Although the bar at the William H. Patterson Elks Lodge at 1007 South Seventh Avenue was supposed to be closed a half-hour earlier, the joint was hopping.
What happened next could have changed the outcome of last fall's District 8 Phoenix City Council race. But the information -- though public record since August 14 -- was never reported until now.
"The club was full of patrons with all tables occupied and no seats available at the bar," the agent's report states.
A lodge employee directed the agent to a booth across the room, where a woman was selling coupons for $5 that could be exchanged for a drink. Rather than wait in line behind five customers, the agent went back to the bar and was asked by a man in a white suit if he wanted a drink.
"I replied 'A vodka with 7-Up' and gave him a five dollar bill," the agent's report states.
A woman bartender poured an Absolut vodka and handed the agent the drink. He took a sip, confirming it contained liquor.
Moments later, uniformed Phoenix police officers entered the nightclub, and liquor agents began interviewing lodge employees.
Bartender Tina Flemons told investigators she had been working at the club for five or six years. The lodge, she said, had been conducting after-hours sales of alcohol on Friday and Saturday for "years."
Drink coupon broker Erma Glasco told agents she had been working at the lodge on Friday nights since 1996, selling drink coupons from 1 a.m. until 3:30 a.m. Glasco said liquor prices increased after 1 a.m.
Glasco was asked if she knew who controlled the lodge's liquor license.
"Ms. Glasco said she did not know who the licensee is but stated the club is under the direction of Michael Johnson, who she referred to as the 'exalted ruler,'" the agent's report states.
"Exalted ruler" is not the only lofty title bestowed on Michael Johnson.
The 47-year-old retired Phoenix cop is better known as newly elected Phoenix City Councilman Michael E. Johnson.
Johnson has been the exalted ruler -- the equivalent of president -- of the lodge since January 1996 and a member of its board of directors since 1988.
During this period, the Elks Lodge compiled a long, notorious history of illegal gambling, after-hours drinking and incomplete disclosure of its financial records. For a period in the 1990s, the lodge was overrun by gangs that turned the parking lot into a shooting gallery.
Johnson's fellow police officers were on high alert when responding to calls at the club because of its violent nature.
Johnson admits the club has a troublesome past, but says he's worked hard to clean up the lodge, and that illegal activities stopped long ago.
"We have made a big turnaround, a big turnaround," Johnson says. "There were some big problems there, and I said, 'We can take this on and do something about it, or we can let it die out.'"
If Johnson is proud of his association with the club, he didn't make it widely known during last year's election campaign. He failed to disclose his membership on the nonprofit board of directors of the club on his personal financial disclosure statement filed with the city.
While the lodge has made strides in reducing violence that plagued the club, reports of illegal after-hours drinking and illegal gambling persist.
On March 20, the state Department of Liquor Licenses and Control slapped the lodge with a two-count citation alleging illegal gambling. It's the second time the lodge has been hit with gambling charges since Johnson became exalted ruler.
Johnson says there was no illegal gambling taking place in the lodge. The club, he says, was simply offering the high scorer each week on a video game machine free lottery tickets.
"There was no payoff," Johnson insists. "I didn't think there was no harm in that."
State liquor department director Myran Musfeldt says awarding lottery tickets to the players constitutes gambling.
The case sets up a showdown between the state liquor department and a Phoenix city councilman.
Musfeldt promises that Johnson's political power will not sway the department's action.
"We are not treating the lodge any differently, that's the bottom line," he says.
Johnson's longtime leadership role in an organization enmeshed with nefarious activities should have become a major campaign issue.
In last fall's primary, four of the nine candidates had their campaigns seriously damaged by widespread media reports of illegal or unethical activities. One candidate had been sent to prison, another used an alias and false social security number, a third was slapped with liens and a fourth faced allegations of living outside the district.
Despite rumors circulating about Johnson's affiliation with the Elks Lodge prior to the election, the media -- including New Times -- let Johnson slide.
The lodge has been under intermittent investigation for illegal after-hours liquor consumption and sales activities dating back to at least 1983, liquor department records show.
The lodge was issued a citation in December 1983 and fined $100 for serving drinks after 1 a.m. About a year later, the Phoenix Police Department filed a report with the liquor department again alleging illegal serving of drinks, this time at 4 a.m.
Rather than stepping up enforcement, the liquor department issued a warning.
In October 1987, the liquor department filed a complaint after lodge employees refused to allow Phoenix police officers to enter the bar at 2:30 a.m. to investigate "a report of possible liquor and gambling violations," liquor department records show. Reports state about 200 people were inside the bar at the time. The lodge paid a $500 fine and had its liquor license suspended three days to settle the case.
Three months later, Johnson joined the board of directors.
By the early 1990s, the lodge had become infiltrated with gang members. Shootings became common.
A May 27, 1992, liquor department report stated the "lodge is frequented by gang members. Police report numerous fights and shots fired outside. Police witnessed numerous fights break out on 5/10/92. Crowd extremely hostile toward police."
The investigator concluded his report with a recommendation: "I feel we should act on this under the premise that tumultuous conduct existed at this location."
The liquor department took no action.
By the summer of 1995 -- while Johnson was still on the police force and serving as vice president of the lodge -- his fellow Phoenix police officers had become extremely concerned about responding to calls at the Elks Lodge.
"This club has generated numerous calls for service as well as shots-fired calls," Phoenix police officer Ronald Warner wrote to begin his August 5, 1995, report on a gang-related shooting incident at the lodge. "Over the radio I knew that officers were at the location so my concern for officer safety was heightened by knowing the prior history of this club."
Three weeks later, two people were gunned down at 3 a.m. a block away from the lodge in a drive-by shooting. A report filed by the lodge with the liquor department states "the couple was on their way to the Elks Lodge."
Since Johnson took over as exalted ruler, shootings and other acts of violence at the lodge reported to police have decreased significantly.
In recent years, off-duty Phoenix police officers have been hired to patrol the parking lot during after-hours events on the weekends. Phoenix police Sergeant Randy Force says off-duty police officers routinely contract with nightclubs to provide additional security. Officers normally do not enter the club unless they become aware of a violent situation.
Providing off-duty police officers to patrol a parking lot at a nightclub that has been known for illegal activity inside the premises is "not necessarily" a reason to refuse the job, Force says.
"If it is believed that the police officers outside are keeping acts of violence to a minimum, acts of violence that would increase if we weren't there, acts of violence that would require a lot of police resources to quell, to deal with once they do arrive, then it might still be in our best interest to provide officers to patrol that parking lot in hopes of keeping violent acts from occurring," Force says.
Johnson says the Elks Lodge's violent days are long over.
"I would never say it wasn't a bad place, because it was," Johnson says. "But I would say that now it's a totally new place, that it's turned around . . . it's a safe environment."
Johnson says it has taken time to reshape the violent, underworld culture that permeated the lodge.
"It became a way of life," he says.
The changes, he says, didn't come easy.
"There was resistance. There was some people who didn't like it. But I'm happy with the changes we've made. I'm happy with the progress that we've made. I'm happy with where we are now."
At first glance, Michael Johnson appears to be the perfect man to represent South Phoenix and an unlikely candidate to be overseeing one of its most disreputable local nightclubs.
He's articulate, handsome, friendly and experienced with handling difficult situations.
He spent 22 years on the Phoenix Police Department, finishing his career as a homicide detective where he worked on such high-profile cases as the brutal murder of former Arizona Republic science writer Carle Hodge, a case in which Johnson earned recognition for his "meticulous handling" of the evidence. Hodge was jumped, beaten and run over with his own car repeatedly in front of his home by assailants.
Other police assignments included a few stints on the department's community relations bureau, where he developed ties to civic organizations that Johnson says are the key to improving the community.
"Mike's dedication to service and dedication to community are very strong," says Lee Rappleyea, president of the Fraternal Order of Police -- one of three police organizations that endorsed Johnson during last year's election campaign.
"I have more than a cursory knowledge of him," Rappleyea says. "We worked side by side for a long time investigating armed robberies and bank robberies."
Buoyed by hefty financial support from real estate interests eager to continue developing his South Phoenix district along with the backing of prominent community leaders, including Maricopa County Supervisor Mary Rose Wilcox and Arizona Diamondbacks managing partner Jerry Colangelo, Johnson quickly emerged as the favorite in the crowded field of candidates. All were vying for the council seat being vacated by Cody Williams.
By midsummer, the only thing that possibly could have derailed his campaign would have been widespread media coverage of the July 7 undercover bust at the lodge he directed.
But the raid never got reported.
The liquor department filed a three-count complaint against the Elks Lodge, alleging the illegal sale of liquor to non-club members, sale of liquor after hours and consumption of liquor after hours.
The lodge quickly and quietly settled the complaint by waiving its right for a public hearing and signing a consent decree on August 14. The liquor department cut a $2,000 fine in half, after lodge leaders agreed to immediately mail in a check. The decree was signed by Johnson's longtime Elks Lodge associate and bar manager, Johnny Tyler Jr.
The matter disappeared into the liquor department's files in the weeks approaching the September 11 primary election.
With the Elks Lodge bust swept aside, Johnson continued to garner support from an array of civic, business, religious and law enforcement leaders in his first political campaign. He raised $47,000, much of it from developers, contractors and attorneys who live outside the district.
Johnson won 49 percent of the vote in the nine-way primary. He coasted to victory two months later to succeed Williams in the city council seat that has been held by a black for the last 29 years.
Johnson quickly became a prominent voice on the city council.
Working closely with business and community leaders in the Downtown Phoenix Partnership, Johnson took the lead in trying to strike a deal to bring the Arizona Cardinals stadium to downtown Phoenix. His vocal support for the stadium elicited accolades from the Arizona Republic's editorial board, which dubbed him a rising star among the city's power brokers.
Johnson immediately forged a tight alliance with Mayor Skip Rimsza on the increasingly fractured city council. Rimsza, in turn, awarded Johnson a chairmanship of a key council subcommittee -- a perk considered highly unusual for a newly elected council member.
Despite Johnson's quick ascension to power and the prospect that he is poised to greatly expand his influence, it seems that Johnson is overwhelmed with his new responsibilities.
"It's a lot of work," Johnson says with a shell-shocked expression.
The campaign, Johnson says, was almost more than he could handle.
"If I had not won that election, I'm not sure that I would have run for another public office because of the amount of time and the work you have to put in to run an election," Johnson says during an interview inside his 12th-floor City Hall office.
As much time as Johnson spent on the campaign, it could have been far worse if the public had known about the ethical and legal problems that have engulfed his private activities (see accompanying story).
But Johnson threw the public -- and a gullible and lazy media -- off from his troubling association with the Elks Lodge by failing to report key information on his personal financial disclosure statement filed with the city's election department.
The statement asks candidates to disclose "the name and address of each business, organization, trust or nonprofit organization or association in which you or any member of your household held any office OR had a fiduciary relationship during the period covered by this statement. Describe the office or relationship."
Johnson says he was told by the city's election department that he didn't need to disclose his role as a director and exalted ruler of the lodge because it was a nonpaid position.
"When I filled out the reports, they told me if you did not receive any type of financial compensation, then you don't have to list it," Johnson says. "If you are a paid officer and you received financial gain, then you list it."
Assistant city attorney Larry Felix disagrees.
"He still needs to disclose, whether he is paid or not," Felix says.
The penalty for intentionally omitting or providing false information on a financial disclosure form includes removal from office, Felix says, although such a move would be unprecedented.
The failure to disclose his position as "exalted ruler" on the board of directors of the nonprofit Elks Lodge normally would be considered a minor violation of city campaign rules. There is certainly nothing wrong with being associated with a private-member club.
But in this case, Johnson's failure to disclose his long-standing ties to the Elks Lodge appears to be an attempt to distance himself from the lodge's illegal activities.
The Elks Lodge long ago earned a gritty reputation in law enforcement circles for its after-hours operations that have featured illegal liquor sales and illegal gambling. The lodge routinely violates its liquor license that is restricted to serving Elks Lodge members and their guests.
The lodge regularly admits and serves drinks to nonmembers.
"It's pretty much open," Johnson says.
When Johnson became involved with the lodge is murky at best.
In a March 12 interview, Johnson says he joined the lodge in 1997, after he retired from the police department in 1995.
"When I retired, my goal was to get involved and make changes and make an impact," Johnson says. "It is like a volunteer program. I jumped into it because it is like my pet project."
The public record, however, reveals that Johnson had held a leadership role in the lodge long before he retired from the police department.
Corporation Commission records show Johnson joined the lodge's board of directors in January 1988. Johnson became vice president in January 1989 and served in that capacity until he was elected exalted ruler in January 1996.
When asked on March 25 about the discrepancy between his interview statement and the public record concerning the date of his involvement in the club, Johnson again said he was not an active member of the club until 1997.
This is despite the fact that Johnson served as vice president -- or, in Elks terminology, "esteemed leader knight" -- since 1989.
"I was the esteemed leader knight, but I wasn't actively involved in the club," he says.
Johnson also says the lodge doesn't have a board of directors, but rather an "organization staff."
"It's like the exalted ruler, the esteemed leader knight, there is a chain of staff people that they have," he says.
Lodge records filed with the liquor department, the Internal Revenue Service and the state Corporation Commission all show the lodge is run by a board of directors.
During Johnson's lengthy leadership tenure at the lodge, police records show the lodge periodically has been the epicenter of gang-related violence, gun play, gambling and illegal after-hours drinking.
The after-hours partying on weekends continues to disrupt neighborhoods near the lodge on the northeast corner of Seventh Avenue and Buckeye Road.
Julian Sodari, a community organizer for the Phoenix Community Redevelopment Corporation and a resident in the Grant Park Neighborhood where the lodge is located, says the nightclub patrons disrupt the community.
"They party inside the Elks Lodge and come out and keep partying in the parking lot," he says.
Sodari says neighborhood complaints diminished a few years ago when the bar stopped staying open past 1 a.m.
"But then they started up with the late-night hours, and that's when I started hearing more of the complaints," he says.
The William H. Patterson Lodge #447 of the Improved Benevolent Protective Order of Elks of the World is the oldest African-American fraternal organization in Phoenix. Liquor department records indicate the lodge has had a liquor license since at least 1950.
The IBPOEW claims 500,000 members and 1,500 lodges worldwide. The IBPOEW was created in 1898 to provide a fraternal organization for blacks who were excluded from the white Elks Lodge.
According to an IBPOEW Web site, the organization's purpose is "that the welfare and happiness of its members be promoted and enhanced, that nobleness of soul and goodness of heart be cultivated, that the principles of Charity, Justice, Brotherly/Sisterly Love and Fidelity be inculcated, that its members and their families be assisted and protected, (and) that the spirit of patriotism be enlivened and exalted."
Johnson says he got involved in the lodge after meeting some people who were members. He used to patrol the area when he was a police officer. He says the lodge has played an important role in the community and he wanted to help restore its prominence.
"Unless you get in there and get the proper leadership, you are going to lose it," he says.
The Patterson lodge has hosted many social and civic activities and currently provides after-school tutoring programs for neighborhood children. The lodge also helps provide meals to the needy during holidays and is engaged in other community outreach programs.
Johnson says the lodge is attempting to provide more services to the community, including hosting wedding receptions, birthday parties and wakes.
"I want to see it progress and be a viable organization and take part in the community," he says.
The lodge played an important role in his campaign, hosting at least one fund-raising event last summer. Johnson's campaign paid $900 for use of the building and catering at a September 10 event.
The mainstay of the lodge, however, is the bar.
In the early 1980s, the lodge generated more than $330,000 a year, with most of the money coming from bar sales and cover charges. The income allowed the lodge to donate $28,000 to charity in 1983. In 1985, the club generated $343,000 in revenue and donated $32,000 in assistance to individuals and $36,000 in benefits to lodge members.
But by the late 1980s, the lodge's reported gross revenues had declined by $100,000 to $233,000 in 1988. That year the lodge donated $18,000 to charity.
Copies of the lodge's annual reports on file with the Corporation Commission showed incomplete financial statements beginning in 1986 and continuing through most of the 1990s.
Corporation Commission records show the lodge attached the same 1998 federal tax return to its 1999 and 2000 annual reports. The state requires nonprofit organizations to submit financial statements or federal tax returns each year. There was no financial statement included with the lodge's 2001 annual report.
The lodge's 1998 tax return reported the club generated only $132,000 in gross revenue -- down more than $200,000 from 15 years earlier. The lodge didn't report any contributions to charity on the 1998 return.
The sharp decline in reported sales at the lodge coincided with an increase in reports of after-hours violence and stepped-up law enforcement activities concerning after-hours liquor sales and consumption, state liquor department records show. And the after-hours sales continued, at least up until last July.
A call to lodge secretary Ananias Mason and treasurer Clayton Sallis seeking an interview to discuss the club's financial condition was not returned. Mason has served as lodge secretary since 1986 and Sallis as treasurer since 1988.
Johnson attributes the precipitous decline in reported sales to the reforms he has put in place since becoming exalted ruler in 1996.
"The organization changed around from the direction it was going," he says. "There was a lot of things going on that weren't right. The whole key was to go in and change those things around and bring it back to a community organization. When you start making changes like that, it comes at some cost," he says. "Part of that is a loss of finances."
Johnson says he was not aware that financial reports filed with the corporation commission were incomplete.
While shootings and violence at the lodge have diminished, reports of after-hours liquor sales and gambling persist.
At first, Johnson insisted in an early March interview that such activities had long ago ceased.
"I don't know of any problems. There's no after-hours drinking going on there now," Johnson says.
But when confronted with details of the July 7 investigation and subsequent consent decree, Johnson responded with a terse, "That's true."
He then portrayed the incident as minor compared to how bad things had been before.
"When we first took over, there were actually officers that were saying that when they drove by the place, people would just start shooting at them. It was really, really dangerous," he says.
Johnson says the lodge no longer serves alcohol after hours, but stays open past 1 a.m. on Fridays and Saturdays.
"We still have dancing. We don't sell liquor after hours. We have a kitchen that sells food," he says.
Despite Johnson's assurances of no after-hours sales of booze, there are strong indications that the Elks Lodge serves up more than food after 1 a.m.
In a November 29 anonymous complaint to the liquor department, an Elks Lodge employee "complained that the owner routinely tells her to serve anyone who comes in after 1 a.m. if they are black. Whites will not be served per his instructions. She was threatened with her job if she did differently."
The caller identified the "owner" as "Johnny," possibly referring to bar manager Johnny Tyler.
"Caller says everything is 'cleared' with Johnny," the report stated.
The phone complaint led to a follow-up investigation at the lodge in January, liquor director Myran Musfeldt says.
Although no after-hours liquor sales were observed, Musfeldt says investigators discovered the lodge was allowing illegal gambling. The club was giving the high scorer each week on a video game machine free lottery tickets.
The department notified the lodge during a March 20 meeting that a two-count citation alleging illegal gambling has been filed with the department's administrative hearing board. No hearing date has been set. It is the second time in less than a year that the lodge has been charged with a liquor or gambling violation.
"At this point, a complaint is being filed and no consent agreement is being offered," Musfeldt says.
The department is not offering the lodge the opportunity to sign a consent decree to settle the case because this is the second citation for gambling under Johnson's leadership, Musfeldt says.
Johnson signed a February 19, 1997, consent decree to settle allegations of unlawful gambling. A Department of Public Safety investigation found four illegal video poker machines at the lodge. The lodge paid a $500 fine to settle the case and promised not to allow gambling in the future.
Johnson says the latest gambling citation is for an activity he doesn't consider to be gambling.
Awarding lottery tickets to the high scorer of a video machine, Johnson says, is not a "payoff" but "a nice benefit to keep people playing the game."
A veteran liquor department investigator before becoming director, Musfeldt says the department has a very simple definition of gambling.
"If you pay a price, to take a chance, to win a prize, that's gambling," he says.
Musfeldt was unaware that Johnson was the top official at the lodge until informed by New Times.
"That's all I need is a councilman in a problem location of mine," he says.
The stage is set for what promises to be a liquor board enforcement hearing that will attract a great deal of public attention.
"There is no treating them differently if a councilman is involved," Musfeldt says. "The cards will fall where they fall."
