Jamgotchian Turns to Court in TOC Dispute
by Jack Shinar
Date Posted: 10/7/2010 7:45:45 PM
Last Updated: 10/8/2010 11:24:42 AM
Horse owner Jerry Jamgotchian filed a court petition Oct. 7 seeking to force the Thoroughbred Owners of California to turn over the email addresses of its 9,512 members to him while he pursues his allegation that the organization has been using a secret "slush fund" to conduct private business dealings.
The petition, filed in Los Angeles County Superior Court, names as respondents the TOC, executive vice president Guy Lamothe, TOC board chairman Arnold Zetcher, and several other members of the TOC board of directors. Many of those named were members of an "acquisition committee" set up last year by the owner's group to explore the possibility of purchasing Santa Anita Park after its parent company, Magna Entertainment Corp., declared bankruptcy and announced the track would be put up for sale in March 2009.
The TOC is the legal representative of Thoroughbred owners in the state and represents them in purse negotiations with tracks, state legislation, and before the California Horse Racing Board.
Jamgotchian, who is a member of TOC, has been involved in many legal disputes with the CHRB since 2005. He believes the TOC misappropriated $600,000 that was being kept in a "secret non-parimutuel account" to members of the acquisition committee. He alleges the fund held as much as $1.2 million through secret dealings with entities such as TVG-Betfair, the Thoroughbred Racing Association of California, and Friends of California Horseracing.
The TOC board of directors, in a letter to its membership released Oct. 6, called Jamgotchian's entire assertion "preposterous."
Jamgotchian, through widely circulated emails, has made several demands on the TOC to produce documents, including its membership list. The TOC did apparently provide Jamgotchian with a 199-page list of member names, but only 530 email addresses. Anybody with an active California owners' license is automatically considered a member of the TOC.
"My desire for acquiring the TOC's email address list is to give TOC members truthful information about how California horse racing is being mismanaged by the TOC," Jamgotchian said. "This information is currently being withheld from TOC members by the TOC's board of directors because the Board does not want to disclose their illegal conduct and secret business dealings …"
Jamgotchian said this was the first legal step he was taking to force disclosures from the TOC. He said he wants the money that was approved for the acquisition committee returned to the TOC. The committee abandoned its effort after the bankruptcy court approved a reorganization plan turning Santa Anita over to MEC affiliate MID Developments in April.
"There is no dispute by anyone at the TOC that this 'secret non-parimutuel fund' exists and that it was never disclosed on the TOC's 2009 financial statement," Jamgotchian said. "The balance in this account exceeded $1 million and the funding for this account needs to be disclosed by the TOC's board of directors to all TOC members. They have refused to disclose where this money came from and how it was spent, but eventually, they will."
In its letter to the membership, the TOC board said it needed to act with confidentially in the acquisition process.
"The board needed to be careful that the capital raise complied with securities laws--which limit how an offering is marketed," the letter said. "The board also needed to maintain a competitive advantage against other potential bidders."
"From inception to conclusion, the TOC Board was kept apprised of the acquisition process and it approved approximately $600,000 spent on the venture, virtually all in fees paid to attorneys, investment bankers, accountants, and other consultants on the project," the letter continued. "These expenditures were all properly documented. The source of these funds was from a non-parimutuel account established to benefit California racing and horsemen. The individual committee members did not receive any compensation or reimbursement for expenses.
"For a member to assert that committee members should now return the funding money is preposterous. That concept would mean that anytime a committee is established and funds are necessary, if the project is not successful, then the committee members are expected to return the funding. And to assert that individual members of the committee profited in any way from the venture is an outright lie.
"For reasons unknown, some parties are trying to disparage the TOC and the individuals who were trying to do such a good thing for all of California horseracing. There are absolutely no facts to support any claims of any impropriety and it needs to stop."
Jamgotchian countered: "The admitted taking of $600,000 from the TOC's non-parimutuel fund concerns me greatly for many reasons. In reviewing the TOC's board minutes, only $250,000 was approved for the acquisition committee's use. What they did with the $250,000, as well as an additional $350,000, apparently was never approved by the TOC board and needs to be disclosed to all TOC members.
"Also, if the money was funded to a private entity which was not owned by the TOC, then whoever took the money should be obligated to return it to the TOC, since the money belonged to the TOC."
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