Former racing regulator got job at Running Aces track she oversaw

Mary Manney resigned as deputy director of the Minnesota Racing Commission in June, several months after a state investigation faulted her oversight of the Running Aces harness track in Anoka County.

She landed a job days later — at Running Aces.

Her employment at a track she once regulated is legal, part of the revolving-door pattern of public officials taking private sector jobs in areas they once oversaw. But it is also the latest trouble for the Racing Commission, the governor-appointed group responsible for ensuring Minnesota's multimillion-dollar horse racing industry is transparent and above reproach.

The investigation into Manney's oversight, completed by a state-contracted attorney in December, faulted Manney for being indifferent to the rights of horsemen, failing to follow commission directives and portraying herself in a way that could be considered threatening to a witness, according to the report recently made public after the Star Tribune pressed for its release. Manney received a letter of reprimand afterward, but it was later removed by the commission in a split vote when a commissioner decided to conduct his own investigation that he said differed with the state's findings. That commissioner admitted in an interview that he has long been a supporter of Running Aces.

Within a month after Manney's resignation, the commission's former chair, Jesse Overton, resigned after he was vindicated in a gender-bias claim brought by Manney. Last week, Manney's attorney served a civil complaint against Overton and commission member James Lane, alleging that they'd violated the state's Data Practices Act by providing the Star Tribune with an un-redacted copy of the report on Manney.

"I suffered significant harm to my reputation and to my family," Manney said in a statement. She said she was forced to resign from her state job, and blamed many of her problems on Overton.

Lane, vice chair of the commission and an attorney, said in an interview that while the practice of government regulators being hired by the businesses they regulate was hardly new, "all of that revolving-door policy raises obvious questions.''

Attorney Ralph Strangis, who in early July was appointed by Dayton as the new chair, downplayed any potential ethical issue posed by her employment with Running Aces. "No one has raised with me that there is some ethical violation here," he said.

The state probe offers an inside look at an operation where there was widespread suspicion of what was taking place among track judges, trainers, owners and track employees during a "very stressful year."

According to the report, applicants for licenses with questionable backgrounds — including race fixing in other states — sought permission to race at Running Aces before background checks were completed. In one case, a trainer was granted a license in 2010 before his fingerprints and criminal history report were sent to the track judges, according to the report. Then, when the criminal history report finally came in, "it was apparent that the [the trainer] falsified his application," the report stated.

In another instance, a trainer's father pleaded with a track judge for his son to be granted a license to run horses at the track even though that trainer had been banned from racing in California due to allegations of race-fixing, according to the report. Track judges finally decided to give the trainer "another chance," and Manney apparently did not object, according to the report.

In addition, the report said that track judges became concerned when horses with mediocre records were suddenly, and repeatedly, in the winning circle, causing concern about the use of performance-enhancing drugs.

Manney also violated the commission's orders and communicated with a track judge after being placed on leave last September. At the time, she was specifically ordered not to have any contact with someone who could be a potential witness in the investigation. "It was a type of communication that a witness could find intimidating or harassing," the investigator wrote.

Running Aces also finds itself under increased scrutiny surrounding its finances, battling rival horse track Canterbury Park over disbursement issues of nearly $1 million in purse funds and card room revenue, including nearly $400,000 in harness purse funds allegedly mishandled over the last five years.

On Tuesday, the Minnesota Court of Appeals upheld the commission's decision not to allow electronic gambling at Running Aces — a decision driven in part by the fact that the state's Public Safety Department had told the commission that installation of the machines would violate state gambling laws. The court's ruling is a huge setback for the track because its operation is heavily dependent on gambling revenue from its card room, especially during racing's winter offseason.

Manney said Running Aces was "interested in my skills, experience and knowledge of the racing industry," downplaying her move from regulator of Running Aces to government relations liaison for the harness track.

In a separate finding that was critical of her professionalism, the state investigator found that Manney made disparaging remarks regarding Overton, the then-commission chair.

Overton was exonerated of any wrongdoing against Manney. The report, however, noted that Overton's "different management style" had exacerbated personality conflicts. Overton was reappointed by Gov. Mark Dayton to the commission in July — but not as chair — and Overton resigned a few days afterward.

"As chairman, I became the villain," Overton said. "What's troubling today is that despite her violations, Ms. Manney has faced no consequences."

The harness track's general manager said he never reviewed the state's investigation before hiring Manney, who, while regulating Running Aces, typically worked out of an office at the harness track. "I have no interest in that report," said general manager Bob Farinella. "That involves matters that have nothing to do with our company or our operations."

Last December, after the investigation was completed, Manney first appealed to her supervisor — who happened to be Lane, the vice chair. Overton had excused himself due to Manney's bias complaint against him. In an early March letter, he told her that "your appeal offered no new or additional evidence, and that certain of your objections are speculative or lack factual basis."

Weeks later, Manney took her appeal before the entire racing commission and watched as Lane's decision was overturned and the reprimand was removed from her file. Lane said the vote, held behind closed doors, was 4-2 for Manney. Lane abstained.

"I did my own investigation," Erhart said. "The [state] investigation didn't talk to the right people.''

Erhart acknowledged that many may think he was biased in favor of Running Aces, a business Erhart said he has long supported.

"I happened to get Running Aces located [in Anoka County] when I was on the County Board," he said. "[But] I want both of those tracks to be very successful.''

Sheila Engelmeier, Manney's attorney, meanwhile criticized Lane's role in the investigation. She claimed that the lawyer hired by the state to conduct Manney's investigation "was a friend of Jim Lane, who's joined at the hip" with Overton.

Lane dismissed the criticism.

Paul McEnroe • 612-673-1745