WROTB files counterclaim against former gaming executive

Western Regional Off-Track Betting Corp has filed a counterclaim against a former executive turned whistleblower who maintains he was fired after he agreed to cooperate with investigations into alleged wrongdoing at the public benefit corporation.

WROTB’s counterclaim, filed Nov. 27, alleges that former Chief Operating Officer Michael Nolan breached his “fiduciary duty and duties of loyalty and confidentiality” to the organization while engaging in a “public smear campaign” designed to draw negative attention to WROTB and its outgoing CEO and President Henry Wojtaszek.

The countersuit accuses Nolan of conspiring with his attorney, Steve Cohen, and former state Sen. George Maziarz to share “confidential” and “incorrect” WROTB information with the press to damage the organization’s reputation and community goodwill.

As a result of Nolan’s actions, WROTB argues that it has suffered financial losses in the form of “compensation, salary and benefits” paid to Nolan, described in the filing as a “disloyal employee.”

As part of its counterclaim, WROTB is asking the courts to dismiss Nolan’s whistleblower lawsuit “with prejudice” while requesting compensation for attorney fees and other costs and “further relief” deemed proper by the courts.

In response to a request for comment, Aaron Saykin, an attorney with the law firm Hodgson Russ representing WROTB, said the allegations in the counterclaim speak for themselves.

“We look forward to vigorously prosecuting our case in court,” Saykin said in a statement.

Cohen described the counterclaim as an “act of desperation,” saying he believes it’s part of a bid by the public benefit corporation to have him removed from the case.

“The WROTB is in deep trouble,” Cohen said. “They are being investigated by state and federal agencies and they are trying to, I believe, create a conflict of interest to get me off the case. It’s my hope and expectation that the judge will dismiss that. The allegations against Michael Nolan are equally frivolous and we would expect that the claims against Mr. Nolan and myself would be dismissed.”

While Nolan still served as COO, WROTB became the subject of investigations undertaken by the FBI, the U.S. Attorney’s Office for the Western District of New York, the state comptroller’s office, the New York State Gaming Commission and what his complaint describes as “various district attorneys’ offices.”

He was removed from his position in December 2020 following nearly three decades of service.

According to Nolan’s lawsuit, he agreed to talk with investigators about various questionable practices at WROTB, including:

• “Rich” health insurance benefits provided to board directors;

• Awarding of “lucrative contracts to politically connected entities;”

• Appointing a “politically connected” board member to allow that individual to receive insurance benefits through the corporation;

• Improper use of video lottery terminal funds

• Distributing luxury box and event tickets purchased by the public benefit corporation to friends, family and political associates for personal use.

In his lawsuit, Nolan alleges that Wojtaszek and WROTB’s former board chairman Richard Bianchi, “swiftly, aggressively, and austerely” retaliated against Nolan for cooperating with investigators and testifying before a grand jury. As a result, Nolan said he was wrongfully denied a raise, forced to work weekends and stripped of various responsibilities, including his role as OTB’s Freedom of Information Law officer. In his lawsuit, Nolan claims the experience caused him significant “emotional distress” and personal financial cost, including $80,000 in personal attorney fees.

U.S. District Court Judge William Skretny dismissed Nolan’s lawsuit in October 2022, finding that it was filed outside a statute of limitations requiring such claims to be brought within one year and 30 days of the alleged first incident.

The U.S. Second Circuit Court of Appeals reinstated Nolan’s lawsuit last year after reviewing the case on appeal and determining Skretny erred in his decision.

In October, Skretny dismissed several of Nolan’s claims, narrowing the scope of the lawsuit while denying a request from WROTB to toss what Nolan’s attorney described as the “most important” causes of action.

In its counterclaim, WROTB admits “some representatives” of the public benefit corporation were “questioned by authorities” while denying “knowledge or information sufficient to form a belief as to the truth of the claims” of wrongdoing alleged by Nolan in his lawsuit.

The counterclaim also asserts that WROTB representatives have told authorities that Nolan is “not honest or trustworthy” and that an unidentified individual told officials with the organization that, before he was fired, Nolan expressed interest in having Wojtaszek’s job.

The counterclaim also accuses Nolan and an unidentified WROTB board member of “secretly” hiring a “criminal defense lawyer from Albany” without seeking authorization from the organization’s board or informing the board of their actions.

In what’s described in the counterclaim as a “second” investigation initiated “secretly” by Nolan, WROTB claims he instructed other employees to “gather records for him and tell no one that he had asked them to do so.”

“Nolan revealed none of his purported ‘concerns’ to the WROTB board until a board meeting on March 18, 2019,” the counterclaim reads. “But Nolan never revealed to the board that he was conducting a separate, ‘secret’ investigation.”

During that meeting, the counterclaim indicates that board members were “caught off guard” by asking for an executive session from which Wojtaszek would be excluded. During that session, according to the counterclaim, Nolan told the Board that Wojtaszek was to blame for all the negative press and advocated for his firing. The counterclaim also indicates that Nolan told board members soon would be ‘going to the FBI’ about Wojtaszek and Bianchi, “whom he also incorrectly suggested could be implicated in unlawful conduct.”

In its counterclaim, WROTB suggests Nolan told a “prominent, well-respected local attorney,” who performed an internal investigation for the organization, that he had “no specific knowledge of any illegal activity” and that he “had not uncovered any illegality” and “did not believe Wojtaszek or Bianchi violated any WROTB internal policies regarding procurement.”

That attorney, noted defense lawyer Terry Connors of Buffalo, compiled a 380-page internal report in response to various accusations of wrongdoing at WROTB. The public benefit corporation has denied multiple Freedom of Information Law requests from the Niagara Gazette and its Buffalo-based news partner Investigative Post that sought the public release of the document. WROTB has argued that the contents of the report are barred from public release as they are considered confidential due to attorney-client privilege.

In his initial interview, WROTB alleges that Nolan told Connors he did not believe Wojtaszek or Bianchi violated any WROTB internal policies regarding procurement and that instead he believed the corporation’s procurement of professional services should be “handled more professionally.” He also told Mr. Connors that there was “nothing there” regarding the allegations concerning WROTB’s use of suite tickets,” according to the counterclaim.

In a second interview with Connors where Cohen was present, WROTB alleges that Nolan requested “significant substantive changes” to his earlier statements, including that he believed there were “substantial abuses concerning the issuance of special event tickets at WROTB.”

The newspaper’s media partner, Buffalo-based Investigative Post, reported earlier this month that two state authorities appear interested in conducting probes into the organization.

IP reported that the Inspector General, responding to a request from state Assemblywoman Monica Wallace, D-Lancaster, and state Sen. Sean Ryan, D-Buffalo, has obtained documents including buyout deals for Henry Wojtaszek, OTB’s outgoing president and CEO, and two of his top lieutenants. The Inspector General’s office would neither confirm nor deny whether the records request has progressed into a formal investigation.

In addition, IP reported that the state comptroller is considering a request from Erie County Comptroller Kevin Hardwick for a “performance and management” audit of OTB. Three good government groups have made a similar request.

The state Inspector General for Gaming is concerned with buyout payments for Wojtaszek and two other officials earlier this year. Two state lawmakers have argued that the buyouts are illegal under state law.

“We have received a request for documents from the Inspector General for Gaming and we have fully complied,” OTB spokesperson Michael DeGeorge said in a statement.

Terry Connors, an attorney representing OTB, said the IG’s office requested copies of the buyout contracts for Wojtaszek and the two other officials “months ago.”

“We provided them the same day,” Connors said. “And we haven’t heard anything since. Quiet as a church mouse. That’s a good thing.”

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