Guild's Gertmenian Called 'Absolute Disgrace' in House Hearing
Updated: Thursday, October 20, 2005 11:57 PM
Posted: Tuesday, October 18, 2005 9:34 PM
Photo: Associated Press
Gary Birzer and his wife, Amy, take the oath to testify before the Subcommittee on Oversight and Investigation Hearings Tuesday.
A U.S. House of Representatives subcommittee looking at jockey health and welfare issues was sharply critical of current Jockeys' Guild management during a hearing on Tuesday that began with testimony from paralyzed rider Gary Birzer and ended with a comment calling Wayne Gertmenian's actions as Guild president and CEO an "absolute disgrace."
The hearing was conducted by the Committee on Energy and Commerce's Subcommittee on Oversight and Investigation, which is chaired by Kentucky Republican Ed Whitfield.
Birzer testified as part of the opening panel with his wife, Amy, who fought back tears as she talked of her husband's July 20, 2004 injury, the shock they both felt when they learned the Guild's $1-million catastrophic injury insurance was gone, and the lack of support she said they received from Guild management when medical bills totaled more than $500,000.
A second panel featured testimony from Hall of Fame jockeys Jerry Bailey, Pat Day, and Chris McCarron -- three former Guild executive committee members; current Guild board chairman David Shepherd; current Guild co-vice chairman and immediate past chair Tomey-Jean Swan; former Guild national manager John Giovanni, who was ousted from that position in 2001; disabled former jockey Gary Donahue, who was ousted from a position with the Disabled Jockeys Fund after he asked questions about transfers of funds; former Guild treasurer Eddie King, who was ousted after asking for more detailed financial information from Gertmenian; and former Guild board member Robert Colton, who submitted detailed written information with allegations of possible wrongdoing by Guild management.
The final panel put the spotlight on current Guild officials: Gertmenian, vice president and chief operating officer Albert Fiss, and general counsel Lloyd Ownbey Jr.
In his opening remarks, Whitfield said two key points of the hearing were to determine why the Guild allowed the accident insurance to lapse March 31, 2002, and whether or not Guild members were adequately notified they were no longer covered for medical bills higher than $100,000. He also said the subcommittee had questions about money that was shifted out of the Disabled Jockeys Fund. Finally, Whitfield said, Congress had concerns "about Mr. Gertmenian himself. He has a tendency to exaggerate -- to embellish."
Whitfield said Gertmenian's resume included references that he was chief détente negotiator in the Nixon and Ford administrations, references that could not be confirmed by Congress or the Department of Defense.
Beyond the issues with the Guild and its management, Whitfield said the committee was interested in helping find a solution to the issue of insurance for jockeys and other backstretch employees. He recalled that the Committee on Energy and Commerce passed the first Interstate Horse Racing Act and suggested a federal solution may be needed to deal with jockeys insurance.
Whitfield's comments were preceded by a brief video focusing on the dangers of riding. The video showed the near accident involving Afleet Alex at this year's Preakness (gr. I), then followed with numerous spills and breakdowns of horses during a race.
Several committee members expressed outrage at the plight of jockeys, blaming racetracks and horse owners for the problem. Whitfield said a second hearing would include racetrack owners, particularly the owners of Mountaineer Park, where Birzer sustained his injury, along with a representative of the National Thoroughbred Racing Association.
Gary Birzer talked of his loyalty to the Guild before and after Gertmenian replaced Giovanni as the organization's top executive in an overthrow orchestrated by McCarron and two other members of the executive committee. "When I joined the Guild, Gary Stevens was president," he said. "When I received my handbook, it read: 'WE TAKE CARE OF OUR OWN.' And that included insurance for on-track injuries."
The Birzers said repeated telephone calls to Gertmenian and Fiss went unanswered, and when the two visited Birzer in a rehabilitation center "the only thing they wanted to discuss was how I should sue Mountaineer Park, not why the Guild couldn't help me," Gary Birzer said. At one point, Amy Birzer asked Fiss why the Guild wasn't helping her husband. "Try to understand," she said he told her. "Horse racing is a billion-dollar industry. Jockeys should not be paying for their own insurance and we are using your husband as a 'guinea pig' to make a statement." Later, under oath Tuesday, Fiss admitted to saying that and said he had apologized to the Birzers.
Bailey and Day said they had resigned from the executive committee and Guild. Bailey had served as Guild president for seven years and Day was president when Gertmenian was brought in following a controversial polling of the nine committee members.
McCarron, who was introduced to Gertmenian in 1994, said he was impressed by the Pepperdine University professor's resume, particularly his role as a negotiator for two American presidents. He recommended to the executive committee that Gertmenian replace Giovanni. When that happened in June 2001, Giovanni and other staff were locked out of the Guild's Lexington office. A fax from McCarron to Giovanni explained that he was being replaced.
McCarron admitted that he had been duped by Gertmenian, who refers to himself as "Dr. G.". "Bringing Dr. G into the mix was the worst mistake I ever made," said McCarron. The retired Hall of Fame rider apologized to Giovanni and the other terminated Guild staff -- not for his role in taking away their livelihoods but for the treatment they received from Gertmenian and Matrix Capital Associates, a consulting company wholly owned by Gertmenian and without any employees or other clients besides the Guild. Gertmenian is paid an annual salary of $165,000 and receives approximately $335,000 a year for Matrix. Gertmenian was unable to fully explain how that $335,000 is spent on the Guild's behalf.
Bailey testified that in June 2002, he asked Gertmenian if Guild members were still covered by the $1-million accident insurance. Gertmenian said they were, but one day later admitted to Bailey that Giovanni had failed to renew it. In a deposition for a lawsuit, Gertmenian testified that the Guild board voted to let the insurance lapse. He testified before the committee that he was wrong when he said that. McCarron and Colton said the issue was never put to a vote at the board level. Members were never told the insurance had been discontinued.
Tennessee Republican Rep. Marsha Blackburn was stunned by the inconsistencies. "This is starting to sound like a Dr. Seuss novel," she said. "Events that never happened in a town that doesn't exist."
"This thing is really a hornet's nest and it's starting to unravel," said Michigan Democratic Rep. Bart Stupak.
Giovanni said the challenges of acquiring health and accident insurance for members was a growing problem during his tenure as national manager of the Guild. Despite accusations from Gertmenian and others that the Guild was "going bankrupt" when Giovanni was thrown out, Giovanni said the organization was in "decent" financial condition.
"More than 60 years of progress made in funding ever-increasing insurance benefits for the Guild's members appears to have vanished," Giovanni told the committee. "On behalf of those who fought so long and hard for these basic needs, I ask why this occurred, who is responsible and, most important, how it may be restored."
Committee members grilled Shepherd and Swan about financial changes made by Gertmenian under their watch as the two most recent chairpersons of the Guild. During Swan's tenure as chairman, she said she could not recall whether or not the board met to discuss the lapse of accident insurance.
Oregon Republican Rep. Greg Walden repeatedly asked Shepherd and Swann why minutes of Guild board meetings had not been made available to the committee and whether or not they had reviewed financial statements. "I think you are sitting on a pile of liability," Walden told them.
Whitfield also pressed Shepherd on minutes from board meetings, which had been subpoenaed by the committee. He asked Shepherd whether or not the Guild would supply those minutes. "I think we should," Shepherd replied.
Shepherd said Gertmenian changed auditors, but he was unaware, for example, that the auditor chosen to replace Arthur Anderson was a former college roommate of Gertmenian. Shepherd said the focus should not be on the Guild but on what he said are the real culprits in the insurance snafu -- the racetracks. "The tracks have no regard for human life or equine life," he said. "It's all about the dollar."
When Gertmenian, Fiss, and Ownbey testified, attention focused on Guild finances, Gertmenian's resume, and the failure to provide accident insurance to members or to notify them of the change. Fiss referred to shortcoming's in Giovanni's insurance program but Rep. Stupak cut him off: "This happened on your watch, not Mr. Giovanni's," he said. Fiss said he didn't think many jockeys were even aware the $1-million insurance policy existed.
Texas Republican Rep. Joe Barton, chairman of the Energy and Commerce Committee, said no one had been able to identify Gertmenian in any position of significance during the Nixon and Ford administrations. He asked Gertmenian if his resume was correct. "Yes, sir," the Guild chief replied. "We think it's a complete fabrication," Barton said. "You need to provide some documentation."
Barton called Gertmenian an "absolute disgrace," adding, "I don't know what it takes to make a change in management, but if I was a dues-paying member of the Guild I would want a change in management."
After the seven-hour hearing, Guild chairman Shepherd shrugged off Barton's suggestion that Gertmenian be replaced. "I've got complete confidence in our management," said Shepherd.CONGRESSIONAL HEARINGS ON JOCKEY HEALTH AND WELFARE
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