result of corrective actions it has taken over the past few months, a state administrative law judge ruled this week.

The administrative law judge also stated in his ruling that funds from the bingo operation, part of a criminal investigation, were not spent only on bingo expenses, and were improperly transferred to another checking account.

The ruling Tuesday suspends the club's bingo license until Jan. 16, 2008. The club suspended bingo operations at the end of June, and the state Department of Inspections and Appeals revoked its bingo license in October. The club appealed.

Normally, such a suspension would last up to two years, but administrative law judge John M. Priester said a revocation of only one year was appropriate "because of all the remedial action taken" by current club board president Chris Harshbarger "in exposing the problems and working to clean them up."

Club officials announced in May the youth organization was facing a financial crisis stemming in large part from its bingo operation. Profits had declined despite annual revenues of $1 million to $1.3 million. It was losing money when operations were suspended.

The club's finances are being reviewed by the Iowa Division of Criminal Investigation.

"It was determined that the club's bingo operation was not operating within the bounds of governing (state) statutes and regulations," Priester wrote. "The bingo operator failed to maintain only funds in the bingo account; it failed to have imprinted checks with the correct information; it failed to pay only bona fide expenses from the bingo account and it improperly transferred funds from the bingo account to another checking account."

In the revocation appeal hearing, Harshbarger agreed violations occurred. "Mr. Harshbarger explained the steps the club took when it discovered the irregularities. The club invited in the Division of Criminal Investigation, it opened its books to the Department of Inspections and Appeals, and other state agencies, to try to get to the bottom of the problem," Priester wrote.

"The club is now on more sound financial footing," Priester wrote. "The club hopes to restart its bingo operation to help fund worthwhile activities in Black Hawk County."

Harshbarger said while the club had hoped for immediate reinstatement of the license, suspension for only one year " is a compliment to the volunteer efforts that have taken place in this community.

"It certainly is a loss to the club," he said. "It is a loss not to be able to utilize this source of revenue to help cover the costs of operations in serving all the kids from Black Hawk County who are eligible for and dependent on the Boys and Girls Club for structured programs.

"The good news is that the state recognizes the efforts that have been put forward, and have measured their sanction to the various violations that were found," Harshbarger said. "The bad news is that in this rebuilding stage, we now need to look to other sources to help replace the revenue that would have come from a healthy and effective and marketable bingo program." A fundraising plan is forthcoming.

Community members raised enough money to sustain club operations in the short term.

"The club is robust at this point, and the programming is strong," Harshbarger said. "We're on the mend, but the judge acknowledged there had to be a sanction for the misconduct."

Michelle Gholston, the club's former director, announced her resignation in April after nearly four years on the job to pursue graduate studies. An administrative law judge with the Unemployment Insurance Appeals Division of Iowa Workforce Development said in December Gholston is entitled to unemployment benefits, but is also under investigation by state unemployment officials for paying herself some $4,800 in wages from the club after filing for unemployment benefits in April and not reporting those wages to the state.

In separate unemployment rulings, the state said two employees of the club's shuttered bingo operation, club bingo manager Robert Neelans and bingo concessions manager Marcus Meeks, were not entitled to extended, or enhanced, unemployment benefits due to a business closing. An administrative law judge ruled they were discharged from employment for being delinquent on monthly reports required by the state, not laid off due to a business closing.

Contact Pat Kinney at (319) 291-1484 or Pat.Kinney@wcfcourier.com