Advertisement

Hubbard’s Ties Are Questioned : Horse racing: Race track owner has had associations with Emprise, a company linked with organized crime in the early 1970s.

TIMES ASSOCIATE SPORTS EDITOR

The battle for control of Hollywood Park has been a boon to people in the paper-product business. A bevy of lawsuits and countersuits have been filed in the past three months, all accompanied by volume after volume of documents.

R.D. Hubbard, the race track owner who is trying to gain control of Hollywood Park, bought a half-page ad and then was ordered by a judge to buy another ad to correct the first one. Hubbard had claimed he had won control of the track, when he actually fell short in consent solicitations.

Marje Everett, heading the group in power, has bought a full-page ad and plans to buy more. The ad asserts that Hubbard should be looked at carefully because of his longstanding association with Emprise, a company that was known to have ties with organized crime in the early 1970s.

Everett announced Tuesday that she was resigning as chairman and chief executive officer but plans to stay on the board. She nominated Steve Wynn, who will meet the board today.

Advertisement

The eventual winner of the takeover attempt won’t be known until Feb. 18, when the shareholders meet. But until then, you can expect the accusations to continue from both sides.

The latest accusation suggests that Hubbard was part of a group in 1969 that was denied a racing license in New Mexico when it was learned that his company had received a $600,000 loan from Emprise. In deposition testimony last month, Hubbard said he could not remember specifics about a loan from Emprise but acknowledged getting a loan from an Emprise-related company. He also said he has never been denied a license. The fuzzy memory coupled with a seeming contradiction has been the recent focus of Everett’s attack.

However, no current owners, officers or directors of Delaware North, the successor company to Emprise, have been convicted of a felony. But, Emprise was indicted and subsequently convicted in 1972 of violating federal racketeering laws.

The recent mailing and advertisement did not address Hubbard’s current relationship with Delaware North, one of the largest concessionaires in the world.

Advertisement

According to court filings and public records obtained by The Times, Hubbard’s association with the company has been renewed in the 1980s and 1990s.

For example:

--In 1988, Sunflower Racing, Inc., a company in which Hubbard owns 60%, hired an executive vice president of a Delaware North subsidiary to help apply for racing licenses in Kansas.

--In 1989, Hubbard explored the idea to use financial backing from Delaware North in his unsuccessful attempt to buy Los Alamitos Race Course. Delaware North officials said they weren’t interested in participating in the deal.

--In 1990, Great Lakes Greyhound Management Corp., a firm controlled by Hubbard, planned to merge with another race track to run Dairyland Greyhound Park in Kenosha, Wis. Under the agreement, Delaware North would own 4.9% of the new company and provide concessions to Dairyland. Hubbard would own 95.1%. The plan fell apart early this month.

--In the midst of Hubbard’s takeover attempt, Jeremy Jacobs, chairman of the board and principal owner of Delaware North, was the holder of at least 33,600 shares of Hollywood Park stock.

Los Alamitos, a track in which Hubbard has the option to buy 25%, also uses Delaware North as its concessionaire. However, the contract was signed by Lloyd Arnold and Chris Bardis before Hubbard came on the scene. In the contract, Delaware North loaned the track $1 million at 10% interest and $4 million at no interest. Loans such as this are commonplace in concession contracts and viewed as little more than an advance on commissions and improvements.

Delaware North, whose principal business is as a sports concessionaire and operator of pari-mutuel tracks, is one of the world’s largest privately held companies with revenues of more than $1.5 billion. It employs between 12,000 and 40,000 people depending upon the time of year. Most of the employees are vendors, whose work is seasonal.

Advertisement

The company owns one thoroughbred, one harness and seven greyhound tracks as well as one jai alai fronton. Delaware North also has concession contracts with five major league baseball teams (Chicago White Sox, Cincinnati, Detroit, Milwaukee and St. Louis), three NHL teams (Boston, Buffalo and St. Louis) and two NBA teams (Boston and Phoenix). The company owns the Boston Garden and Jacobs owns the Boston Bruins.

“Delaware North is one of the largest and most successful concession companies in the world,” Hubbard said Tuesday. “Numerous race tracks and professional and college sports teams use their services and have received loans from them as part of their concession contracts.

“My relationship with Delaware North and Emprise Corporation has been entirely above board and proper. I view this spurious attack by Mrs. Everett as one more desperate effort by her to try to divert scrutiny from her own mismanagement of Hollywood Park and her proven misconduct--including a bribery of the former governor of Illinois in order to get racing favors.”

Hubbard was referring to 1971, when former Illinois governor Otto Kerner and others were indicted and convicted for conspiracy to accept bribes and mail fraud. Everett was named as an unindicted co-conspirator for allegedly bribing Kerner.

NEW MEXICO--TWO DECADES AGO

R.D. Hubbard was a very successful glass manufacturer who also had interests in horse racing when he decided to be part of a group that wanted to run racing dates at Ruidoso Downs, N.M., in 1969. Ruidoso Downs is home to the All-American Futurity, a race for 2-year-old quarter horses that is considered the richest horse race in the world.

He was part of a company named Newco Industries, Inc., with Eric Culver, a race track manager in New Mexico. Culver owned 36% of Newco and Hubbard owned 24%. Tom Mosier, a Denver insurance manager, and Richard Azar, a certified public accountant in New Mexico, each owned 20%.

The application was expected to be approved until a $600,000 loan from Emprise to Newco was discovered. A copy of the loan, entered into evidence at a special meeting of the New Mexico Racing Commission, was signed by the four principals of Newco--including Hubbard--and their wives.

Advertisement

The first hearing was held Oct. 25, 1969 and continued to Jan. 30, 1970. Hubbard was in Japan during the October meeting.

At the January meeting, racing commissioner John Augustine Jr. said the problem was with Emprise, not the applicants: “We have no quarrel in any way with these gentlemen’s qualities, their good judgment, their business or anything. The only thing we’re questioning is this other thing.”

Later, a motion to grant the license was denied and it was decided to hold another meeting on Feb. 21. After the vote to deny, Hubbard, according to transcripts of the meeting, acknowledged that his group was turned down.

“The motion was to approve our license and our racing dates and the vote was against the approving (of) our license and racing dates which, in effect, is turning us down,” the transcript quoted Hubbard as saying.

Hubbard also addressed Robert Lee, chairman of the New Mexico State Racing Commission, about the Emprise situation.

“We borrowed the money for 30% less interest than we’re borrowing from the banks,” Hubbard said. " . . . We borrowed it to where our first payment was not due until six months after the original loan. . . . I think from all standpoints, the loan that we made with Emprise, from a business standpoint, was an excellent decision and we will stand behind it 100%.”

The meeting was continued to Feb. 21, 1970. Shortly after 11 p.m., and more than 10 hours of testimony, Newco was denied a license by a vote of 3-2.

The attorney general of New Mexico filed a brief in support of the decision saying that Newco “failed to make a full disclosure” of its relationship with Emprise and said that Emprise was the “real party in interest in the application.”

The racing commission concluded that Emprise and its subsidiaries “have a bad general reputation for honesty and fair dealings” and that it would be “detrimental to racing” for Emprise to own or control Ruidoso Downs.

Hubbard gave a deposition on Dec. 12, 1990, where he said: “There was a loan made to Newco (by an Emprise-affiliated entity). Who made the loan I do not know.” Hubbard reiterated that point at least three other times.

Hubbard also said that neither he nor Newco was ever turned down for a racing license in New Mexico.

Hubbard’s Los Angeles attorney wrote to the California Horse Racing Board on Dec. 12, 1990: “Mr. Hubbard was never denied a license to own Ruidoso Downs. . . . Neither Mr. (Eric) Culver nor the company that was operating Ruidoso Downs at that time was denied a license.”

Hubbard explained the New Mexico situation this way: “I was a minority stockholder in the company that applied for the license at Ruidoso Downs in 1970, my recollection had been that, since the meet was run, that a license had been granted to the company.

“Instead the license was issued to trustees. In any event, when I acquired Ruidoso Downs in 1988 the racing board conducted a full and complete investigation and did license me. In fact, the chairman of the New Mexico Racing Board even wrote a letter to the California Racing Board chairman confirming the favorable impact which I have had on racing in New Mexico.”

EMPRISE--THE PAST

Emprise, in one form or another, has been around for three-quarters of a century. It has had many names from Emprise to Sportservice to Sportsystems to its current name of Delaware North.

On occasion, some have argued that Delaware North is not the same company as Emprise. However, a U.S. District Court in Arkansas ruled in 1983 that it was the successor company. The opinion was upheld by the U.S. Circuit Court of Appeals in 1984.

The company was formed in 1915 by the Jacobs brothers--Louis, Marvin and Charles. The principal business was as a concession firm for baseball teams.

According to a confidential report submitted to the Birmingham (Ala.) Racing Commission in 1988, the company was in need of cash in the 1930s and Louis Jacobs “borrowed it from organized crime figure Moe Dalitz . . . and in the 1950s, Louis Jacobs helped Dalitz acquire the Stardust Casino and Hotel.”

In the 1950s, according to James (Jimmy Doyle) Plumeri, a New York labor racketeer who was murdered in 1971, Louis Jacobs financially backed boxers controlled by Plumeri and Frankie Carbo, a New York organized crime figure.

Max Jacobs, the son of Louis Jacobs, admitted that in 1956 his father loaned $256,000 to Anthony Zerilli and Giacoma (Jack) Tocco, which they used to get control of Hazel Park Race Track. The McClellan Committe identified the pair as members of the Detroit Mafia in 1960.

Sports Illustrated, which did a story in 1972 on Jeremy Jacobs called “The Godfather of Sports” detailed a transaction in 1962 in which “Gerardo (Jerry Catena, the successor to Vito Genovese in the New York Mafia), arranged for Louie (Jacobs) to fund an attempt by Joe (the Wop) Cataldo--a New York gangster . . . --to gain control of Finger Lakes track.

Finger Lakes track is the only thoroughbred facility currently owned by Delaware North.

In 1966, Robert Leacy, a former vice president of Emprise, testified that he had “personally delivered $10,000 in cash as a campaign contributor to former Louisiana Governor Earl Long.” Leacy said the payments were made “to ensure that Emprise would be able to operate in Louisiana without problems.”

The company was passed from Louis to Jeremy and his brother Max in 1968.

The New Mexico loan involving Hubbard was revealed in 1970 but on March 4, 1970, Arizona representative Sam Steiger read into the Congressional record the names of underworld figures he believed had business dealings with Emprise.

Among those named were Sam Tucker of River Downs Raceway, a member of the “Purple Gang,”; Moe Dalitz, who was identified by the Kefauver Committe as being involved in organized crime; Raymond Patriarca, leader of the New England Mafia and Zerilli, Tocco and Dominic (Fats) Corrado, all officers of Hazel Park.

Steiger later changed his mind in 1977 and asked President Jimmy Carter to issue a pardon for Emprise.

The most damaging blow came on April 26, 1972, when Emprise and six people including Zerilli, Michael Polizzi and Peter Bellanca, all identified as members of the Detroit Mafia, were convicted in Los Angeles of criminally conspiring to obtain secret ownership of the Frontier Casino and Hotel in Las Vegas.

“The 20-year-old thing is on the public record and no one has ever made any effort to hide it,” Gifford of Delaware North said. “It happened, but it happened a long time ago. And it’s perceived as something useful to someone who’s trying to discredit another party and I can’t imagine it would work.”

In 1974, the Daytona Beach (Fla.) Jai Alai fronton, still owned by Delaware North, burned to the ground and a $4-million insurance payment was paid out. The report to the Birmingham Racing Commission said that in 1980, Gary Bowdach, a federal prosecution witness, said the fire was ordered by Salvatore Cufari, a reputed crime boss in Springfield, Mass.

The Florida director of pari-mutuel wagering suspended the three licenses held by Emprise in 1974. However, in 1981, after an out-of-court settlement, the licenses were reinstated.

Officials of Delaware North contend that the company has made only one mistake--the 1972 conviction--in 75 years.

In 1984, the company was told it was unlikely to be approved for a license in Iowa and the company subsequently withdrew its application. Vermont denied the company a license in 1984 but granted the permit in 1988. West Virginia approved a license to run Wheeling Downs in 1988. In fact, the Thoroughbred Racing Protective Bureau has given the company a clean bill of health.

Perhaps the most famous mention of Emprise came in 1976, when Don Bolles, an investigative reporter for the Arizona Republic, died 11 days after his car was bombed.

Bolles final words were: “They finally got me. The Mafia. Emprise. John Adamson.” Adamson, a local greyhound breeder, was convicted of murder and sentenced to death, a sentence that was overturned in 1988. No charges were ever brought against Emprise or any of its employees. The case remains under investigation 14 years later.

KANSAS--THE NEW FRONTIER

A bitter struggle was on the horizon for control of Kansas’ untapped race track business. On one side was Sunflower Racing Inc., headed by Hubbard and Richard Boushka and on the other was David Schoenstadt, a Kansas City anesthesiologist and former owner of the Kansas City Comets soccer team.

And in the backgound was Delaware North.

Both Boushka and Schoenstadt admitted to hearing from Delaware North. Schoenstadt said he was interested, but Boushka took another tact.

He told the Kansas City Business Journal that he was using Lou Derteen, an executive vice president of Southland Racing Corp., a subsidiary of Delaware North, as a consultant. Boushka added that Derteen was one of “two or three” Delaware North people he was considering to run the track.

On July 1, 1988 Sunflower Racing received a $40-million loan from Southeast Bank to help finance the building of the track. The third largest shareholder of Southeast is Delaware Management Company, a subsidiary of Delaware North.

Sunflower was finally granted a license on July 22, 1988, which spawned litigation by the losing group.

Court filings tried to draw Hubbard and Delaware North together. Clifford Kaeser, vice president and secretary of Delaware North, said that there was no “legal relationship” between his company and Hubbard but that Hubbard was a close friend of Jeremy Jacobs.

Kaeser went on to say that Hubbard introduced Delaware North to his partner, Boushka and that Stan Phillips, the vice president in charge of Delaware North’s pari-mutuel operation was a good friend of Boushka.

Kaeser said that Delaware North had volunteered to help Hubbard and Boushka “in any way possible with their application.”

Boushka has been named to Hubbard’s proposed slate of directors should he gain control of Hollywood Park.

LOS ALAMITOS--NO INTEREST

Hollywood Park had bought Los Alamitos Race Course in the early 1980s from Millie Vessels, who had a long time quarter horse interest. Officials at Hollywood Park believed this purchase would give them a stronger hold on the Southern California racing community.

But what happened was quite the opposite.

The track became a heavy burden on the shareholders of Hollywood Park and the track fell more and more into disrepair. The track was finally put on the market in mid-1989 in hope to lessen a debt load that was approaching $100 million.

Two quite opposite groups made a play for the track. On one side was the harness racing interests of Lloyd Arnold and Chris Bardis. On the other side were Hubbard and Ed Allred, a quarter horse owner who owned Ruidoso Downs along with Hubbard.

Once again a call was placed to Delaware North to see if any financing could be found.

“At one time we were thinking about a deal where we would offer $60 million for the track,” Allred said in an interview. “But I don’t believe we ever got a commitment from (Jeremy) Jacobs on this. But their (Delaware North) people came out here and spent a day or two with our attorneys, evaluating what we should do.

“We were going to offer $60 million and they were going to put up $20 million and each of us $20 million. We figured with their clout we could get some better financing.”

However, things never reached the offer stage.

“We sent a couple of corporate lawyers out there to look everything over, but there was never a formal proposal,” said Sam Gifford, vice president of corporate public affairs for Delaware North.

“In fact, we decided not to do it or get involved financially.”

Arnold and Bardis eventually were chosen as the buyers and several months later Allred was brought in with Hubbard given an option to buy in. The two groups had battled for many years, and this was seen as a marriage of convenience.

After buying the track, Arnold and Bardis brought in Delaware North as the concessionaire without consulting Allred and Hubbard.

“I like these people,” Allred said about Delaware North. “I continue to like them. I continue to bring them into discussions on other projects. I think they are great caterers and a great help to us here. I’m 100% in favor of them and I’m not embarrassed in any way.”

OTHER DEALS

Dairyland Greyhound Park in Kenosha, Wis., was struggling. It needed an infusion of cash and the Wisconsin Racing Board was seeking a solution.

In late December, merger talks began to combine Gret Lakes Greyhound Management Corp., which is controlled by Hubbard, with Alfred Ross, an owner in Kenosha Gateway Development Limited Partnership, and Delaware North.

Under the new structure, Hubbard would control 95.1% of the company and Delaware North the remaining 4.9%. However, the deal fell apart in early January and the original owners maintained control of the track.

“Hubbard provides the depth,” said Anthony Varda, an attorney representing Delaware North.

Gifford of Delaware North explained it this way: “We’re involved in Wisconsin with a couple of greyhound tracks one way or another. Our relationship with Dee Hubbard goes back a ways, it’s long standing. I know Mr. Jacobs doesn’t have a comment on it. But, it’s a well-known fact and we’re very proud of it.”

Allred has approval to build a track near Norco in Riverside County and may also use Delaware North. Hubbard was originally planning to be a partner in the track but decided against it.

“If I build the track near Riverside, which I hope to do, one of the prime people I would negotiate with would be Delaware North,” Allred said.

The stockholders of Hollywood Park plan to meet Feb. 18, when the issue of who runs the track will be decided. Both sides are trying to get their point across.

“A couple of weeks ago, 49.4% of the outstanding shareholders have already consented to her removal,” Hubbard said. “I am looking forward to the annual meeting when the stockholders will finally have a chance to decide this issue.”


Advertisement