Illinois Settlement Doesn't Equal Resolution

A recently settled lawsuit between Southern Illinois horsemen against executives with the Illinois Horsemen's Benevolent and Protective Association doesn't mean the legal action did not uncover problems with the organization, according to plaintiffs.

Lanny Brooks, executive director of the IHBPA and president John Wainwright were named in a lawsuit filed last Aug. 11 that alleged Brooks has been operating the Southern Illinois horsemen's group largely in secret and has ignored multiple requests by members to review IHBPA financial records. 

On April 22 the Circuit Court of Madison County approved a settlement that allowed for an early election of the IHBPA's leadership in exchange for dropping the suit. The election will be held June 11. 

As news of the settlement spread, plaintiffs began hearing from IHBPA members who assumed the lawsuit had not uncovered anything improper. Attorney Wayne Skigen noted in a case summary for the IHBPA board of directors that "there was no determination by the court of any mismanagement, conflict of interest, misuse of funds, or any other form of wrongdoing, breach of fiduciary responsibility, or mismanagement by association executives."

This characterization of the impact of the lawsuit, however, has been called "misleading" by plaintiffs, who point out the court did not rule on these allegations because the court never heard testimony or deliberated on the allegations. Skigen concurred that the case "never progressed to that point."

"At the end of the day, plaintiffs offered to settle this case, in exchange for an early election in which the membership would have the right to select new leadership," wrote plaintiff Peter Scalcione on behalf of the horsemen who filed the suit. "They did this, in order to save their own organization from the costs of further protracted litigation. However, plaintiffs were, and still are, confident that had the litigation continued, it would have resulted in a court finding of impropriety on the part of one or more defendants."

According to Scalcione, the lawsuit succeeded during the discovery phase in obtaining documentation of a suspected conflict of interest between Brooks and Fairmount Park, poor oversight by the board of directors regarding management of the organization's finances, and no oversight of the R.A.C.E. unwanted horse adoption program, which is supported by mandatory contributions from IHBPA members.

"As a result of the settlement, plaintiffs were able to get two different board members on the finance committee who have pledged to begin holding committee meetings again once the election is over," Scalcione wrote on behalf of the horsemen who filed the suit. "But the bottom line is this: The status quo is a disaster. And the fact that some of these previous board members are running for office again is shameful and embarrassing."

Scalcione added that the following was revealed during discovery:

•  Brooks was paid in excess of $230,000 over a three-year period by Fairmount Park during a time that he was negotiating a new winter stall-rent contract with the racetrack. The stall rent, which is paid by the IHBPA, increased three-fold at this time,

•  Feed purchased through the R.A.C.E. program, which is funded largely by withholdings taken from IHBPA members' purses from horses running at Fairmount Park, was delivered to Brooks' property without any record of how or when it was then distributed to the Vandalia Correctional Facility where the rescue horses in the program are kept.

•  An IHBPA board member disclosed during a deposition that he did not know Brooks' salary as executive director, which he considered an issue "between (Brooks) and the track."

•  Finance committee members said the committee had not been meeting regularly and had not been reviewing the organization's bills, as is required by the bylaws.

"The documents showed a host of other items that the plaintiffs believe demonstrates outright mismanagement of the organization, at a minimum," Scalcione wrote. 

Attorney Wayne Skigen, who represents the IHBPA, disputed the plaintiffs' claim that the lawsuit compelled the organization to make available any requested documents.

"At the time the lawsuit was first filed, the IHBPA already had engaged counsel to arrange for the production of association records and to retain an independent CPA to perform a financial review of the association's books and records," Skigen wrote in his case summary. "Then after the lawsuit was filed, IHBPA proceeded voluntarily, without being compelled by the court, to make available to the plaintiffs all records that they asked to inspect and, in so doing, went beyond what was required of it by the applicable bylaws."

As to the continuing allegations of mismanagement, Skigen noted in his statement that the settlement of the case "does not entail any finding of wrongdoing or any admission or concession of any misconduct or impropriety whatsoever."

"Anybody can file a lawsuit, but it doesn't mean any of the allegations were true," Skigen said during a follow-up conversation May 6. "And as my clients know, there was no foundation to any of them. As far as we are concerned, the lawsuit has been resolved. The election will happen as scheduled and after the neutral monitor counts the votes then the lawsuit is dismissed per the terms of the agreement."

Skigen also noted in his letter to directors that Brooks has proposed terminating the existing agreement between the IHBPA and Fairmount Park for the track to contribute to the executive director's compensation.

"But, just as the lawsuit was resolved without any determination that any officer or director of the IHBPA has done anything wrong, there also has been no finding that the terms of the current contract between Fairmount Park and the IHBPA are in any way improper or reflect a conflict of interest," Skigen wrote.