IHRC's Reevaluation of Indiana HBPA 2014 Registration Application - Part 2

On June 26, 2014, the Indiana Horse Racing Commission (IHRC) held a hearing on the renewal application of the Indiana Horsemen's Benevolent and Protective Association (INHBPA) to receive slot funding as a registered horsemen's association. This hearing was originally scheduled to take place on October 29, 2013, but what the IHRC described as a "complaint" filed by INHBPA board member Kim Hobson regarding the handling of benevolence funds led to a six month investigation into those practices.

For more background on this subject, including IBOP's findings and commentary prior to the hearing, please read the Part 1 as a prerequisite to this article: http://www.ibopindy.blogspot.com/2014/06/ihrcs-reevaluation-of-indiana-hbpa-2014.html.

After Ms. Hobson addressed the commission (Official Transcript: Pages 86 through 93) regarding the reasons for her complaint and her experiences in dealing with cronyism in benevolence-related eligibility and benefit receipt, dealing with denials for requests for information required by HBPA By-Laws and dealing with threats against her, here's what former Chairman Bill Diener had to say, "Miss Hobson, I personally wanted to thank you for filing the complaint because I concur with our executive director but for your filing this complaint, there would have been no change to the HBPA."

Here's what IHRC Executive Director Joe Gorajec had said earlier (Official Transcript: Page 76, Line 14 Through Page 77, Line 25)

"JOE GORAJEC: First off, I would like to piggyback on the question that Commissioner Pillow asked of Mike Brown with regard to the impact of the complaint on the process of improving the organization. And I have maybe a little bit different take. I think the complaint in and of itself was a very positive development in that had the Commission not received the complaint, then, quite frankly, we would probably have a continuation of practices that, quite frankly, shouldn't have been continued. So from that standpoint I think the complaint was very positive.

And I think Miss Hobson, even though when you read the report, it is not, it's written in such a way that does not confirm some of the allegations or some of the things that she tried to lead us to, quite frankly, didn't pan out. I think overall these improvements wouldn't have been made absent the complaint.

Having said that, in a perfect world the complaints would be unnecessary because the HBPA would have been more open and transparent in the past. Some of the things that we looked at, the time frame for the investigation was from 2009 to 2013. So we were looking at things three and four years old. And, quite frankly, that shouldn't be.

If things are going on that shouldn't be going on three, four years ago, they should have been brought up, handled and addressed three or four years ago. More importantly, they should have been brought up, handled and addressed not by the Commission but by the HBPA and the Board of Directors.

And I think when you look at the reevaluation,I think the most important thing to look at is what the reevaluation caused, which is all of the improvements and corrective action steps."

In a perfect world, Mr. Gorajec is correct in that complaints to the commission should not be unnecessary. In a perfect world, the IHRC staff would have done their jobs to supervise the INHBPA's benevolence funds over the last five years to understand there was no openness or no transparency with an appointed benevolence board having more authority than the elected INHBPA board. If things were "going on that shouldn't be going on," the IHRC staff should have known through their oversight. Clearly, Mr. Gorajec throws that responsibility to the INHBPA and its board members, yet ignores that Indiana law requires the IHRC to provide oversight to benevolence funds. In short, these issues were "brought up" by the INHBPA, but only by a single member seeking reforms. Did other board members simply not care enough? Or, was their family members receiving benefits, which violated the commission-required conflict of interest policy, an influence on their view of their own responsibilities?

As a result of Ms. Hobson's complaint, the INHBPA was required to take many corrective actions, especially regarding eligibility for a horseman to receive benevolence funds. Mr. Gorajec said this about the INHBPA's eligibility requirements, "First off, there were concerns that were well founded about eligibility requirements. HBPA had eligibility requirements. They were not enforcing all of their requirements. One thing to be said is that they were not enforcing all their requirements apparently uniformly." (Official Transcript: Page 78, Lines 7 through 12) Not uniformly enforcing eligibility requirements is saying that there was selective application of who got benevolence funds and who did not which still begs the question, on what basis were people declined for benevolence funds?

One of the most significant corrective action steps was the termination of the INHBPA Benevolence Trust and its board in favor of the elected INHBPA board. The fact that the INHBPA was using a non-elected board to oversee benevolence funds was evident in every INHBPA application for slot funds since 2008. Yet, this somehow came as a surprise to the IHRC staff during their investigation.

What was also in every INHBPA registration application since 2008 was the eligibility requirements for a horsemen to receive benevolence. Given that the INHBPA was not following their own commission-approved eligibility requirements, means that each application submitted to the IHRC for review was a lie. In effect, the INHBPA provided false documentation to the IHRC each year which is a violation of the IHRC's rules on horsemen's associations applications. Also, each year, senior leaders of the INHBPA would testify under oath at the IHRC's hearing on the application as to its legitimacy. Again, violations of the IHRC's rules and of Indiana statute. Yet, no sanctions were levied (just yet) on anyone. Below is the entire discussion regarding sanctions:

"CHAIRMAN DIENER: Questions for Joe? I have a hypothetical question. Your recommendation is, was that this application of HBPA be denied unless a revised application was submitted that addressed many of your concerns. You did not propose whether or not there should be any sanctions. Do you consider sanctions warranted in this case or not?

JOE GORAJEC: No. Based on our findings, no."
(Official Transcript: Page 80, Line 22 through Page 81, Line 4)

Since the IHRC's commissioners were acting as an Administrative Law Judge regarding the INHBPA's application at this June hearing, their sole agenda was to sit in judgment of the application, not sanctions. In our view, approving the application with the considerable corrective action steps was the right move. There are many on the backsides of the tracks that truly need assistance from these funds. However, sanctioning a licensee has to be a separate event from the hearing or an additional ruling based upon the IHRC's Due Process and Disciplinary Procedures and Indiana statute. While Mr. Gorajec wasn't going to sanction anyone for his own lack of oversight with these funds, with a new Chairman of the IHRC, that jury is actually still out. Under Indiana law the commissioners themselves or the commissioners collectively can recommend sanctions. The hearing on the INHBPA's 2015 application, which will take place before the end of the year, may just be very interesting.

For the full transcript to the IHRC meeting on June 26, 2014, follow this link: http://www.in.gov/hrc/files/IHRC_June_26_2014_meeting_full.pdf
. The relevant pages to the hearing on the INHBPA's registration application are pages 42 through 108.