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By PHILLIP BANTZ
Sentinel Staff
The Keene Sentinel: January 17, 2009
MANCHESTER — The Hinsdale Greyhound Park’s president and chief executive is denying that he ever told state gambling regulators that bettors would be paid if the track went bankrupt and closed its doors.

The track filed for Chapter 7 bankruptcy last month, leaving hundreds of bettors across the country at risk of losing a half-million dollars they had in wagering accounts.

The Hinsdale Greyhound Racing Association, which owns the track, does not have the assets to fully reimburse these bettors, Chief Executive Joseph E. Sullivan 3rd said Friday during a creditors meeting in Manchester.

Sullivan also provided details about the transfer of the property the track sits on to a holding company he manages and his pending land deal with Wal-Mart.

The N.H. Racing and Charitable Gaming Commission asked the state Attorney General’s Office last week to determine whether Sullivan did anything illegal when he filed for bankruptcy.

Commission Chairman Timothy J. Connors said Sullivan promised bettors would be paid, and then kept quiet about the bankruptcy so they wouldn’t try to withdraw their accounts.

Connors is adamant that he and his fellow commissioners heard Sullivan make assurances during several meetings that bettors would be protected.

“I’m kind of shocked that Joe would make that kind of statement. I personally will attest that he said that (he would repay the bettors) on more than one occasion. The other commissioners also feel strongly the same way,” Connors said in a telephone interview with The Sentinel after the creditors meeting.

Sullivan’s promises were verbal and made during nonpublic commission meetings that were not recorded, Connors said. The meetings were private because the track’s finances were being discussed, he said.

Sullivan said during the creditors meeting that he would have told bettors the track was going bankrupt, but they never asked. He acknowledged that bettors lacked sufficient knowledge about the track’s finances to inquire about its future.

Andrew Beyer, who writes a horse racing column for The Washington Post, could lose more than $20,000 in Hinsdale’s bankruptcy. Beyer and 11 of Hinsdale’s largest betting account holders have hired Manchester attorney Jennifer Rood in an attempt to collect what they’re owed.

“It certainly feels like a fraudulent criminal enterprise,” Beyer said. “At what point did Hinsdale say, ‘This money is ours, we’re entitled to take it’?”

The majority of Hinsdale’s bettors placed wagers on races over the telephone. Some never stepped foot on the track.

Bettors who spoke with The Sentinel said they thought they were depositing their gambling funds directly into accounts they held at the track.

They were wrong.

When any bettor sent the track a check or made a cash deposit, the funds would show up electronically in their wagering account.

But the money was actually deposited into the track’s general fund. This fund was used to pay for any track expenses, from dog food to the electric bill to payroll, according to Sullivan.

“All of the money was swirling around all of the time,” he said.

The track’s profits were plummeting in the years preceding the bankruptcy. It pulled in $5.9 million in revenue through Dec. 16, the day after its bankruptcy filing, a decline of $2.6 million compared with the same period last year.

The state gambling commission knew Hinsdale was having financial hardships, and began sending auditors to the track on a weekly basis in the months leading to the bankruptcy, according to Connors. He refused to explain why the commission did not pull the track’s pari-mutuel license before it went bankrupt.

In November 2007, Sullivan sold the track’s land and buildings to Hinsdale Real Estate Development LLC, a holding company, for $3.3 million, according to bankruptcy filings.

Sullivan and Carl Thomas, owner of Spofford-based Carl Thomas Construction Corporation, are the principals of the holding company.

The land transfer allowed Sullivan to obtain a $1 million loan on the holding company from TD Banknorth and use it as a cash infusion for the struggling track, Sullivan said. The bank had refused to lend the money to the track, he said.

Thomas also bought the track’s mortgage for $2 million, Sullivan said. The track was paying $20,000 a month to the holding company for its debt on the mortgage, he said.

In the year before the track went bankrupt, Sullivan said his salary was $225,000.

Sullivan also borrowed a total of $650,000 from the track while he was its CEO. He refused to say where that money went.

Wal-Mart is looking to purchase 22 acres of land from Sullivan’s holding company for $2.1 million. Sullivan said the deal is expected to be finalized by mid-year.

So far, one of the track’s accountants has collected $60,000 that will go to the bettors and non-betting creditors. The track owes a total of $1.7 million.

The track’s bankruptcy attorney has said that bettors might receive 10 to 25 cents on the dollar, if they are ever reimbursed.

A bankruptcy judge will decide who gets paid and how much. The case is expected to be hung up in court for at least a year.

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By PHILLIP BANTZ
Sentinel Staff
The Keene Sentinel: January 01, 2009
The head of the Hinsdale Greyhound Racing Association kept quiet about his intent to file for bankruptcy to protect employees and keep bettors from withdrawing an estimated half-million dollars from their accounts.

“If we leaked it to a handful of people and said, ‘We’re filing for bankruptcy, so come and cash out your account,’ there would have been a run on the track and we wouldn’t have been able to pay off the employees,” said John M. Sullivan of Concord, the track’s lead bankruptcy attorney.

The track filed for Chapter 7 bankruptcy Dec. 15, leaving in jeopardy more than 500 betting accounts that are not protected by state law, according to Sullivan.

“This was or should have been a known fact to people,” he said, adding that the track was not required to notify bettors of the risk associated with their accounts.

“There was no obligation under state law to hold their hands and tell them what to be worried about.”

Account holders should prepare to receive a fraction of what they’re owed, if they see any reimbursement at all.

“It’s not realistic to expect to receive full reimbursement,” Sullivan said. “The range is probably between 10 to 25 cents on the dollar.”

And it will be at least a year before the bankruptcy is resolved in court.

Among the account holders are bettors such as Herschel Bird of Nevada, who stands to lose $138,150; Byrne J. Kinney, also from the Silver State, who is owed $48,167; and David Cuscuna of Florida, who had nearly $24,000 tied up at the track, according to bankruptcy filings.

There are also dozens of account holders who are owed a few thousand to a few hundred dollars. Some accounts held only a couple dollars or even change.

The track recently lost one of its first arguments in U.S. Bankruptcy Court in Manchester to be excluded from paying 288 bettors with $10 or less in their accounts.

The price of postage for notifying some of these account holders of the bankruptcy exceeds what they’re owed, Sullivan said.

“Our concern is that if somebody is owed 30 cents, they’re going to be confused when they receive a piece of mail about it,” he said. “The judge just didn’t feel that there was any exception in the law for a 5 cents claim or a $5,000 claim.”

Richard Mackey, a resident of Westminster, Mass., had $606 in his track account, and said he never expected to be at risk of losing it. Mackey said a friend broke the news to him about the track’s closure.

“It’s not about the money, it’s the principle of the thing. To me, that money was, in its own way, in a bank account that couldn’t be touched by anybody but me,” he said.

“My money should never have been commingled with the track’s other expenses. I don’t owe their employees a damn penny. That money should not be coming out of my pocket.”

Horse racing author Andrew R. Beyer of Washington D.C. told the Thoroughbred Times that he had “already written off” the $20,440 he had in an account at the track. He said he believed his money was safe with a licensed operator, rather than competing offshore bookmakers.

The N.H. Racing and Charitable Gaming Commission in Concord regulates the state’s thoroughbred and greyhound racing operations, but can do nothing to protect bettors’ accounts, according to Sullivan.

Sudhir Naik, the commission’s deputy director, declined comment on the Hinsdale track situation. Naik referred all questions to Director Paul M. Kelley, who was out of the office this week.

Business at the track had been suffering as the economy worsened, but skyrocketing fuel prices caused gamblers to further tighten their budgets and put one of the final nails in its coffin, track president and chief executive Joseph E. Sullivan 3rd said in a prepared statement. He is not related to the bankruptcy attorney.

“People simply have less money to wager in New Hampshire and nationally,” he said.

The track pulled in $5.9 million in revenue through mid-December, a decline of $2.6 million compared to the same period last year, according to the gaming commission.

So far this year, the state’s other tracks — The Lodge at Belmont, Rockingham Park and Seabrook Greyhound — have each posted more than $1 million drops in revenue.

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