Opinion ID: 766361
Heading Depth: 2
Heading Rank: 1

Heading: The Principal Allegations of the Complaint

Text: 5 During his 25 years of employment by OTB, Dangler held many high-level executive positions. From October 1994 until the termination of his employment, he held the position of senior vice president in charge of operations and was OTB's third-highest ranking executive. In that position, Dangler reported to OTB's president and to Robert Palumbo, its executive vice president. 6 In the fall of 1994, OTB used a computerized wagering system provided and maintained by Amtote International (Amtote); as the contract with Amtote was due to expire in October 1996, OTB began consideration of the issuance of a new contract, worth some $35,000,000, for the acquisition of a new computerized system. All OTB contracts for goods and services for amounts in excess of $10,000 were required to be awarded on the basis of competitive bidding. With respect to such contracts, the procedure was for OTB to prepare and advertise a request for proposals (RFP) and to analyze the RFP responses before awarding a contract. It was anticipated that the companies bidding on the contract to supply OTB's new computerized betting system beginning in October 1996 would include Amtote and Autotote Corporation (Autotote). 7 Sherman became OTB's president and general manager in November 1994. In January 1995, Dangler met with him and outlined the laws and regulations governing OTB contracts. Sherman expressed dissatisfaction with the fact that OTB was required to proceed in accordance with those laws and regulations. Several weeks later, an OTB official informed Dangler of overhearing a conversation between Sherman and the chairman of Autotote, which left the impression that Sherman would try to steer the contract for OTB's new computerized betting system to Autotote. 8 In early February, Dangler was informed by OTB's director of security and a financial division official of what they believed were irregularities surrounding the renewal of a lease for one of OTB's betting parlors in Queens, New York. They informed Dangler that the amount to be paid to the landlord included $16,000 that was characterized as a retroactive payment for security guard services provided by the landlord for the prior five years; but OTB had provided its own security services for those premises, and the landlord had never provided such services. Moreover, the landlord's earlier attempts to obtain such payments had been rejected by prior OTB management. 9 Dangler also was informed by Palumbo that a member of OTB's board of directors was insistent that one Joseph Horn be given an exclusive concession at a new OTB betting facility. However, Horn also owned a restaurant formerly called Goodfellows. OTB officials had previously inspected Goodfellows and had observed evidence indicating that the premises were being used improperly as an after hours club and had seen transactions that appeared to relate to illegal conduct. 10 At all times pertinent to these events, OTB had a written policy requiring all employees to disclose corrupt or illegal activities at OTB. That policy, as reflected in various corporate documents, (a) provide[d] that all employees of [OTB] are 'obligated to report any incidents of possible wrongs or corruption to the OTB Inspector General' (Complaint ¶15 (quoting OTB Employee Handbook at 3 (Mar. 1994 ed.)) (complaint's emphasis omitted)); (b) stated that '[a]ny employee who refuse[d] or fail[ed] to appear to answer questions as to the performance of his/her official duties before the Corporation, the [New York City] Department of Investigation, or any lawfully constituted court,' or who, having made an appearance, 'refuse[d] to answer' such questions or answered 'in a palpably evasive, transparently sham, false, or untruthful manner,' would be 'subject to charges of misconduct' (Complaint ¶16 (quoting OTB Uniform Rules of Discipline §§2.0, 2.1)); and (c) stated that 'no officer, employee, or Director of [OTB] shall take any adverse personnel action with respect to another officer or employee in retaliation for his or her making a report of information concerning corrupt or other criminal activity, conflict of interest, gross mismanagement or abuse of authority to the Inspector General.' (Complaint ¶17 (quoting December 21, 1988 OTB Board of Directors Resolution) (complaint's emphasis omitted).) 11 On February 7, 1995, Dangler contacted OTB Inspector General (OTBIG) Robert Unger and informed him of the apparently improper $16,000 payment to the Queens landlord and of the insistence on granting a concession to a person who apparently ran an illegal operation elsewhere. 12 Prior to February 7, Dangler had not been criticized for his work at OTB. Indeed, when OTB was attempting to downsize in December 1994 and January 1995 and was offering other executives early retirement/severance buy-out packages, Dangler was encouraged to remain with OTB. Palumbo informed him that everyone above Dangler in the OTB hierarchy was pleased with Dangler's work, and that although Sherman was dissatisfied with others at OTB, Sherman loved Dangler. (Complaint ¶21.) 13 On February 9 and 10, however, shortly after Dangler's first communication with Inspector General Unger, Sherman summoned Dangler to his office several times and challenged Dangler's loyalty to OTB. Sherman threatened to fire Dangler because Mr. Dangler was unhappy with what management was doing (Complaint ¶27); Sherman stated that he wanted only 'team players' at OTB (Complaint ¶28). Sometime in February, Sherman, Cornstein, and others began to strip Dangler of his staff and areas of responsibility, to disparage Dangler on the basis of criticisms that were pretextual, and to embarrass and humiliate him, in retaliation for his reports to Unger. 14 On February 16, Dangler reported Sherman's threats to OTBIG Unger. On February 24, he relayed to Unger the information he had just received that Sherman appeared to be trying to steer the anticipated $35 million contract for the new computerized betting system to Autotote. 15 In the meantime, on February 21, Dangler was contacted by DOI inspector Brian Foley, who sought information from Dangler. At the ensuing meeting on February 27, Foley and two associates questioned Dangler (a) about any conflicts of interest Mr. Dangler knew or heard about at OTB, (b) why OTB was not earning greater profits, and (c) any other wrongdoing or questionable circumstances Mr. Dangler knew or heard about at OTB. (Complaint ¶34.) Dangler gave his DOI interrogators the same information he had given OTBIG Unger as to the unwarranted payment to the Queens landlord and the granting of a concession to a restaurateur who was believed to permit unlawful activity on his premises. In addition, Dangler relayed rumors he had heard that there were interlocking board relationships between Autotote and a company of which Cornstein was chairman. As to OTB's lack of greater profitability, Dangler told Foley that Sherman had, inter alia, caused the hiring of unnecessary employees, caused those new employees to be paid higher salaries than were normal for their jobs, and awarded several persons raises that appeared to be excessive. 16 On February 28, Dangler reported to Unger and Foley information he had received from other OTB officials that a $120,000 contract was being awarded, at the behest of Sherman, to a company called C&C Visuals without competitive bidding. C&C Visuals was run by a friend of Sherman. Eventually a competitive bidding process was used for that contract, but only after OTB's RFP had been manipulated to afford C&C Visuals an improper advantage. 17 In the spring of 1995, various OTB officials, including OTBIG Unger, were summoned by DOI to give information in its investigation. Unger told Dangler that he knew Dangler had been talking with DOI, and Unger stated that 'no administration feels comfortable knowing that one of their executives is talking to the Department of Investigation, that's something they react to.' (Complaint ¶59.) 18 Another OTB official informed Dangler that Sherman and another high-ranking official were attempting to force Dangler to resign. In aid of that goal, Dangler's input was no longer sought, and he was excluded from meetings of people who reported to him concerning areas for which he was responsible. Dangler was also excluded from social gatherings at which his absence was sure to cause comment; and his subordinates were threatened with adverse employment actions if they were seen socializing with him or discussing OTB affairs with him. 19 In May, DOI informed Sherman and other OTB officials that its investigation revealed no criminal violations and that the DOI investigation was closed. Dangler remained isolated. He complained to Palumbo about the retaliation against him and asked that his skills be utilized. Instead, on July 31, Sherman summoned Dangler and threatened to fire him unless he agreed (1) to retire on March 15, 1996 (the date on which Dangler would be eligible for maximum pension benefits), (2) to surrender all his responsibilities at OTB until March 15, 1996, and (3) to give a release to OTB, its officers, directors, and employees from all claims arising out of Dangler's employment. Dangler refused. On August 11, he was fired. Although Sherman stated at that time that Dangler could continue using his office and company car until late September, those privileges were revoked on August 24, and Dangler was then forced to pack his belongings and leave the premises.