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Star-Telegram.com

Part 2: Questions raised about charity linked to North Texas video sweepstakes company

Posted Sunday, Dec. 18, 2011

By Darren Barbee

dbarbee@star-telegram.com

Second of two parts

To judge by Hest Technologies promotions, its video sweepstakes largely exist to benefit charity. "We make donating fun!" the company says on its Facebook page, adding that it offers "a product and charitable promotional system."

Hest singles out its close relationship with Skyeward Bound Ranch, which works exclusively with Hest. The company promotes the charity at a Euless office and on its website; in gaming rooms, signs direct players to donate to the charity by playing the video sweepstakes machines. Skyeward has enabled dozens of sick children to take part in cruises.

The Hest-Skyeward sweepstakes partnership apparently began in 2010, according to a Hest news release.

Skyeward has received "tens of thousands of dollars a month" from Hest, according to an interview with a South Carolina newspaper in October.

Much about the charity is a mystery.

It's run by Dalace-Skye Duvall, who changed his name, says he doesn't know how much money his charity is supposed to get from Hest and won't discuss his background as a cage fighter or gymnast, or where he got his college degree.

The charity's finances are also a riddle, according to a Star-Telegram review.

Consider Duvall's pay.

Duvall, known as Douglas Stuart Duvall until he changed his name in 2006, established the charity in 1994. Internal Revenue Service documents from 2002 to 2010 show that most years, Duvall reported working 10-15 hours a week for the charity.

None of the tax forms list his receiving any form of compensation.

However, court documents show that on 2006 personal bankruptcy forms, he listed his gross monthly income at $7,438.17 and listed his occupation as ranch director of Skyeward Bound Ranch. The charity brought in $2,500 that year, IRS documents say.

Personal bankruptcy documents from 2007 show that at one point that year, he was averaging more than $10,000 a month income from Skyeward Ranch. The charity reported raising $32,000 that year.

Other bankruptcy records say Duvall worked for Skyeward's bingo games in Duncanville, earning a small salary.

In an interview, Duvall would not say what he does for a living or how he maintains a lifestyle that includes a $427,000, five-bedroom home.

Initially, Duvall said he received only a small amount of money from the charity each month.

In a later interview he said: "I get a paycheck now. I didn't for 16 years except for the $261. But it's not a significant amount of money."

He referred the Star-Telegram to his accountant for questions about finances, but the firm said it would not open its books, though state law requires Texas nonprofits to do so.

John Vinson, an Austin attorney who formerly worked for the Texas attorney general's charitable trust section, said a charity would need to report accurate salary information on the tax form. "It would be fishy if [that charity's] not reporting that kind of income and that it's not reflected in the charity's" tax form, he said.

Skyeward's 2010 tax forms say it generated $189,000 in revenues last year. More than $180,000 of that went for its charitable purpose, the document shows, and it lists no salary expenses. Much of its revenue came from companies with ties to Hest's owner. The forms say the organization received $43,835 from Prepaid Planet, $11,663 from The Donate Zone 1 and $22,366 from Trip Wire Entertainment.

In 2009, before joining with Hest, the charity reported gross revenue of $3,000. In 2008, it reported total revenue of $43,872. IRS documents also show $763,805 in gross receipts that year from an activity related to the organization's tax-exempt purpose; that could include such things as bingo. That year, it reported spending $18,186 on charitable activities, including $4,100 to assist physically impaired or terminally ill youths.

Skyeward is so closely tied to Hest that they share an attorney and Hest helped pay for Skyeward's lawsuit against San Antonio. What's more, Duvall signed a notarized letter in June stating that "any and all donations made under the name Skyeward Bound Ranch sweepstakes must be confirmed, registered and in full compliance with Hest Technologies."

Skyeward sued San Antonio after police shut down video sweepstakes machines. The suit lists Hest President Chris Canard as an expert witness on the legality of the games and the damages Skyeward suffered from having the machine shut down.

Canard said the lawsuit was recently settled and the games will resume. Assistant City Attorney Debbie Klein said that a tentative agreement has been reached but that the matter is pending with the City Council and department heads are being consulted.

John Warren Kindt, a business and legal policy professor at the University of Illinois, said he sees red flags in such an intertwining. Some companies, he said, try use a charity as a public relations front. "I am not saying anything illegal is going on here, but it certainly does raise some red flags."

Duvall said he does business with Hest because it is fully licensed and complies with the law.

"When a company [Hest] has the ability to come to you ... and you see that everything is done aboveboard and that it is legitimate, how can you sit there and say, 'I don't want your $20,000, $30,000 a month'?" he said.

News researcher Cathy Belcher contributed to this report.

Darren Barbee, 817-390-7126

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