NJ Racing Commission Errors Documented In State Audit

Review faults commission for failure to properly track fees, fines, licenses, and equine deaths
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The New Jersey state auditor’s office issued a report recently documenting a series of improper bookkeeping errors by the state Racing Commission. Some of the issues have now been referred to the Division of Criminal Justice.

The report, which reviewed the last nine months, checked on the revenue documentation of racing licensing fees, fingerprinting fees, and fines — as well as reporting on equine fatalities. The annual revenue to the commission in the previous year was found to be $31 million.

“The commission is not in compliance with its monitoring procedures to ensure all revenues collected are deposited timely, properly recorded in the state accounting system, and accounted for in the NJRC system,” the report concluded.

The auditor’s office randomly selected 50 transactions totaling $437,261 for fingerprinting fees, licensing fees, and fines during fiscal years 2018 and 2019.

The result was that a majority of transactions were “not deposited in timely fashion” or recorded in the state’s accounting system on time. And in all but one of 45 cases, the daily collection reports were not initialed by both the licensing inspector and supervisor.

Where did the money go?

A follow-up by state auditors of fees collected at the state’s three racetracks as well as at the commission’s Trenton office in 2017-18 found widespread irregularities.

“At each of the locations, we found instances where receipts were collected; however, there was no documentation that the receipts were deposited because the bank deposit slips were missing, and the transactions were never recorded in the state’s accounting system.”

The missing cash totaled $565.75 at Freehold Raceway; $333.50 at Monmouth Park; $50 at the Meadowlands Racetrack; and $150 at the Trenton office.

“The commission could not provide an explanation for the missing deposit slips nor could they explain why the receipts were not recorded in the state’s accounting system,” according to the report.

The commission has ongoing issues

Bookkeeping issues by the commission are nothing new, according to the report.

“As noted in our prior report, we found the commission continues to improperly process transactions in the state’s accounting system. For fiscal years 2017 through 2019 transactions totaling $7.5 million were improperly processed. … Based on our testing of revenue receipts collected, we conclude the commission does not properly adhere to its internal control procedures over the daily collection and reconciliation processes.”

Another longstanding issue is with the collection of outstanding fines. The audit reviewed 65 horsemen fined from 2000 to 2010, and 35 more from 2016 to 2019.

Of the 100, 18 did not have their licenses suspended while the overall group owed $272,000 in fines dating back almost 20 years.

Any debt not collected within 90 days is supposed to be referred to the Treasury Department, but the commission did not do so in any case, auditors concluded.

“The commission should suspend the racing licenses of individuals who do not pay their fines.”

Auditors also tested to determine whether the 894 applicants licensed during January 2019 had been federally fingerprinted, as required. From 82 of those randomly chosen for review, auditors found that 32 either had no record on file of meeting the federal fingerprint requirement or else were overdue for their fingerprint renewal.

The death of racehorses

Equine fatalities have become a national issue in recent years, leading the People for Ethical Treatment of Animals (PETA) and other groups to call for remedies ranging from major improvements in treatment of racehorses to abolition of the sport entirely.

State auditors who reviewed the fatality reports on 111 horses from 2014-2018 found that 50 were missing information and thus found to be incomplete.

Shortcomings included reports submitted without the horse’s tattoo number;  lacking adequate information regarding the carcass removal; missing the necessary signature of either the trainer, custodian, or veterinarian; or not listing the owner or trainer’s name.

“In addition, we could not determine the timeliness of the submission of any of the reports to the commission because the reports were not datestamped when received. Lack of complete information on the equine fatality reports, such as missing tattoo numbers, makes it difficult for the commission to properly identify racehorses that are deceased.

The commission responds

“The acceptance of cash payments for fees and fines presented an unacceptable risk of loss,” the commission responded to the auditor’s office, noting that a phaseout of such payments dates back to October 2018, with a ban on cash payments having been initiated in May 2019.

In terms of seemingly lax checks on whether horsemen are up to date on fines owed, the commission responded that “only one licensee received a license to race in New Jersey after failing to pay a fine. That license was issued in 2009, and has not been renewed since then.”

The commission also agreed to notify state Treasury Department officials about any fines that are at least 90 days late.

Regarding fingerprinting, the commission responded that its 2019 “Fingerprint Initiative” research found 911 licensees to be out of compliance.

Each offender was sent a letter, with 334 submitting fingerprints within 30 days, while the other 547 were listed on the commission’s Security guide so that they could not renew their licenses without proper fingerprinting.

In December 2019, “the commission proposed amendments to require that an appropriate post-mortem necropsy be conducted by a qualified veterinarian on the remains of any race horse that died on the racetrack during racing or training, or which died within one hour after racing or training on a racetrack, to determine the cause of death.”

Prevailing name on the Racing Commission: ‘vacant’

The commission is supposed to consist of nine members appointed by the governor with the “advice and consent” of the state Senate.

But according to the commission’s website, five of the nine seats are vacant in this fourth year of Gov. Phil Murphy’s administration.

The members are Michael Arnone, Pamela Clyne, Francis Keegan, and Glen Vetrano, with day-to-day operations handled by Executive Director Judith Nason.

Clyne, the committee’s chairman, has a master’s degree in social work and has focused on equine therapy for those with autism, post-traumatic stress disorder, and other challenges. She was appointed in 2012.

Keegan, appointed in 2006, is a former president of the Thoroughbred Breeders’ Association of New Jersey as well as the state Thoroughbred Horsemen’s Association.

Arnone is a dentist in Red Bank, where he served as mayor from 1978-1990. He also was a state assemblyman from 1989-2004. Arnone joined the commission in 2013.

Vetrano is the lone Murphy appointee, having been nominated in January 2019 and appointed six months later. Vetrano is a retired Paterson Fire Department Battalion Chief and has been an owner, breeder, and racer in the harness racing sector.

Nason became a deputy attorney general in 1993 and deputy commissioner for the Racing Commission in 2014 before replacing retiring Frank Zanzuccki in 2018.

Image provided by Shutterstock

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