From Paulick Report:
CHRB: Asleep at the Wheel?by Ray Paulick | 12.02.2010 | 12:06pm
Frank Monteleone
The last time Frank J. Monteleone was in the news, he was settling a 2004 lawsuit with a pair of Nevada residents who thought the California trainer had purchased them a pair of racehorses from Europe named Malrome and Musilumieres.
The two men – Joseph Hirshfield and Ron Holguin -- paid Monteleone for the horses. Paid training bills for them, veterinary and farrier bills, even vanning bills. They got to see the horses train in Southern California when they visited Monteleone’s barn.
One problem, though. Malrome and Musilumieres were never purchased. They never left Europe.
Those two horses Hirshfield and Holguin watched train that morning were phonies. It was a first-class fleecing.
After hearing endless excuses from Monteleone as to why the horses had never made it to the races, the two men finally became suspicious. The owners notified the California Horse Racing Board, which looked into the matter and took no official action. So Hirshfield and Holguin sued, in Clark County, Nev., and won a $635,000 judgment in compensatory and punitive damages from Monteleone, who the judge ruled had defrauded the two men out of $100,000.
Even after the case was heard in court, and Monteleone subsequently agreed to a financial settlement with Hirschfield and Holguin, the CHRB took no action. Monteleone kept on training horses. He was never fined or suspended by the CHRB. He never had his license suspended.
Nor was any action taken against his assistant trainer, Linda Mikus, who was also named in the suit.
John Harris, a current member of the CHRB who was then chairman of the regulatory body, promised a full investigation into why stewards never sanctioned Monteleone or Mikus. There were rumors that Monteleone had cut a deal with Roy Wood, the CHRB’s executive director at the time, to “snitch” on individuals who were bringing banned medications onto the backstretch. But they were only rumors. The CHRB would not confirm the existence of such a deal. Shortly thereafter, though, Roy Wood was gone.
And that full investigation promised by John Harris, if completed, was never made public.
A NEW COMPLAINT TO THE CHRB, FOLLOWED BY BANKRUPTCY
A few years after the Nevada lawsuit, Californian Brian McGoldrick hired Monteleone as trainer and permitted him to be an authorized agent to claim horses on his behalf. When Santa Anita’s parent company, Magna Entertainment, filed for bankruptcy in March 2009 and there were concerns about money kept in the track’s horsemen’s account, McGoldrick called Santa Anita to make a withdrawal. He was surprised to find the account was missing roughly $15,000.
As Hirschfield and Holguin had done, McGoldrick went to the CHRB to complain about Monteleone. CHRB investigators looked into the matter and at McGoldrick’s request stewards scheduled a hearing with Monteleone, who, according to McGoldrick’s attorney, in June 2009 signed a settlement agreement to repay the debt on an installment plan.
In February of this year, after Monteleone allegedly failed to live up to the payment schedule, McGoldrick filed a complaint with the stewards, and another hearing was scheduled. Monteleone failed to show up, but his attorney, Carlo Fisco (who now serves as general counsel for California Thoroughbred Trainers), provided documentation to the stewards that Monteleone had filed for Chapter 7 bankruptcy.
It turns out McGoldrick wasn’t the only one Monteleone was indebted to. He reported $653,258 in liabilities and $13,700 in assets. Among the creditors listed with the U.S. Bankruptcy Court in the Central District of California were:
-- The Los Angeles Turf Club (Santa Anita Park), $90,000, promissory note
-- Hollywood Park, $20,000, promissory note
-- Fairplex Park, $3,500, returned check
-- Barretts Equine Sales, $16,237, horse purchase
-- Citrus Feed Co., $89,000, feed
-- Chino Hills Equine Hospital, $15,000, medical services
-- Don Shields, DVM, $7,176, veterinary services
-- Trans Atlantic Racing Stable, $18,000, loan
-- Hubbard Horse Transportation, $4,000, vanning
-- Hobson’s Saddlery, $2,000, supplies
In addition, Monteleone said he owed $15,000 to the Internal Revenue Service, $20,000 for rent, $14,000 to CashCall, and more than $90,000 on 34 separate credit cards. He listed a $75,000 liability to Joseph Hirshfield, one of the Nevada horse owners who won the fraud judgment against him, and $15,000 to Brian McGoldrick on a “loan” and pending lawsuit.
There was $99,000 listed as a “pending lawsuit” liability to former employee Alisha Johnson, who filed a suit in May 2009 against Monteleone for sexual harassment, wrongful termination, and failure to furnish wage statements.
Oh, yes, and he owed $205 to a collection agency for “pool service.”
Last month, Monteleone’s case was closed and his debts discharged by the U.S. Bankruptcy Court.
MONTELEONE: ‘I DON’T HAVE ANY OWNERS’
In January 2010, the month before Monteleone filed for bankruptcy, the Santa Anita press office published in their “stable notes” a story under the headline: ECONOMY FORCES MONTELEONE TO GIVE UP TRAINING.
“Frank Monteleone saddled his last horse yesterday,” the Jan. 18 press release said, “After 26 years in racing, the veteran trainer is yielding to a daunting economy.”
“I can’t make it,” the 61-year-old Monteleone was quoted as saying. “I don’t have any owners and I only have eight horses left.” Monteleone became a jockeys’ agent instead, though according to the CHRB website he remains licensed as trainer “in compliance” until 2011.
“I’ve had some good horses and some good clients, but I’ve got to survive and I couldn’t do it the way things were going,” Monteleone told the press office. He indicated that assistant Linda Mikus (who was named in the Nevada fraud lawsuit) would get his horses.
Things went from bad to worse for Monteleone in October, when Los Angeles County deputy sheriffs served a felony arrest warrant on him at Hollywood Park on a charge of “embezzlement by public or private officer.” The charges stem from the dispute between Monteleone and McGoldrick over the money allegedly missing from McGoldrick’s horsemen’s account. The warrant states that Monteleone “did unlawfully, and fraudulently appropriate (property) to a use and purpose not in the due lawful execution of his/her trust.” Monteleone has been ordered to appear in Pasadena Superior Court Dec. 16.”
CHRB LICENSES REMAIN INTACT
Despite the 2004 fraud judgment against Monteleone, the alleged financial irregularities involving McGoldrick in 2008, and the pending criminal charges against him in 2010, the CHRB has never taken action to revoke or suspend Monteleone’s license as a trainer or jockeys’ agent.
“He’s bulletproof,” one California horseman told the Paulick Report.
Executive director Kirk Breed said “our normal procedure in a (criminal) case like this is he receives due process. His license would not be suspended or revoked until he has actually been sentenced (if found guilty).”
Breed said the California Administrative Procedures Act does provide a process whereby a person’s California state-issued occupational license can be summarily suspended but it must be proven there be “serious harm” to the public if action is not taken.
“The Monteleone matter does not rise to the level of serious harm being inflicted on the public,” said Breed. “The California Horse Racing Board understands Mr. Monteleone is alleged to have withdrawn funds to which he was not entitled from an owner’s account. The withdrawal was then made the subject of a Settlement Agreement between Mr. Monteleone and the owner. Subsequently, Mr. Monteleone filed for bankruptcy protection and listed the withdrawal as a debt owed the owner. The debt was discharged by the federal Bankruptcy Court.”
Is the CHRB asleep at the wheel? The organization has suspended the licenses of owners who owed money to their trainers, and it recently suspended the owner’s license of Robert Rizzo, the chief administrative officer for the city of Bell in Southern California. Rizzo was among the Bell city officials whose exorbitant salaries outraged citizens and made national headlines. However, there have been no criminal charges filed against Rizzo or lawsuits finding that Rizzo defrauded the public.
The CHRB also has the ability to suspend a licensee for what it considers “conduct detrimental to racing” under CHRB Rule 1902. Robert Miller, counsel to the CHRB, would not comment whether or not the regulatory agency might exercise that option against Monteleone. “The California Horse Racing Board does not comment on investigations or potential investigations,” he said.
Tracks also have the private property rights of “exclusion,” something that has held up in various legal challenges. George Haines, the president of Santa Anita Park, said exclusion was not used against Monteleone – who Haines said ran up the $90,000 debt to the Los Angeles Turf Club by “cashing some non-sufficient checks a few years ago” – because “if you exclude him, it takes away his ability to pay. He made some payments. As a track, you are caught in the middle.”
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