PTHA Prez Alleges Years of 'Brazen and Unlawful Conduct' Involving 'Illicit and Disguised' Payments

A legal petition spearheaded by the current president of the Pennsylvania Thoroughbred Horsemen's Association (PTHA) has made sweeping allegations involving bad-faith cronyism, corruption investigation obstruction, and more than a million dollars of “illicit and disguised ghost consulting payments” and “lame duck” contract awards that were purportedly authorized by and at times reportedly made to the PTHA's past president and the organization's current executive director.

The purpose of the Sept. 6 civil petition filed in the Court of Common Pleas of Bucks County, Pennsylvania, by PTHA president Bob Hutt and PTHA board of directors member John Julia is to persuade a judge to use a state business corporations law to remove seven of the 11 current directors from the board because they have allegedly been complicit in the purported wrongdoing.

The petition alleged that those board members have failed to carry out duties they were elected to perform on behalf of the 2,500 owners, breeders and trainers that the PTHA represents at Parx.

“Regrettably, for many years, PTHA was mismanaged by self-interested Directors with conflicting goals who conducted themselves without regard for their fiduciary obligations to PTHA and to the member Horsemen that it dutybound to represent,” the petition stated. “Their brazen and unlawful conduct harmed PTHA's mission, both financially and with respect to its power to advance measures and reforms benefitting the member Horsemen.”

In November 2022, Hutt and Julia were among those newly elected to serve on the PTHA board. Hutt then ran for PTHA president under a reform platform, and he beat the long-entrenched Salvatore DeBunda, who had served four consecutive three-year terms as president and a total of nine terms on the board of directors.

DeBunda, an attorney, is listed as the general counsel for the PTHA, and he serves separately as a member of the state body that regulates racing, the Pennsylvania Horse Racing Commission.

The petition stated that as Hutt and other newly elected board members “have attempted to investigate and reform past misconduct, and have begun to discover past acts and omissions by former Directors, Legacy Directors and managerial employees, including criminal conduct, self-dealing, conflicts of interest and violations of the Bylaws, [the directors perceived as being loyal to DeBunda] have attempted to frustrate their efforts.”

The petition stated that these so-called legacy directors “have created a voting block that, notwithstanding the fiduciary obligations each Director owes to PTHA, routinely vote to ignore, condone, and conceal past misconduct, perpetuate ongoing misconduct, and prevent PTHA, under the leadership of [Hutt], from taking timely and effective action to enforce its rights and recoup its losses.

“Because Respondents exercise majority control over the Board, and have continuously utilized their majority control corruptly and in breach of their obligations to PTHA, their removal from the Board is essential to PTHA's ability to carry out its mission,” the petition stated.

Hutt told TDN in a Tuesday phone interview that in the four days since his legal filing was first made public, he has received plenty of feedback.

“The overwhelming majority has been very supportive and thanking [us] for having the guts to come forward and speak the truth about what has been known for decades,” Hutt said.

Asked if he has also received threats of retaliation because of his whistleblowing, Hutt answered in one word.

“Yes,” Hutt said, choosing not to elaborate.

The directors that Hutt and Julia want removed are Jeffrey Matty, Jr. (who also is under contract to work as the PTHA's executive director), Kathleen DeMasi (the PTHA's vice-president), Charles Asensio, Jack Armstrong, Scott Lake, Robert Reid, Jr., and John Servis.

The lawsuit stated that Edward Coletti, Jr. and John Fanelli, who both currently serve on the PTHA board, “have indicated their support for the initiatives sought by Petitioners and no relief is sought against them.”

The accusations in the petition that refer to alleged money-related malfeasance nearly all tie in to DeBunda and Matty. TDN left several email and voicemail messages for both of them on Tuesday seeking their side of the story, but none of the requests for comment yielded individual replies prior to deadline for this article.

Soon after this article was published, TDN received an emailed statement from a publicist acting on behalf of the seven PTHA board members. It stated:

“The respondent PTHA board members will vigorously and forcefully defend against the false and malicious allegations made by Mr. Hutt and Mr. Julia and their defamatory assault on our character and reputations. In the meantime, we will continue to fulfill our responsibilities to serve the best interests of our 2,500+ Horsemen and the Thoroughbred industry in the Commonwealth. We will not be intimidated by those who engage in personal attacks and litigation for their own gain.”

It is important to note that the allegations made by Hutt and Julia do not constitute a criminal complaint, nor are the petitioners attempting to use the court filing to recover any purportedly misspent money.

But the dollar sums in the petition are staggering, and it is possible that as the civil case proceeds it could generate interest from law enforcement that might result in separate criminal charges.

The petition alleged that Dun Roamin Farms, the racing stable owned by DeBunda, was paid in excess of $380,000 by the PTHA between 2017 and 2022 for “ghost consulting” that involved no apparent services and no deliverables.

“Moreover, the Bylaws precluded DeBunda from receiving compensation, directly or indirectly, for his efforts as President of PTHA,” the petition stated. “The final payment to Dun Roamin Farms occurred in December 2022, the final full month during which DeBunda served as President of PTHA.

“Matty and the Legacy Directors were aware of these illicit and disguised ghost consulting payments to DeBunda, but attempted to conceal them from Petitioners. Moreover, Matty and the Legacy Directors, in violation of their fiduciary duty to PTHA, have prevented PTHA from taking timely action to recoup the improper payments,” the petition stated.

Hutt and Julia also red-flagged $550,800 in PTHA payments between 2019 and 2023 to the law firm Archer & Greiner, where DeBunda is listed as being “of counsel.”

“Notwithstanding his conflict of interest, and in violation of the express prohibitions set forth in the Bylaws, as President of PTHA, DeBunda funneled legal work to A&G,” the petition stated.

“Matty and the Legacy Directors were aware of and acquiesced to the hiring of DeBunda's law firm and the payment of substantial compensation to A&G,” the petition stated. “In violation of their fiduciary duties to PTHA, Matty and the Legacy Directors have failed to take timely action to investigate the possible overpayment of fees and/or to recoup PTHA possible overpayments.”

In a different section, the petition alleged that “commencing in or around 2015, PTHA began making payments to disgraced former politician Vincent Fumo for alleged consulting.”

The petition stated that, “In 2009, Fumo had been convicted by a federal jury on 137 counts of corruption, conspiracy, fraud and other crimes,” and that “in excess of $215,000” was paid to Fumo for his alleged consulting.

“No apparent services were provided by Fumo in exchange for the payments and Petitioners' investigation has revealed the existence of no deliverables,” the petition stated. “The final payment to Fumo occurred in December 2022, the final full month during which DeBunda served as President of PTHA.”

When the PTHA stopped paying Furno under Hutt's tenure, the petition stated, Fumo, on Oct. 5, 2023, “threatened suit against PTHA for an alleged outstanding balance due of $52,500 for unpaid and past due consulting services.”

Later, “without the knowledge or approval of the full Board, and notwithstanding the admonition of Hutt that ghost consulting is illegal and will not be tolerated by PTHA, Respondent Matty purported to negotiate a settlement with Fumo on behalf of PTHA,” the petition stated.

“In violation of the express limitations set forth in the Bylaws, Respondent Matty entered into a $30,000 settlement with Fumo, and apparently signed a settlement agreement with Fumo on behalf of PTHA without the prior knowledge and/or approval of Hutt or the full Board,” the petition stated.

Matty's own contract to work as the PTHA's executive director was also listed in the petition as evidence of alleged overcompensation in exchange for loyalty to DeBunda.

“Respondent Matty was initially hired by DeBunda as Executive Director in late 2021,” the petition stated. “On Jan. 4, 2023, while serving as the lame duck President of PTHA, DeBunda awarded Matty a three-year written Employment Agreement, which included a substantial increase in compensation, well beyond that of similarly situated executives with Matty's experience, and an unreasonable severance provision.

A copy of Matty's contract that was filed with the petition lists his annual salary as $225,000.

“Matty's Employment Agreement violates Section 5.11.4 of the Bylaws in that it exceeds the term of one year beyond the term of then President DeBunda,” the petition stated. “Matty's Employment Agreement falsely recites that it was reviewed by the Board and approved unanimously. To the contrary, the Board was not made aware that Matty's Employment Agreement would violate the terms of [the bylaws].

“The transparent motive for awarding Matty a three-year Employment Agreement on the eve of Hutt's term as President was to procure Matty's future continued loyalty to DeBunda, and to the other Legacy Directors, for the duration of Hutt's term as President,” the petition stated.

“Not surprisingly then, throughout Hutt's tenure as President of PTHA, Matty has frustrated Hutt's efforts to lead PTHA, has run interference and placed obstacles in Hutt's path to investigating past misconduct and implementing reforms, has disregarded his duty to take direction from Hutt and to support Hutt's leadership, and has violated numerous express provisions of the Bylaws along the way,” the petition stated.

“Respondent Matty's misconduct has included refusing to provide Hutt with access to PTHA financial records, personnel records, bank statements and cancelled checks,” the petition stated.

The petition also stated a number of other alleged instances of misconduct in which “the Board has continually failed to represent the interests of the members of PTHA in contractual undertakings and negotiations with Parx.”

The petition further alleged that, “On multiple occasions, Petitioners notified Parx of potential issues of 'race fixing' and demanded that prompt investigation and remedial action be taken to ensure the fairness and integrity of live racing at Parx.

“Petitioners have provided evidence to Parx to support their claims and suspicions [and on] May 25, 2024, provided data to the Pennsylvania Racing Commission to support their claims and suspicions as well,” the petition stated.

“Petitioners presented the same data and evidence to the Board and requested that the Board authorize PTHA to support the Horsemen in connection with the investigation of the claims and suspicions,” the petition stated. “Respondents, however, again chose not to represent the interests of the Horsemen members of PTHA, and instead voted not to provide financial or administrative assistance to the investigation of the claims.”