Friedman Kaplan Seiler & Adelman LLP Releases Charles Hayward's Response Statement to NYRA Board Action

Charles Hayward today issued the following response statement to NYRA Board Action:

I am extremely disappointed in the New York Racing Association’s (NYRA) Board of Directors’ action. Both the interim report and the investigation on which the report is based are flawed and admittedly incomplete. The interim report badly misinterprets documents and was prepared without interviewing me or any other individuals relevant to their investigation.

I have been fully cooperating, and will continue to fully cooperate with the NYRA Board. I look forward to the Racing and Wagering Board and the New York Inspector General completing their investigations as expeditiously as possible. I expect to be fully exonerated when all of the facts come out.

Below is a copy of a letter sent by attorney Eric Corngold to the Chairman of NYRA prior to today’s action.

Friedman Kaplan Seiler & Adelman LLP

May 3, 2012

BY ELECTRONIC TRANSMISSION

C. Steven Duncker
Chairman
New York Racing Association
P.O. Box 90
Jamaica, NY 11417

Re: Charles Hayward

Dear Mr. Duncker:

As you know, we represent Charles Hayward in connection with the allegations raised in the Interim Report issued by the State of New York Racing and Wagering Board on April 29, 2012. We are aware that the Executive Committee of NYRA’s Board of Directors is meeting on May 4, 2012.

At your request, on May 1, 2012, Mr. Hayward met with you and other members of the NYRA Board of Directors in order the discuss the allegations in the Interim Report. As Mr. Hayward discussed at that meeting, all the evidence that he has seen demonstrably establishes that NYRA did not deliberately apply an incorrect takeout rate. And, importantly, all the evidence also demonstrably establishes that Mr. Hayward did not act improperly in any way with respect to the takeout issue. Indeed, although the Interim Report asserts that the motive behind the purported misconduct was for NYRA to obtain additional revenue, as you are aware it has been Mr. Hayward’s consistent philosophy — expressed publicly and privately — that lower takeout rates actually yield higher revenues. So it simply makes no sense to conclude that NYRA or Mr. Hayward knowingly attempted to set higher rather than lower takeout rates.

This is, of course, entirely consistent with the public statements of Steven Crist, the other participant in the email chain that forms the centerpiece of the allegations made against Mr. Hayward. As Mr. Crist explained in a posting this week on the DRF website, at the time of the email correspondence neither he nor Mr. Hayward understood that NYRA was overcharging by applying an incorrect rate on certain exotic bets. Crist candidly explained that when he learned of the mistake 14 months later:

This was news to me, and I personally believe this was news to Hayward. I can think of no reason why he would have concealed that knowledge, and I believe that had he known the wrong rate was being applied, he would have gotten it changed immediately. He has consistently been a proponent of lower takeout throughout the decades I have known him, and had opposed the very increase that had expired.... I find it completely implausible that he would deliberately overcharge bettors for more than a year and think it would never have been discovered.

At the May 1, 2012 meeting, and throughout this process, Mr. Hayward was, I believe, fully cooperative and forthcoming. We are prepared to continue to meet and fully cooperate with you and any other representatives of the Board, as well as the Racing and Wagering Board (which, to our knowledge, has never even requested an interview of Mr. Hayward or any of the other individuals relevant to its investigation), in order to complete the investigation promptly and resolve the allegations made in the Interim Report against Mr. Hayward and NYRA.

Accordingly, and especially in light of Governor Cuomo’s admonition on April 30, 2012 — “Let’s get the facts first” — it would be supremely unfair and counterproductive to take any further steps with regard to Mr. Hayward at this time. We are aware that the Chair of the Franchise Oversight Board has requested that the NYRA Board report on May 4, 2012 as to its response and action. To this point, the Board has suspended Mr. Hayward and Mr. Kehoe without pay until the investigation is complete. It is in everyone’s interest to complete the investigation expeditiously — that is, to “get the facts first.” We are eager to work with the Board to resolve this matter quickly and completely.

We urge you to consider our request and bring it to the attention of the Executive Committee of NYRA’s Board. We look forward to hearing from you.

Sincerely,

Eric Corngold

cc: Charles Hayward

Contacts:

Friedman Kaplan Seiler & Adelman LLP
Eric Corngold, 212-833-1114
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