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December 2, 2014


Submitted July 30, 2014 Decided

Before Judges Waugh and Accurso.

On appeal from the New Jersey Racing Commission, Docket No. NJRC-5-H-10-TR.

Fox & Melofchik, L.L.C., attorneys for appellant (Dennis J. Melofchik, on the briefs).

John J. Hoffman, Acting Attorney General, attorney for respondent (Lewis A. Scheindlin, Assistant Attorney General, of counsel; Pamela N. Ullman, Deputy Attorney General, on the brief).


Petitioner Frederic Esposito appeals from a final decision of respondent New Jersey Racing Commission denying him a trainer's license. We affirm.

The facts and procedural history are not in dispute. Petitioner was last licensed in New Jersey as a driver and trainer in 1996. In 1998, when petitioner was forty-four years old, he was charged in New York with promoting gambling and possession of gambling records. The detective executing the search warrant averred that she discovered petitioner and his co-defendants in the presence of telephones, calculators, gambling records and Nevada sports schedules and seized over one hundred and twenty betting slips reflecting over $900,000 in wagers for one day's operations. Although petitioner claims he never placed wagers on horse races, he admits he became acquainted with his co-defendants at a racetrack. Petitioner pled guilty to promoting gambling in the second degree, a class A misdemeanor carrying a maximum penalty of one year's imprisonment. N.Y. Penal Law 225.05; 70.15 (McKinney 2003). He received no jail time and was not placed on probation. In 2008, petitioner obtained a certificate of relief for that conviction from a court in New York.1

Following his receipt of the New York Certificate of Relief, petitioner became relicensed as a trainer in New York and Pennsylvania. In November 2010, petitioner's wife purchased a Standardbred race horse and shortly thereafter obtained a 2011 New Jersey owner's license. Petitioner's wife maintained her horse at a licensed off-track stabling facility in Colts Neck. Petitioner trained and raced his wife's horse in Pennsylvania and New York while the horse was stabled in New Jersey.

In 2011, petitioner applied for a New Jersey trainer's license. After being informed that he would not be recommended for licensure by the State Steward and Commission staff, petitioner requested a hearing, and the matter was transferred to the OAL. Following a hearing, the Administrative Law Judge (ALJ) found that petitioner's "involvement in bookmaking activities" was an isolated incident "at a relatively bad time in his life, when he . . . was going through a divorce." He noted that petitioner testified that his involvement in the bookmaking operation "consisted of 'betting with friends at their request.'" The ALJ found that petitioner is remarried, owns his own used-car business, attends church services regularly and has become a "respected member of the community, as evidenced by the great number of support letters that he submitted." The ALJ concluded that petitioner had submitted sufficient evidence of good moral character and recommended that he be licensed as a trainer.

The Racing Commission rejected the ALJ's recommendation. While accepting the ALJ's finding that petitioner was not sentenced to either a custodial or probationary term following his New York conviction, the Commission found nowhere in the record that petitioner testified that his bookmaking activities "consisted of 'betting with friends at their request'" as the ALJ found. Instead, the Commission found the statement of felony charges included as an exhibit at the hearing, which noted the seizure of over one hundred and twenty betting slips reflecting over $900,000 in wagers for one day's operations, suggested a much larger bookmaking operation. The Commission also found inexplicable the ALJ's failure to address petitioner's admission that he had been training his wife's horse "stabled at a licensed farm in New Jersey without a New Jersey racing license in a clear violation of [the] Commission's rules."

Finding that petitioner's New York conviction related adversely to the trainer's license petitioner sought, the Commission applied the factors of the Rehabilitated Convicted Offenders Act, N.J.S.A. 2A:168A-1 to -16.2 The Commission found that petitioner's conviction for promoting gambling "even if it [did] not involve gambling on horse racing, strikes at the heart of the integrity of horse racing because it is an illegal, dishonest and clandestine activity." Further, petitioner's bookmaking operation "was not inconsequential" given the number of wagers being placed and the involvement of several other individuals. While accepting petitioner's testimony that he was not licensed or active as a trainer at the time and that he was experiencing personal difficulties, including going through a divorce, the Commission found it concerning that petitioner became acquainted with his co-defendants in the public areas of a race track. The Commission found that "[a]ny conduct that leads to the violation of the law which takes place at a racetrack, even in the public areas, is contrary to the integrity of the racing industry and the public interest."

The Commission found that petitioner was forty-four years old when he committed the crime of which he was convicted and fifty-six at the time of the OAL hearing. It accepted that the crime was an isolated incident but noted that there was no indication in the record as to how long petitioner had been involved in the bookmaking operation. The Commission noted the extensive evidence petitioner submitted as to his rehabilitation and commended him for the positive changes he had made in his life. It also considered that petitioner had been recently licensed as a trainer in New York and Pennsylvania.

The Commission, however, found that one could readily draw the conclusion that petitioner had been "training his wife's race horse in New Jersey for more than a year from March 2011, when he resumed his participation in racing, through March 29, 2012, the date he admitted under oath that he had been training her race horse." The Commission found that

[t]raining a race horse stabled at a licensed off-track stabling facility in New Jersey without a New Jersey trainer's license is a clear, flagrant violation of the Commission's rules. N.J.A.C. 13:71-7.26 mandates that any race horse stabled at a farm or training facility licensed by the Commission must be under the care and custody of a licensed trainer. Only a trainer licensed in the State of New Jersey may train a race horse in New Jersey.

Finding that petitioner's admitted violation of the Commission's rules "[u]ndermines [petitioner's] claims that he has been rehabilitated to the extent that he is suitable for licensure in this highly-regulated industry," the Commission concluded that the nature and seriousness of petitioner's crime, the circumstances under which it occurred and his recent admitted violation of the Commission's rules clearly establish that petitioner has failed to demonstrate that he possesses the requisite integrity and suitability for licensure and that the grant of a license to him would not be contrary to the public interest. This appeal followed.

Our role in reviewing the decision of an administrative agency is limited. In re Taylor, 158 N.J. 644, 656 (1999); Brady v. Bd. of Review, 152 N.J. 197, 210 (1997). Agency decisions carry with them a presumption of reasonableness. City of Newark v. Natural Res. Council, 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980). We will not upset the determination of an administrative agency absent a showing that it was arbitrary, capricious, or unreasonable; that it lacked fair support in the evidence; or that it violated legislative policies. In re Musick, 143 N.J. 206, 216 (1996).

Petitioner contends that the Racing Commission's denial of his trainer's license was arbitrary and that the Commission abused the discretion accorded it under the Rehabilitated Convicted Offender's Act. We disagree.

The Legislature has vested the Racing Commission with broad powers "to regulate the racing industry and to protect the interest of the public, which has a vital stake in maintaining the integrity of the horse racing industry." King v. N.J. Racing Comm'n, 103 N.J. 412, 423 (1986). There can be little doubt that defendant's conviction for promoting gambling related adversely to the training license petitioner sought, especially given that it involved a sizable bookmaking operation wagering on sporting events.

The Commission addressed each of the factors required by N.J.S.A. 2A:168A-2, the nature and seriousness of the crime and its attendant circumstances, when it occurred and the age of the person when he committed it, whether the crime was an isolated or repeated incident, any social conditions contributing to the crime and evidence of rehabilitation. Although the crime was an isolated one, it was undoubtedly serious; as unlawful gambling risks the integrity of racing, the Commission was rightly concerned with the nature of the offense. See Delguidice v. N.J. Racing Comm'n, 100 N.J. 79, 91 (1985). In addition, defendant was far from a youthful offender. Although he may have been experiencing personal difficulties, he had been a licensed trainer and was certainly mature enough to realize the consequences of his actions for his future in the racing industry. Finally, notwithstanding other evidence of petitioner's rehabilitation, he admitted that he had illegally trained his wife's horse while his application for licensure was pending. We reject as utterly without merit petitioner's contention that he was not in violation of N.J.A.C. 13:71-7.26(d), which provides that "[a]ny horse in training . . . stabled on [a licensed off-track stabling facility] must be under the care and custody of a licensed trainer" because the "[t]here is no language requiring that the horse must be under the care of a New Jersey licensed trainer."

Having reviewed the record and the Commission's thorough treatment of the evidence in its careful findings, we conclude that its decision was not arbitrary, capricious, or unreasonable and is supported by substantial credible evidence in the record as a whole.


1 Although petitioner asserted at the hearing before the Office of Administrative Law (OAL) that the certificate is the equivalent of an expungement in New Jersey, that is not accurate. See In re Winston, ___ N.J. Super. ___, ___ (App. Div. 2014) (slip op. at 9-12).

2 N.J.S.A. 2A:168A-2 provides

Notwithstanding the contrary provisions of any law or rule or regulation . . . , no State . . . department, board, officer or agency, hereinafter referred to as "licensing authority" authorized to pass upon the qualifications of any applicant for a license or certificate of authority or qualification to engage in the practice of a profession or business or for admission to an examination to qualify for such a license or certificate may disqualify or discriminate against an applicant for a license or certificate or an application for admission to a qualifying examination on the grounds that the applicant has been convicted of a crime, . . . except that a licensing authority may disqualify or discriminate against an applicant for a license or certificate if [N.J.S.A.] 2C:51-2 . . . is applicable, or if a conviction for a crime relates adversely to the occupation, trade, vocation, profession or business for which the license or certificate is sought. In determining that a conviction for a crime relates adversely to the occupation, trade, vocation, profession or business, the licensing authority shall explain in writing how the following factors, or any other factors, relate to the license or certificate sought

a. The nature and duties of the occupation, trade, vocation, profession or business, a license or certificate for which the person is applying;

b. Nature and seriousness of the crime;

c. Circumstances under which the crime occurred;

d. Date of the crime;

e. Age of the person when the crime was committed;

f. Whether the crime was an isolated or repeated incident;

g. Social conditions which may have contributed to the crime;

h. Any evidence of rehabilitation, including good conduct in prison or in the community, counseling or psychiatric treatment received, acquisition of additional academic or vocational schooling, successful participation in correctional work-release programs, or the recommendation of persons who have or have had the applicant under their supervision.