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Trainer, Clocker Stunned as NYSGC Rejects Advice of from Hearing Appeal Officers

by T.D. Thornton & Bill Finley

The New York State Gaming Commission (NYSGC) on Monday adjudicated two unrelated penalty appeals by a clocker and a trainer by flat-out rejecting two separate hearing officers' recommendations that those cases be dismissed without penalization.

In both instances, the commissioners voted unanimously to impose the original penalties that had been handed down by Braulio Baeza, Jr., the NYSGC state steward at the three New York Racing Association (NYRA) tracks.

Monday's vote means trainer Orlando Noda now must pay a fine of $5,000, serve a 90-day suspension, and complete an anger management course prior to being reinstated for “for striking a horse excessively while working the horse out at Saratoga Race Course on Aug. 5, 2021,” according to the NYSGC.

And Richard Gazer, a longtime NYRA clocker, has been fined $2,500 and suspended 30 days “for altering a published work of a horse to make the horse eligible to race,” the NYSGC ruled.

The outright rejections of the officers' combined days of conducting the hearings and their months spent writing up the reports is somewhat unusual. But in a number of jurisdictions, racing commissioners are not bound to accept the opinions of the officers they hire to hear appeals.

Drew Mollica, who represents Noda, told TDN in a phone interview he was stunned by the NYSGC's decision.

“This is crazy. I was just telling my colleagues, 'I win, but I lose,'” Mollica said.

“This is madness. The hearing officer is the one who heard the evidence. On what basis, what evidence, did the commission use to overturn the hearing officer's recommendation?” Mollica asked rhetorically.

Noda, who has been training since 2019, is also licensed as an exercise rider.

In his reading into the record of the decision, NYSGC chairman Brian O'Dwyer said that, “The commission duly deliberated and considered this matter, and determined by a 6-0 vote to reject the hearing officer's report and recommendations. In doing that, commissioners reviewed the entire record, and established by a preponderance of evidence that Noda's conduct was improper and detrimental to the best interest of racing, and determined that the appropriate penalty was that which was given by the stewards.”

Mollica said he will confer with Noda about using “every legal remedy at his disposal” to fight the commission's order, “because the hearing officer vindicated him and found that he did nothing wrong.”

Gazer's penalty stems from a May 19, 2022, ruling in which the commission stated he “alter[ed] a horse's workout time while training at Belmont Park.”

The horse in question, Papi On Ice (Keen Ice), was initially credited with a five-furlong work in 1:04.60. The work was later changed to a half-mile in :51.33.

Because Papi On Ice had been beaten more than 25 lengths in a previous start, that result triggered a precautionary placement on NYRA's “poor performance” list. In order to get off that list, a horse must work a half-mile in :53 or faster. But the rule does not allow for a workout farther than a half mile.

Because Papi On Ice's workout was initially published as a five-furlong move, the racing office would not accept the colt's entry for a race.

Gazer told DRF.com back in May that the time of the work was not changed, but that the distance was shortened to comply with NYRA's rule. He did not time Papi On Ice himself, but a subordinate clocker told him the horse did work a properly timed half mile as part of the longer five-eighths breeze.

“This is a joke. It really is,” Gazer told TDN Dec. 12. “I've been doing this for 40 years. The horse was on the other training track, went a half-mile, and galloped out five-eighths and the trainer, Randi Persaud, wanted the five-eighths time. But they have that rule where he had to have a half-mile workout. It's a stupid rule. They called me up and I said I would change it. It was no big deal. It was either :51 for the half or 1:04 and something for five-eighths.”

Gazer continued: “We had a seven-hour hearing, [the hearing officer] recommended that they drop all the charges. And then they do this. It doesn't make any sense.”

Chairman O'Dwyer said Monday that the commissioners saw it differently.

“The commission reviewed the entire record [and] established the violation as a matter of fact,” O'Dwyer said. “And in particular, found that the conduct was improper in relation to commission rule 4042.1(f).”

That rule prohibits “improper, corrupt or fraudulent” acts or practices in relation to racing or conspiring or assisting others in such acts or practices.

Along with O'Dwyer, NYSGC commissioners John Crotty, Peter Moschetti, Jr., Christopher Riano, Marissa Shorenstein and Jerry Skurnik all voted in favor of rejecting the hearing officers' recommendations not to penalize the two licensees.

The commissioners did not debate or discuss the details of the two cases during the open, public meeting, which is standard for the way the NYSGC usually issues appeal outcomes after a hearing officer issues a report.

Based on past practice, the NYSGC generally receives such reports and takes its vote on the hearing officer's recommendation at some point before the meeting, and the chairman then reads the results into the record when the meeting goes into session, explaining the vote in one or two sentences.

Karen Murphy, an attorney who represents Gazer, told TDN in an email that, “In the 30 years that I have been practicing before the Gaming Commission (and its predecessor) this has never happened….The decision in this matter was dependent on the credibility of the proffered witnesses. In recommending that all the charges be dismissed, including a 'fraudulent, corrupt act' charge, the designated Hearing Officer made a determination in favor of Mr. Gazer's credibility. Today, the Commission rejected that credibility [and] did so without giving any specific reasons or findings…”

Murphy added that the NYSGC's ruling against her client amounted to a failure of the open-government test, “and in doing so abjectly failed in its obligations under law to Mr. Gazer. We look forward to righting this wrong.”

The penalties for Noda and Gazer will go into effect within a few days upon formal issuance of the commission's findings and order.

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Ness Receives Six-Month Suspension in PA; Has Appealed

Jamie Ness, a prolific winner in the Mid-Atlantic states and the third-leading trainer in the country in wins, has been handed a six-month suspension by the Pennsylvania Racing Commission after a horse he trained tested positive for Bufotenine.

Ness was also fined $5,000. The suspension is scheduled to begin Sept. 5 and runs through March 3, 2023.

Ness, who is being represented by attorney Andrew Mollica, has appealed the suspension.

“We are in the process of appealing,” Mollica said. “We will take this the whole way. He obviously vehemently denies any wrongdoing. The law and the facts are on our side.”

The positive test occurred in a Feb. 23 race at Parx and involves the horse Crabs N Beer (Blofeld). The 3-year-old gelding won the race, a starter-optional claimer by 2 1/2 lengths as the 3-5 favorite.

According to britannica.com, Bufotenine is a “weak hallucinogenic agent active by intravenous injection, isolated from several natural sources or prepared by chemical synthesis. Bufotenine is a constituent of toad poison, the poisonous, milky secretion of glands found in the skin on the back of the animal.” Bufotenine is often referred to as a toad venom and, in humans, is used as a hallucinogen with properties similar to mescaline and mushrooms.

Mollica provided the TDN with a document issued by the Association of Racing Commissioners International (ARCI) that lists Bufotenine as a substance that has “no effect on the physiology of a racing animal except to improve nutrition or treat or prevent infections or parasite infestations…”

The document also notes that the substance is found in reed canary grass and may be found in the urine of horses eating this grass.

“We already know it's a contaminant, not because I say so, but because ARCI says so,” Mollica said, “ARCI went out of their way to carve it out and say it should not result in a positive. I thought this was pretty straight-forward. I am shocked we are here. How this got to this level is unfathomable to me. Our position is quite clear.”

Mollica also questioned why Pennsylvania regulators were relying on a blood test but did not conduct a urine test. He said that if the substance had shown up in a urine test, that would not have resulted in a positive.

Ness is enjoying another banner season. Through Friday, he had 198 wins on the year from 711 starters, for a winning rate of 28%. He has been particularly dominant at Parx, where he has run away from the pack in the race for leading trainer. Ness's 107 wins at Parx puts him 67 wins in front of runner-up Louis Linder, Jr. Ness also runs regularly at Laurel, where he six wins on the meet.

Ness, who been training since 1999, has 3,703 winners and a career winning percentage of 25%.

In 2012, his Tampa Bay Downs barn was searched. It appears that nothing illegal was found.

“It's something I'm not used to, but it comes with the territory of being on top, I guess,” he told the Paulick Report at the time. “The higher your win percentage is, the more detractors you get. But I sleep well at night, and not because I'm tired. I know everything gets done right and it doesn't bother me when I walk through the grandstand and hear people say, 'Oh, they're cheating,' but it bothers the people who work for me, and that's what I care about. I'm used to it, but some of my grooms get very defensive when somebody says, 'You guys are cheaters,' or something like that.”

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Proposed $5M Zayat Settlement Gives Only $30K to ‘Unsecured’ Claimants

The court-appointed trustee in the nearly two-year-old Zayat Stables involuntary bankruptcy case is proposing a settlement in which Ahmed Zayat and his family members would pay $5 million to be allocated between MGG Investment Group and the trustee.

Of that amount, only $30,000 is earmarked to eventually go to “unsecured creditors,” some of whom are Thoroughbred industry participants owed money by Zayat Stables and are much further down the legal pecking order for otherwise getting repaid.

MGG will also get a disbursement from the funds in the bankruptcy trustee's account amounting to $1,025,145.

In return, MGG–the lender that alleged Zayat and his family members obtained a $24 million loan by fraud in 2016 then never repaid it–will issue a “waiver” giving up any further pursuit of the total $27.1 million total amount it had been seeking as a secured creditor.

MGG has also agreed to return $452,500 of the settlement money it gets from the “Zayat Parties” to the trustee, which will provide for the above-mentioned $30,000 “carve-out” that gets set aside to pay unsecured creditors.

The trustee will then be permitted to use $185,981 of that MGG payment to cover “administrative obligations” that the estate has incurred.

“[E]ntry into the Settlement Agreement serves the paramount interest of the creditors of the Debtor's estate,” trustee Jeffrey Testa wrote in a July 26 series of documents filed in United States Bankruptcy Court (District of New Jersey). “Resolution of the claims by and between the Chapter 7 Trustee MGG and the Zayat Parties through the Settlement Agreement represents a successful outcome for the Debtor's creditors.”

Not every creditor is going to agree with the trustee on that “successful outcome” statement.

Drew Mollica, the attorney for New York-based trainer Rudy Rodriguez, told TDN in a phone interview that his client has an unsecured claim of $397,000, and the $30,000 set aside for all unsecured claimants amounts only to a “drop in the bucket” for what Rodriguez is owed.

“Although I don't know all of the details and I'm going to reach out to the trustee, it seems the only carve-out for anybody but MGG is $30,000, Mollica said. “And all of the other unsecured claimants are in the same boat.”

It's important to note that this involuntary bankruptcy petition involving Zayat Stables is different from the Chapter 7 personal bankruptcy claim that the allegedly impoverished breeder and owner of Triple Crown champ American Pharoah initiated Sept. 8, 2020, when he claimed to own just $300 in cash and $14.22 in two checking accounts.

Six days later, on Sept. 14, 2020, an involuntary bankruptcy petition led by Zayat's former financial advisor was initiated against Zayat's family racing business.

Involuntary bankruptcy proceedings are relatively uncommon in United States courts. They are designed to protect creditors, not debtors, and are often filed against companies (as opposed to individuals) as an attempt to get paid when it is believed that a firm is rapidly burning through assets and/or financial malfeasance is alleged.

The trustee could have elected to keep battling MGG to try and whittle down the sought-after $27.1 million. But Testa explained in court documents that the proceedings had reached a point where resistance equated to a losing proposition for the estate.

“Litigation against MGG would involve sufficiently complex legal and factual issues, particularly regarding the substance of complex loan documents and the establishment of lender liability, which would require protracted hard-fought and arduous litigation and significant expert costs,” Testa wrote.

“In addition, as a result of MGG's properly-perfected status and outstanding amounts owed to it, the Chapter 7 Trustee has no encumbered funds to fight such a taxing battle,” Testa wrote.

“As to the Zayat Parties, litigation against them would be equally challenging, demanding, complex, and come at significant additional cost and delay,” Testa wrote. “In addition, based on the litigious history of this proceeding, any judgment obtained would almost certainly be subject to an appeal.

“The Settlement Agreement avoids these obstacles in favor of a prompt and efficient resolution without the need to expend further estate resources,” Testa wrote.

Other family members of Ahmed Zayat (identified in court documents as his wife, Joanne; four children, Justin, Ashley, Benjamin and Emma, plus a brother, Sherif) are on the hook for contributing to the $5-million settlement payment because, Testa wrote, “The Zayat Parties strenuously asserted that to their detriment they provided funds to Zayat Stables in an effort to keep the entity operating [by contributing] approximately $2.5 million more to Zayat Stables than the transfers they had received from Zayat Stables.”

The proposed settlement agreement even includes a section related to who gets the trophies and other racing mementos that the trustee has been storing since their seizure from the under-receivership Zayat Stables offices.

“Zayat and several of the Zayat Parties objected to the removal of the Memorabilia based upon the position that the Memorabilia were not estate property,” Testa wrote.

The trustee added that he now considers that property “abandoned,” which likely means that Zayat can reclaim it.

“So it looks like he keeps the trophies, and the horsemen who earned the trophies get nothing,” Mollica said.

The next step in the process is for the court to approve the settlement. If other parties file an objection by Aug. 16, then an Aug. 23 hearing will take place to hear the objection(s). If no one objects, the court will enter a notice of “no objection” and the settlement will be completed as proposed.

Asked if he would be objecting on behalf of Rodriguez, Mollica said, “I'll know more after I reach out to the trustee. I'll reserve my right.”

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NY Gaming Commission Upholds Void of Claim

A hearing officer for the New York Gaming Commission has upheld the voided claim of Battalion (Tiznow) in the fourth race at Belmont Park, May 28. Bella Mia Stables LLC and their trainer Bob Klesaris had entered the horse into the race with a $25,000 claiming tag. When owner Sanford Goldfarb and trainer Robert Atras claimed the horse, no one notified the Klesaris barn and the horse was returned to their barn, rather than the test barn. The New York Stewards decided to void the claim, and Michael De Bella, Bella Mia's owner, and attorney Drew Mollica appealed that decision.

“I conclude that, on this record, the Stewards did not abuse their discretion and, therefore, affirm the decision of the Stewards to void the claim,” wrote Gaming Commission Member Peter J. Moschetti Jr. in his decision. “The horse's prompt presence in the test barn is required to protect the claimant, who may, if circumstances warrant, avail himself of provisions in Commission Rule 4038.5(a)(4) to have the claim deemed void, if a Commission-designated veterinarian determines that the horse is lame pursuant to the standards of such rule. Rule 4038.5(a)(4) provides that the claim of a horse determined to be sufficiently lame by the Commission-designated veterinarian shall be deemed voided unless a representative of the claimant is present in the test barn and, instead, `decides immediately to accept the horse.'”

It was the job of the NYRA Clerk of Scales Jack Welsh to ensure that notice of a claim is given to the groom of the claimed horse, and he admitted that he had failed to do so.

“Appellants did nothing wrong here,” continued Moschetti in his decision. “Battalion's trainer did eventually bring the horse to the test barn when belatedly informed of the claim, but through no fault of Appellants, time had passed already from the end of the race. Claimant did nothing wrong here, either. However, through no fault of Appellants or Claimant, Claimant was deprived of the assurance that the horse was under the observation of Commission staff from the end of the race until delivery to the test barn for examination.”

Because there is no specific Commission rule on how to handle such a situation, Moschetti said, the Stewards have discretionary power to to impose a remedy. Battalion finished last in the race as the 2-1 favorite.

“I need not make any judgment about whether the Stewards' decision was the only plausible one they could have made, or whether their decision may or may not have been the best one. Rather, I conclude that in applying a Rule that empowers the Stewards to make a discretionary decision in unusual circumstances, the Stewards did not abuse that discretion in retuning the ownership of this horse to the status quo ante.”

“Michael De Bella is happy he fought this fight,” said Mollica, “although we obviously disagree with the commissioner's decision. This case brings to light the arbitrary and capricious nature that have recently been handed down in New York Racing. The facts here are clear and while in the final analysis, the hearing officer stated that although the decision might not be the right one, the Stewards' discretion rule carried the day. My client and I remain convinced, however, that the Stewards' discretion in this case was arbitrary and ill-advised at best, and illogical at worst.”

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