Non-Raceday Inquiry MJ Cleaver

DECISION OF JUDICIAL COMMITTEE ON PENALTY

In a written decision dated 8 August 2005, the Committee found Mr Cleaver guilty on five charges of committing a dishonest or fraudulent act connected with harness racing pursuant to Rule 1001 (1) (p) of the New Zealand Rules of Harness Racing.

Rule 1001 (2) provides as follows:

The Committee has now received submissions in writing on behalf of the Informant and from the Defendant in relation to penalty. Those submissions are set out in full hereunder.

1. The Committee has sought written submissions as to penalty and disqualification, following its decision of 8 August 2005 in which it found proved the offences contained in Information 64902.

2. The offences are serious racing offences for which the penalties can be a fine not exceeding $25,000.00 for each offence and/or suspension or disqualification for a specified period or for life.

3. The conduct was to transfer five horses into the Defendant's name, after the co-offender Korostchuk was arrested on criminal charges. Under the Rules, the horses in Korostchuk's ownership would have been ineligible to race upon his conviction. The Committee has found that the purpose of the offending was, at least in part, to defeat the Rules of Harness Racing.

4. It is submitted any penalty should provide a deterrent to this type of offending, which is fraudulent, brings racing into disrepute and adversely affects the administration of the Rules.

5. As the co-offender in this matter is Mr Korostchuk, it is desirable to achieve some consistency in penalty.

6. Korostchuk's penalty of 10 years' disqualification was reduced on appeal to 7 years' disqualification.

7. Korostchuk pleaded guilty guilty, and some allowance was made for that penalty, except the JCA found that that factor was tempered by the fact that it was Korostchuk's self-interest that caused him to complain. Korostchuk also had a previous breach of the Rules regarding a bicarbonate charge.

8. In the Jacee decision, similar offending resulted in the main offender being disqualified for life and various penalties of disqualification and fines imposed.

9. In this case, the charges were defended. The Committee may consider that the differences between Korostchuk and Mr Cleaver may lead the Committee to the view that Korostchuk was the main offender. However, there are other aggravating factors pertaining to Mr Cleaver individually, as follows:

(a) The defendant nominated, started and raced the horses involved;

(b) The defendant received substantial winnings ($17,993);

(c) There cannot be any credit for a guilty plea.

10. The Informant also seeks:

(a) Disqualification of the five horses "Delivery and Pickup", "The Bragger", "Uknowhatimean", "Timeticsbye" and "Monica Lewinsky".

(b) The Informant has provided the Committee a schedule of stakes won for each horse.

(c) The Informant seeks legal costs, and the cost of Mr Kitto's travel to Queensland to interview the Defendant ($800).

"In viewing the submissions made by Counsel for HRNZ, I Michael Cleaver, wish to make my submission, also I would like to stipulate my original statements about this whole matter that I only took ownership of the said horses in lieu of personal debts between Mr Korostchuk and myself, which had accumulated between 10-12 thousand dollars.

As I knew the horses through having done everything with them since they were born. I saw an opportunity and took it, knowing that Mr Korostchuk was about to go to jail for Drug Offences and Benefit Fraud. When the deal was struck there was definitely "NO" shoddy practice on my behalf and was not under the impression that as soon as Mr Korostchuk was released from jail that the horses or monies they have earned was to be returned.

I have been in the Harness industry for all of my working life having worked for many top horsemen ? S J Hunter (Queensland, Australia), J W Adams (Southland) and C J de Filippi (Canterbury). I have been held in high esteem by the abovenamed.

I myself had only been a trainer for a short time and meet (sic) with reasonable success and was beginning to build a good client base prior to the events which bring us to where we are now. I have returned to Invercargill to await your decision on the various charges that have been laid. Understanding that the offences for which I am charged are extremely serious and penalties are harsh and unforgiving I must ask for leniency so that I can gain some form of employment in Harness Racing i.e. stable hand, ground staff so I can get money to pay the form of fines and/or penalties I may receive.

I believe that Mr Korostchuk has only came (sic) up with this because the horses turned out better than he expected, after selling to me for less than they earned in my ownership."

DECISION ON PENALTY:

"The starting point for determining an appropriate penalty in this case is the penalty imposed on the co-offender, Mr J E Korostchuk. Mr Korostchuk was disqualified for a period of 7 years by an Appeals Tribunal, in a decision dated 19 March 2004, on five charges of together with Mr Cleaver committing a dishonest or fraudulent act connected with harness racing. The Appeals Tribunal took into account that Mr Korostchuk had previously breached the thoroughbred racing Rules in respect of a bicarbonate charge.

On page 7 of its decision, the Appeals Tribunal said, in considering an appropriate penalty:

The above statement will be referred to later in this decision in the context of disqualification of the horses.

On page 8, the Tribunal said:

The above comments are relevant to this Committee in considering penalty in Mr Cleaver's case.

Therefore, the Committee proceeded to consider an appropriate penalty for Mr Cleaver from the starting point of 7 years' disqualification as imposed on Mr Korostchuk. As previously stated, that penalty took into account a previous bicarbonate charge under the Rules of Racing. The Committee notes that the Informant in this case did not refer us to any previous offending by Mr Cleaver and we, therefore, infer that his record in relation to previous offending is clear. In addition, and most importantly, the Committee is satisfied that Mr Korostchuk was the principal offender. We are satisfied that the scheme to circumvent the ownership Rules was conceived by him and that Mr Cleaver was taken in by it ? perhaps, partly by way of a misguided favour to a friend and partly as a means of securing certain debts which he believed were owing to him by Mr Korostchuk. Whatever the case, it is clear to us that Mr Korostchuk was the architect of the scheme and the prime mover. Having regard to the above factors, it is appropriate to consider a disqualification for a period of less than that imposed on Mr Korostchuk. However, it must not be lost sight of the fact that the scheme could not have been implemented without the cooperation and participation of Mr Cleaver and he did have a choice to refuse to participate in it. His participation in the scheme still amounted to serious breaches of the Rule of Harness Racing, as Mr Cleaver himself acknowledged in his submissions on penalty.

The Committee is also required to take into account the ultimate rehabilitation of Mr Cleaver and it is apparent, from his submissions, that he is keen to continue his participation in the harness racing industry in the future. We note the comment of the Appeals Tribunal in the Korostchuk case (pages 8 & 9):

Having regard to all of the above matters, the Committee has decided that a period of disqualification of three (3) years is an appropriate penalty for the particular breaches. The five breaches are all related and, accordingly, the Committee has approached the matter of penalty for the breaches on a totality basis ? that is to say, the period of disqualification is in respect of all five breaches looked at together rather than by way of separate periods of disqualification for each individual breach of the Rules.

The period of disqualification shall commence on 23 September 2005 to enable Mr Cleaver, if necessary, to transfer the ownership of any horse or horses presently owned by him.

Rule 1001 (3) provides as follows:

It is clear from the wording of that Rule that the Committee has a discretion whether or not to disqualify all or any of the five horses involved in the breaches of the Rules which have been found to be proved against Mr Cleaver.

The Committee notes that the relevant details for each horse are as follows:

DELIVERY AND PICKUP ? 7 starts, 1 win, 1 second, total stakes earned $4,735

THE BRAGGER ? 25 starts, 1 win, 4 seconds, 1 third, total stakes earned $11,513

UKNOWHATIMEAN ? 2 starts, total stakes earned $85

MONICA LEWINSKY ? 2 starts, total stakes earned $50

TIMESTICSBYE ? 10 starts, 1 second, total stakes earned $1,610.

This Committee also has a discretion, under Rule 1115 (4), to direct that stakes paid in respect of any disqualified horse shall be repaid to the Club concerned.

It is significant that all of the races in which stakes were earned by the above horses were at least two and a half years ago. This is a quite compelling factor against disqualification in this instance.

Another consideration is that, whilst the various horses were connected with serious racing offences, the stakes earned as set out above were earned by those horses on their respective merits and, at the time the races were run, those horses had no unfair advantage over their opposition and owners of other runners were not unfairly disadvantaged by the ownership irregularities affecting any of the horses involved. The Committee refers, in this regard, to the statement of the Appeals Tribunal in the Korostchuk case on page 3 of this decision.

Finally, there are the issues between Messrs Cleaver and Korostchuk as to their liability, as between themselves, to refund any stake moneys directed to be repaid. It would be unfair, in the circumstances, to direct that the stake moneys be repaid by either one of them but not the other and the exercise of apportioning liability would be a complex one indeed. Any order that Mr Cleaver refund any stake moneys would clearly impose a heavy financial burden on him and, in practical terms, would be likely to delay his return to participation in the harness racing industry in the future.

Having regard to all of the above matters, the Committee exercises its discretion under Rule 1101 (3) to not disqualify from any race any of the horses connected with the breaches. As a consequence, the Committee directs that none of the stakes paid in respect of any of those horses are required to be repaid.

Mr Cleaver is ordered to pay costs to Harness Racing New Zealand in the sum of $500.00 together with the sum of $800.00 for the costs of Mr Kitto's travel to Queensland to interview Mr Cleaver, a total of $1,300.00. In addition, Mr Cleaver is ordered to pay costs in the sum of $500.00 to the Judicial Control Authority.

CHAIRMAN