Oklahoma Horsemen's Benevolent and Protective Association v. Oklahoma Horse Racing Commission

IN THE DISTRICT COURT FOR OKLAHOMA COUNTY STATE OF OKLAHOMA OKLAHOMA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION, Plaintiff, v. OKLAHOMA HORSE RACING COMMISSION; AMANDA ENGLISH, in her official capacity as Interim Executive Director of the Oklahoma Horse Racing Commission; BRIAN BURGET, in his official capacity as Chairman; KURT MURRAY, in his official capacity as Vice-Chairman; BRYANT CRAIG, in his official capacity as Secretary; CLINT O. BROOKOVER, in his official capacity as Member; G. R. CARTER, in his official capacity as Member; KATHLEEN MCNALLY, in her official capacity as Member; COURTNEY GREGG, in her official capacity as Member; JAMES FUSER, in his official capacity as Member; RYAN TERRY, in his official capacity as Member, Defendants. PETITION FOR DECLARATORY AND INJUNCTIVE RELIEF, AND COURT-SUPERVISED ACCOUNTING, AND RESTITUTION Plaintiff Oklahoma Horsemen’s Benevolent and Protective Association d/b/a Thoroughbred Racing Association of Oklahoma ("TRAO"), on its own behalf and on behalf of its members, files this Petition for declaratory and injunctive relief, mandamus, and other equitable relief. Plaintiff alleges as follows: I. NATURE OF THE CASE 1. This action arises from the Oklahoma Horse Racing Commission’s ("Commission" or "OHRC") maladministration of the Oklahoma Breeding Development Fund Special Account (the “OKBred Fund”) and its unlawful refusal to produce public records needed for a full accounting of its actions. The Commission has produced a reconciliation report that admits severe financial discrepancies and system failures but withhold s the underlying data and workpapers needed to verify the findings and determine the full scope of the mismanagement. 2. Plaintiff seeks immediate judicial intervention to: (a) compel prompt and complete production of all non-exempt public records related to the OKBred Fund reconciliation; (b) secure an injunction to prevent alteration or destruction of evidence or diversion of OKBred funds; and (c) establish a court-supervised accounting to trace the flow of public funds and determine the amounts due to Oklahoma’s Thoroughbred horsemen. 3. Plaintiff is not, at this time, requesting a money judgment because the amount of any shortfall attributable to the Thoroughbred program is unknown and cannot be reliably calculated without the underlying records Defendants are withholding. Plaintiff intends to seek restoration of any misallocated funds only after a court-supervised accounting establishes a verified basis for such relief. 4. Contemporaneously with this filing, Plaintiff is serving a notice of tort claim on the appropriate state entities to preserve its rights under the Oklahoma Governmental Tort Claims Act and will seek leave to amend this Petition to add claims for damages upon satisfaction of the statutory prerequisites. 5. By this Petition and contemporaneous correspondence, Plaintiff provides formal written notice to the Oklahoma Horse Racing Commission and the Attorney General of its intent to bring a civil action for declaratory and injunctive relief under the Oklahoma Open Records Act and to seek relief for violations, penalties, and civil liability. Plaintiff states that such civil action will be filed after expiration of the applicable ten (10) business-day notice period and expressly reserves all rights and remedies. Plaintiff is not presently asserting that civil-liability claim here and will evaluate amendment after the notice period has elapsed and the record is further developed. II. PARTIES 6. Plaintiff TRAO is an Oklahoma non-profit association incorporated in 1993. TRAO is an elected and representative advocate for horsemen who race and train Thoroughbreds in Oklahoma and represents the interests of its members in matters affecting purses, awards, and fund administration impacting Thoroughbred racing. 3A O.S. § 264(D). 7. Defendant Oklahoma Horse Racing Commission ("OHRC" or "Commission") is a state agency of the State of Oklahoma with its principal offices in Oklahoma County, Oklahoma. 8. Defendant Amanda English is the Interim Executive Director of OHRC and is sued only in her official capacity. 9. Defendants Brian Burget, Kurt Murray, Dr. Bryant Craig, Clint O. Brookover, G. R. Carter, Kathleen McNally, Courtney Gregg, James Fuser, and Ryan Terry are Commissioners of OHRC and are sued only in their official capacities. III. JURISDICTION AND VENUE 10. This Court has subject-matter jurisdiction under the Uniform Declaratory Judgments Act, 12 O.S. § 1651 et seq., and the Court’s inherent equitable power to grant injunctive relief and order an accounting. 11. Venue is proper in Oklahoma County because Defendants are state officials and the OHRC is headquartered in Oklahoma County, where their official duties are performed and the requested records are maintained. IV. FACTUAL ALLEGATIONS A. The Commission’s Partial Production Admits Gross Financial Mismanagement 12. On December 31, 2025, and again on January 15, 2026, TRAO submitted an ORA request to OHRC seeking the final audit report on the OKBred Fund, including all exhibits, schedules, transmittal communications, and management letters. 13. On January 27, 2026, OHRC produced a limited set of documents, including a transmittal letter from Defendant English, a “Report on the Reconciliation of the Oklahoma Bred (OKBred) Account” prepared by Shanna Dutton, CPA (the “Reconciliation Report”), and related memoranda. 14. In her transmittal letter, Defendant English acknowledged the Commission’s obligation to safeguard OKBred Fund monies “as a fiduciary.” 15. The Reconciliation Report documents severe, longstanding failures in financial controls and data integrity from January 1, 2022, through June 30, 2025. Its findings include: (a) An aggregate variance of $893,112, representing the excess of checks clearing the bank over amounts recorded in the Commission’s internal ‘Binkley’ system; (b) At least 65 checks totaling $118,532 that were marked as “canceled” or “voided” in the Binkley system after they had cleared the bank, making the disbursements disappear from internal records; (c) Pervasive “payee integrity failures,” including checks issued to incorrect payees or to payees who were not listed on any OHRC report; and (d) Numerous out-of-sequence and missing checks, undermining the reliability of the entire accounting system. 16. The Reconciliation Report states that the Commission’s internal data was so unreliable that the preparer had to make “assumptions and allocations” to estimate balances. These admissions confirm that a complete accounting is impossible without access to the underlying workpapers, bank records, and raw data used to generate the report. B. The Commission Unlawfully Withholds the Records Necessary to Verify Its Findings 17. Upon reviewing the partial production, TRAO sent a follow-up request on January 30, 2026, demanding the underlying workpapers and supporting materials referenced in the Reconciliation Report, which are necessary to verify its findings and replicate its calculations. 18. OHRC’s General Counsel initially cited a future meeting with law enforcement as a basis to delay production. After Plaintiff objected, Counsel acknowledged on February 2, 2026, that a law-enforcement referral does not justify withholding pre-existing public records. 19. Despite that admission, Counsel proposed an open-ended delay, estimating 60 to 90 days for “substantial completion” of production, which fails to provide the “prompt, reasonable access” mandated by the ORA. 20. Plaintiff previously requested that the Commission exercise its authority to obtain all missing audit materials from the auditor; however, to date, the Commission has failed to act on this request. 21. As of the filing of this Petition, despite repeated requests, Defendants have not produced the complete audit-and-reconciliation file, including the workpapers, schedules, data exports, exception lists, and communications essential to substantiate the findings in the Reconciliation Report. Defendants have also not provided a privilege log or specifically identified any statutory exemption that would justify withholding those underlying materials. C. The Need for Immediate Equitable Relief 22. The documents produced by OHRC describe the Binkley system as a fragile, outdated application with significant control weaknesses, including the ability to alter data fields without detection. 23. Given the documented system fragility, the manifest record-integrity issues, and Defendants’ ongoing delay, there is a substantial and immediate risk that relevant evidence may be altered, overwritten, or destroyed. Court-ordered preservation, production, and accounting oversight are necessary to protect the public interest and the integrity of this proceeding. V. CAUSES OF ACTION COUNT I — Declaratory Judgment Plaintiff incorporates by reference paragraphs 1 through 23. 24. An actual, justiciable controversy exists between the parties regarding Defendants’ legal duties under the ORA and the Oklahoma Horse Racing Act, 3A O.S. § 200 et seq. 25. Plaintiff seeks a declaratory judgment from this Court under 12 O.S. § 1651 declaring that Defendants have acted ultra vires, or beyond their statutory authority, by failing to properly administer the OKBred Fund and maintain records sufficient to ensure its integrity. COUNT II — Equitable Accounting and Injunctive Relief 26. Plaintiff incorporates by reference paragraphs 1 through 25. 27. The Reconciliation Report’s findings of substantial financial variances, improper or unexplained transactions, and unreliable internal data show that Defendants have failed to maintain adequate controls and accurate records for the OKBred Fund. An accounting performed solely by Defendants would be inadequate and untrustworthy to establish a complete, verifiable transaction history and the correct breed allocations. 28. The complexity of the financial issues and the documented mismanagement of public funds warrant the imposition of a court-supervised equitable accounting to trace all OKBred Fund transactions for the relevant period and determine the correct allocations owed to the Thoroughbred program. 29. Given the documented fragility of the Binkley system and the risk of data alteration or destruction, and the documented mismanagement of public funds by the Commission, Plaintiff is entitled to a temporary and permanent injunction requiring Defendants to preserve all relevant financial and electronic records pending the outcome of this litigation. 30. Plaintiff therefore seeks a temporary injunction, set for an expedited evidentiary hearing, ordering Defendants immediately to implement and maintain a litigation hold and to preserve, without alteration, deletion, overwriting, or disposition, all records and data relating to the audit and reconciliation of the OKBred Fund, including without limitation: all bank records relied upon or obtained; cleared-check lists and check images reviewed or referenced; check registers; deposit documentation; internal system exports and reports (including Binkley exports) used, referenced, or generated in connection with the audit/reconciliation work; reconciliation analyses and worksheets; sampling and transaction-testing materials; exception lists; workpapers; access-control records; and change logs/history tables, as well as all related communications (including emails and attachments), regardless of whether such materials are stored on agency systems, vendor systems, or personal devices used for Commission business. 31. Plaintiff further seeks a temporary injunction, set for an expedited evidentiary hearing, prohibiting Defendants, during the pendency of this action and until completion of the court-supervised accounting (and further order of the Court), from transferring, commingling, encumbering, or otherwise diverting any OKBred Fund monies to any other account or for any purpose not authorized, and requiring Defendants to maintain the OKBred Fund as a segregated, traceable corpus so the Court may determine and enforce lawful distributions. 32. Plaintiff requests that the Court order Defendants to provide prompt written confirmation of the preservation steps implemented and to identify the custodians and repositories subject to the hold. 33. Defendants may contend that certain responsive materials are protected by attorney-client privilege or attorney work-product protection. To the extent such privileges are asserted, Plaintiff requests that Defendants be ordered to identify the withheld material with sufficient specificity to permit evaluation of the claim while preserving the evidentiary record necessary for the court-supervised accounting. 34. Separately, to the extent Defendants contend that responsive audit-related materials are not within their custody or control, Plaintiff alleges that Defendants’ obligations to preserve and account extend to materials within their possession, custody, or control, including materials maintained for Defendants in connection with Commission business, and seeks an order requiring Defendants to identify what is and is not within their possession, custody, or control. COUNT III — Restitution-Unjust Enrichment 35. Plaintiff incorporates by reference paragraphs 1 through 34. 36. The Oklahoma Breeding Development Fund Special Account (the “OKBred Fund”) is a statutorily created fund administered by the Oklahoma Horse Racing Commission for restricted program purposes, including purse supplements and awards. 3A O.S. § 208.3. As custodians of this fund, Defendants owe a statutory and fiduciary duty to manage, safeguard, and properly disburse these funds. 37. As documented in the Reconciliation Report, Defendants have breached this duty through gross mismanagement, including but not limited to failing to reconcile accounts, allowing an $893,112 variance to exist, permitting cleared checks to be voided in the accounting system, and failing to ensure payee integrity. These actions and omissions are unauthorized, unlawful, and *ultra vires*. 38. This mismanagement has caused the loss, commingling, or diversion of OKBred funds, including funds that should have been allocated and paid to the Thoroughbred program and its participants. 39. Plaintiff seeks (and in other counts requests) a court-supervised accounting because Plaintiff cannot quantify the amount of any Thoroughbred-related shortfall or diversion, and because the Commission’s published reconciliation materials reflect that internal system data was unreliable. 40. If the accounting ordered by this Court determines that monies deposited into, earmarked for, or otherwise attributable to Oklahoma-bred program distributions—including amounts properly allocable to Thoroughbred purse supplements and awards—were diverted, misallocated, or otherwise expended or distributed in a manner inconsistent with the OKBred Fund’s statutory purposes and restrictions, then Defendants will have received, retained, or controlled funds that, in equity and good conscience, they should not be permitted to retain without restoration. 41. Oklahoma recognizes unjust enrichment as a common-law restitution theory requiring restoration where equity and good conscience require the return of money retained without justification. 42. The restitution Plaintiff seeks is expressly contingent and post-accounting. Plaintiff seeks an order requiring restoration of any amounts the accounting determines were improperly diverted or misallocated away from Thoroughbred-related Oklahoma-bred program purposes. 43. To the extent the Court determines that restitution is appropriately framed as equitable restitution from specifically identifiable funds or traceable proceeds (as opposed to a general money judgment), Plaintiff requests such relief in the alternative, including imposition of an equitable lien and/or constructive trust on identifiable funds or accounts into which diverted monies were deposited or traced. (a) Plaintiff alleges that diverted OKBred monies are capable of identification and tracing through bank-cleared check data, check images, deposit records, and the Commission’s accounting records and system exports to be produced and analyzed in the court-supervised accounting. (b) Plaintiff seeks equitable restitution only to the extent traceable to identifiable funds or their proceeds, consistent with traditional equitable principles. RELIEF REQUESTED WHEREFORE, Plaintiff respectfully requests that the Court enter judgment in its favor and grant the following relief: a. An injunction ordering the immediate preservation of all relevant financial records, electronic data (including data from the Binkley system), and communications; b. An order establishing a court-supervised accounting of the OKBred Fund, with periodic reports to Plaintiff and the Court; c. An order for restitution and restoration of all funds determined by the accounting to be owed to participants in the Thoroughbred program; and d. Such other and further relief as the Court deems just and proper. Dated: February 20, 2026 Respectfully submitted, Christopher L. Kannady, OBA #20513 Terry M. McKeever, OBA #21751 P.O. Box 890420 Oklahoma City, OK 73189 Telephone: (405) 632-6668 Facsimile: (405) 632-3036 Email: [email protected]