Louisiana Horsemen's audit, missing 1M

A preliminary draft of the report, obtained by The Times-Picayune, suggests several violations of state law within the Louisiana Horsemen's Benevolent and Protective Association from 2006 to last year, under the watch of its then-board president, Sean Alfortish, and then-executive director Mona Romero.

The report adds detail to allegations in a federal indictment handed up in November against Alfortish and Romero. The 29-count indictment accuses the pair of conspiring to rig a board election in 2008 to hold onto power and control over the association's accounts in order to maintain their pattern of luxury spending.

The association is in charge of bookkeeping at Louisiana's four racetracks, paying out the purses and keeping 6 percent of the cut -- an estimated $5 million a year -- for pension, workers' compensation and medical funds. After Hurricanes Katrina and Rita, the association also doled out donated money to horse owners and trainers to help them deal with losses and medical costs.

The draft report, produced by Legislative Auditor Daryl Purpera's office, found $147,474 in international travel expenses for various trips, funded largely through the medical trust. The expenses included first-class travel for some board members, two fishing trips and $2,900 for a pair of Louis Vuitton handbags that Alfortish bought Mona Romero and another former employee, Tammy Broussard, the draft report said.

The board removed Alfortish shortly after the indictment and suspended Romero. Both are accused of playing loose with dedicated medical trust and workers' compensation accounts, both for travel and to cover the association's operational costs.

Alfortish and Romero declined to speak with the auditors who produced the report, it says. Colin Sherman, a civil defense attorney for Alfortish, called the issues the report is expected to raise with the trusts "basically an internal corporate governance dispute." The way the association handled the medical, workers compensation and pension trusts preceded Alfortish, he said. Alfortish declined to comment.

"Sean, from Day One, has maintained that he's never done anything wrong. A lot of what was done is what was done prior to Sean taking office," said Sherman.

In the federal case, Cindy "Cricket" Romero, a former employee of the horsemen's association and Romero's sister-in-law, has pleaded to conspiracy charges and awaits sentencing. She has agreed to cooperate with authorities as part of the plea. According to authorities, she helped Alfortish and Mona Romero find out-of-state members who were unlikely to vote in a 2008 board election. Cindy Romero and others then traveled to those members' cities and mailed forged ballots back to Louisiana, officials said.

The federal indictment argues that Alfortish, a Kenner lawyer, stuffed the ballot box not simply to keep his unpaid board post, but to maintain a paid job he held with the association, and the access to luxuries.

Alfortish was paid $116,000 to serve as director of workers' compensation and simulcasting operations. His criminal attorneys have argued that there was no gain from any voter fraud, since the job didn't depend on the election.

They also note that state law allows 30 percent of medical trust funds to go toward administrative costs, although the U.S. Attorney's Office claims the spending went far afield of any common definition of administrative costs for the medical trust, which funded a health plan for horsemen.

Among the other purchases Alfortish made with association funds were a home speaker system worth more than $2,800 and a karaoke machine, according to the federal indictment. Mona Romero is accused of receiving, among other benefits, $2,500 from the hurricane relief fund, though she had suffered no eligible storm losses.

The auditor's report focuses on the funds with statutory requirements for how the money is spent. But the board's new president, horse owner Stanley Seelig, estimated that there's another $1 million to be repaid into a different account.

"We're going to have to come up with a program to pay it back," he said. "We've got just so much cleaning up to do, where do you start?"

Seelig said the association's financial problems started when interest money dried up in a bookkeeping account from race start fees. That, he says, is when the board was led by Alfortish. "Instead of cutting the budget, they kept spending like drunken sailors," Seelig said.

The report says the association may have violated state law by borrowing from the medical trust, noting that over the same time frame, it spent $760,000 on political lobbying and $11,000 in donations to a campaign fund and transition fund for Gov. Bobby Jindal. It also said the association may have illegally used dedicated funds to set up and run its Cayman Islands-based workers' compensation fund.

The association "directed the operation of the affiliates as if there were no distinct entities," the draft report states. That loose arrangement could threaten its not-for-profit status, said the report.

The questionable spending came to light after an insurgent group began pressing for answers within the association, said Arthur Morrell, a former board member who sued over the 2008 election.

Morrell, now back on the board, said he agrees with all of the findings in the preliminary report, and a raft of recommendations that include new travel and credit card policies and a ban on "entertainment and personal expenses such as spousal/guest travel expenses, fishing trips and Louis Vuitton handbags" with statutorily dedicated fees.

"What they're recommending is what should have been done a long time ago," said Morrell, a horse owner and the Orleans Parish criminal court clerk. "It confirmed what we thought was happening," he said.

Just how many of the association's 5,500 members were affected by the dwindling medical trust is unclear, but Seelig said it slowed payments to medical providers long enough that some stopped accepting the program.

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