By PHILLIP BANTZ
The Keene Sentinel: August 13, 2009
The N.H. Attorney General’s Office has cleared the president of the bankrupt Hinsdale Greyhound Park of any criminal wrongdoing after bettors accused him of stealing money from their wagering accounts.
However, a bankruptcy trustee continues to investigate the multimillion-dollar land deal track president Joseph E. Sullivan 3rd made before the bankruptcy. The trustee is also looking at loans Sullivan took from the track.
When the track closed in December 2008, dozens of bettors with an estimated $500,000 in their wagering accounts were told their money was gone, because the cash had been commingled with the track’s general funds.
Sullivan’s bankruptcy attorney, John M. Sullivan of Concord, said bettors were kept in the dark so the track, which was in financial turmoil, would have enough money to pay its 49 employees for the last time.
In the wake of the Chapter 7 bankruptcy, some bettors filed complaints with the Attorney General’s Office alleging fraud and theft, spurring the criminal investigation, said Assistant Attorney General Peter Hinckley, who handled the inquiry.
“Our focus was whether there was any criminal wrongdoing. We were not looking into bad business practices. And in looking at state law, we found there was no violation,” Hinckley said. “The regulations at the time were ambiguous and there was no duty to separate or segregate the betting funds from general operating funds.”
The loophole was closed shortly after Hinsdale went bankrupt. Tracks are now required to maintain reserve accounts to ensure bettors are not left holding the bag in the aftermath of bankruptcy or closure.
N.H. Racing and Charitable Gaming Commission Chairman Timothy J. Connors said Joseph Sullivan assured commissioners during closed-door meetings before the bankruptcy that bettors would be paid if the track closed.
The meetings were private because the track’s finances were being discussed, Connors said.
At a public meeting with creditors in January, Joseph Sullivan said he never made any promises to protect the bettors.
The commission also took its concerns about Joseph Sullivan’s handling of the bankruptcy to the Attorney General’s Office, which can reopen its criminal investigation if new information comes to light as the case moves forward in U.S. Bankruptcy Court in Manchester.
The bankruptcy trustee, Michael S. Askenaizer, and his attorney, Steven M. Notinger, both of Nashua, are investigating the land deal Joseph Sullivan made and a $650,000 loan he took from the track in the years before the closure.
A trustee is a court-appointed official who liquidates the debtor’s property and determines whether a bankruptcy filing involves fraudulent transfers of property, perjury or is an abuse of the bankruptcy system.
A little more than a year before Joseph Sullivan filed for bankruptcy, he formed Hinsdale Real Estate LLC with Carl B. Thomas of Spofford-based Thomas Construction Corp. and sold the track’s 102 acres and buildings to the holding company for $3.3 million.
Joseph Sullivan remains in the middle of negotiations to sell 22 acres of land that now belongs to the holding company to Wal-Mart for $2.1 million.
Under state law, any fraudulent transfer involving a debtor can be undone if it occurred less than four years prior to the bankruptcy filing.
Federal bankruptcy law was changed in 2006 to extend the look-back period from a year to two years.
As for the loan, Joseph Sullivan has declined to say where that money went.
“Right now all I have is the promissory note he gave to the company. We’re going to be trying to unwind how that came to be,” Askenaizer said in a March interview. He could not be reached for comment this week.
In April, Askenaizer held an auction at the defunct track’s headquarters, selling ATM machines, computers, televisions, trucks, humidors, art, kitchen equipment, office equipment, furniture, tools, books and cash counters to the highest bidders.
Sixteen, 25-inch televisions sold for $30. An executive desk and leather chair went for $10. A 1979 Ford truck with a water tank was won with an $800 bid. Ten security cameras sold for $212. An ATM machine fetched $500. Someone paid $25 for a 20-inch tall bust of Elvis Presley.
At the end of the day, the auction netted $41,710 after auction-related expenses.
The earnings will be used to repay the track’s $1.75 million debt to the bettors and an array of other creditors who did business with the track, such as telephone companies, food vendors and various greyhound tracks across the country.
John Sullivan, the bankruptcy attorney, has said bettors should expect to receive a fraction of what they’re owed — he estimated 10 to 25 cents on the dollar — if they’re ever repaid.