Outsiders may probe owners' dispute Directors seek to add 2 to board HTC

December 05, 1992|By Jon Morgan | Jon Morgan,Staff Writer

Directors of Laurel and Pimlico racetracks have asked tw outsiders to join the board and investigate charges of improprieties lodged earlier this year against top track executives in a bitter boardroom revolt.

Henry Rosenberg, chairman of Crown Central Petroleum, and semi-retired businessman Sigmund M. Hyman were elected to the board at a meeting late last month and participated in the meeting. However, a source said Hyman is still considering the offer.

The board additions would be the latest twist in the dispute between track owners Joseph De Francis and John and Robert Manfuso. The Manfuso brothers filed suit in April against De Francis, alleging that he and other executives improperly used company credit cards, diverted track resources to an out-of-state venture and improperly shifted assets between Laurel and Pimlico to strengthen Laurel's books and keep it from defaulting on loans.

A judge threw out a number of the charges in June, saying that before shareholders can sue a corporation they must first approach the board, demanding, if necessary, for it to file suit in the corporation's name.

In such cases, a litigation committee is typically formed from among board members who are not employed by the company, so-called "outside" directors.

But of the track's outside directors, Loyola College president Joseph A. Sellinger is terminally ill and long-time De Francis associate Alec Courtelis is busy with other obligations, said James Gray, an attorney with Goodell, DeVries, Leech & Gray who is representing De Francis.

The Manfusos also have questioned the impartiality of the two.

"We are following up with what the judge instructed in her ruling," said Andrew Jay Graham, an attorney with Kramon & Graham who is representing the Manfusos.

The new board members could investigate charges raised by the Manfusos and recommend action to the board, which could include filing a lawsuit or dismissing the matter, freeing the Manfusos to raise it anew in court.

In addition to Sellinger, Courtelis, De Francis and the Manfusos, the board includes company treasurer Martin Jacobs and company secretary Karin M. Van Dyke.

De Francis was unavailable for comment yesterday.

"I was glad to see them join the board," John Manfuso said of Hyman and Rosenberg.

He described Rosenberg, who owned a starter in this year's Preakness, as a close friend of he and his brother. Hyman is a semi-retired consulting actuary whose past clients have included racetracks and the National Football League.

The two were nominated by De Francis.

De Francis, through his control of the stock held by his late father, Frank De Francis, votes the majority of stock in the tracks and appointed himself chief officer -- over the initial objections of the Manfusos -- after his father's death in 1989.

De Francis has since accused the Manfusos of engaging in a conspiracy to take control of the tracks.

Much of the Manfusos' initial suit has been dismissed. But the remaining issues and several surviving counterclaims raised by De Francis, alleging the Manfusos violated a stockholders agreement and illegally interfered in a Texas track venture by De Francis, are tentatively scheduled for trial in March 1994.

Meanwhile, a judge has ordered the Manfusos to return their company cars and for De Francis to return to the Manfusos their box seats and free valet parking at the tracks.

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