KEY TAKEAWAYS:
- Nearly $200K in state funds used for bingo events
- NAAAED failed to document spending or monitor subrecipients
- $115K went to a film project with no proof of training
- Legislative Auditor referred case to prosecutors for review
Nearly half of the state dollars awarded to the National Association for African American Economic Development were improperly used to support bingo nights and other gaming-related expenses, according to a new investigative audit released this week by the Louisiana Legislative Auditor’s Office.
The association received $400,000 in March 2024 through a Cooperative Endeavor Agreement with the state treasury. The funds, authorized under Act 397 of the 2023 legislative session, were intended to support occupational training, job placement, and eviction prevention in House District 99, which includes parts of New Orleans East.
Instead, the audit found that from March to December 2024, the nonprofit diverted $199,568 to charitable gaming activities.
“By diverting state funds to support charitable gaming activities and failing to maintain and submit required supporting documentation to Treasury, NAAAED may have violated its CEA with Treasury and state law,” the audit states.
Records show NAAAED used public funds to rent a building for bingo events at up to $1,000 per day, purchase electrical upgrades, and open multiple gaming-related bank accounts.
The association began holding bingo sessions in early May and continued through at least November 2024, despite never receiving permission to repurpose the funding.
The organization also disbursed $185,000 to six subrecipients, including churches and community organizations. But auditors found NAAAED failed to monitor those partners or document the services delivered.
For instance, one subrecipient — a media production company — was awarded $115,000 to produce a movie, train interns and provide job shadowing. Auditors found no evidence that participants received training.
NAAAED Chief Executive Officer Myron Lee and board member Ernest Johnson both acknowledged using state money to support bingo nights, saying they believed it aligned with the CEA’s workforce development goals. But attendance was lower than expected, they said, and revenue fell short of covering expenses.
Treasury officials said they were never provided documentation to justify any of the nonprofit’s spending. The Legislative Auditor’s Office noted that NAAAED had not submitted any of the required quarterly progress or cost reports by March 2025, a year after receiving funds. As of January 2025, NAAAED’s bank accounts held just $938.
The report also raised questions about tax compliance. NAAAED allegedly failed to issue 1099 forms to at least 29 individuals, including board members, who were paid more than $600 in 2024. The nonprofit also failed to file required quarterly charitable gaming reports for the second half of the year.
In a written response, CEO Myron Lee thanked the auditor’s office and pledged reforms, including hiring a CPA and general counsel, improving ledger reconciliation, and bringing on new board members with experience in public contracting.
But the Legislative Auditor’s Office recommended that NAAAED seek legal guidance on repaying the misspent funds and implement stronger internal controls going forward. The matter has been referred to prosecutors in Orleans and East Baton Rouge parishes.
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