National HBPA to Probe Potential Conflicts of Interest

The National Horsemen's Benevolent and Protective Association has appointed a task force that will, among other things, investigate what it believes might be potential conflicts of interest by prior officers and representatives from 1999 to 2001.

According to a statement released April 24, the situation concerns the "lack of required disclosure" in regard to simulcasting issues. Officials wouldn't provide details, but it is believed the investigation is linked to the National HBPA's relationship with Choctaw Racing Services of Oklahoma.

National HBPA president John Roark, who took office just last year, wouldn't discuss details but did say: "Nobody in Oklahoma has done anything wrong. It's strictly an internal problem."

Choctaw Racing Services, a tribal-owned entity, has had a contract with the National HBPA and some of its affiliates since the late 1990s. The agreement, which horsemen said has been beneficial for all parties, provides revenue for the National HBPA and allows Choctaw Racing to import signals from racetracks to its more than 15 off-track wagering sites in Oklahoma. Some offer gaming and bingo.

The National HBPA at one time received a percentage of pari-mutuel handle for helping Choctaw Racing Services gain access to signals, but now gets a flat fee each month from the organization, according to the latest contract.

The agreement has generated hundreds of thousands of dollars in revenue for the National HBPA and, according to one former officer of the organization, that contract wasn't breached. The deal provided income for the National HBPA at a time when its finances were depleted.

The concerns instead center on formation of a separate company, Century Consultants Inc., which is said to have earned $100,000 to $150,000 for assisting Choctaw Racing Services in simulcasting matters, according to the former officer.

Century Consultants is an Illinois company incorporated in August 1999, according to information provided by the Illinois Secretary of State's office. Its president is Rick Hiles, former president of the National and Kentucky HBPAs, and its secretary is Marty Maline, currently executive director of the Kentucky HBPA. The company is paid up for 2002, but Hiles said it is currently inactive.

James Dry, general manager of Choctaw Racing Services, said the organization and National HBPA maintain their relationship, but that Choctaw Racing Services no longer has an agreement with Century Consultants. (The contract was negotiated under previous management, he said.) Choctaw Racing Services plans no action on the matter even though the National HBPA is pursuing its own investigation, Dry said.

"We support live racing," Dry said of the organization based in Durant, Okla. "We pay a fee to the horsemen every month."

At the time the deal was struck with Choctaw Racing Services in 1999, the National HBPA executive committee voted that all information concerning the relationship be provided to the National HBPA on a regular basis. A high-ranking official from an HBPA affiliate said that didn't happen.

However, in a related decision, the executive committee voted to waive potential conflicts of interest in negotiations between the third-party company and Choctaw Racing Services, HBPA officials said. The waiver pertained to the National HBPA general counsel and vice president, who at that time were Don Sturgill and Hiles, respectively.

Sturgill, a Lexington attorney and longtime counsel for the National and Kentucky HBPAs, confirmed April 24 that he had resigned from both organizations, but he said he did so because he has accepted of-counsel status at the law firm where he works and plans to reduce his workload. The National HBPA executive committee plans to name a new general counsel at its summer convention July 18-21 in Vancouver, British Columbia.

Hiles, who served as National HBPA president from mid-1999 to mid-2001, said he hadn't heard from the National HBPA office concerning release of the statement on April 24. He said Century Consultants did nothing illegal.

"I did nothing but work hard for the National HBPA, and was helpful in securing revenue for it," said Hiles, a Kentucky-based trainer who preceded Dr. Alex Harthill as president of the Kentucky HBPA. "I had no conflicts of interest. I worked for free for that organization, and worked as hard as anybody. I've never taken a dime from it."

High-ranking officials from HBPA affiliates said the situation might come down to a simple case of poor judgment rather than civil or criminal liability, but that's up to the task force to decide.

Roark, an attorney who serves as president of the Texas Horsemen's Partnership, has named a task force that includes himself; Mike Ballezzi, executive director of the Pennsylvania Thoroughbred Horsemen's Association; Nebraska HBPA president Bob Lee; Florida HBPA president Linda Mills; Arkansas HBPA president Bill Walmsley; and Charles Town HBPA president Dick Watson. In addition, Lexington attorney Peter Ecabert has been hired as interim counsel and will make recommendations concerning possible conflicts of interest.

"It's kind of sensitive right now," Roark said. "The task force's job is to gather evidence and come back to us so we can see what we can do about it."