STUART JANNEY III: Welcome back. I’m going to go a little off script because I can see Paul Tonko, who of course was absolutely instrumental in us finally getting the federal legislation we needed. So, Paul, thank you.
Next up is what I believe will be fascinating interview with John Penza conducted by Jim Gagliano. John is a retired FBI agent who was involved with the investigation of horse racing in 2019 that led to the indictments of dozens of people.
John retired this past April as an assistant special agent in charge of the Violent Crime Threat Program for New York City’s FBI office, the largest and busiest field office in the country.
He now serves as the director of International Investigations for 5 Stones intelligence.
John, Jim, welcome.
JAMES GAGLIANO: Thank you, Stuart. Good morning, everybody.
John, thank you for being here. I know this was a busy weekend for John. He’s on vacation. His wife is a celebrating a milestone birthday, so we appreciate you coming up from Long Beach Island and being with us today.
JOHN PENZA: It’s certainly my pleasure. Thank you, Jim.
JAMES GAGLIANO: Give us a little bit of your background. How did you become an FBI agent?
JOHN PENZA: Sure. Raised in northern New Jersey, come from a very, very small family. No law enforcement in my family. Attended Rutgers University, and it was there that I really got interested in law enforcement, and knew I wanted to do something with the government, but didn’t know what. Was it going to be military, some type of law enforcement.
When I graduated, like most of you at 21, 22, I wanted to apply to the FBI. The FBI was not hiring 21, 22-year-old John. My first job was actually with the Federal Bureau of Prisons working in a detention facility in Manhattan, which I did that for a year. It was long enough.
Moved on to a police department in northern New Jersey, and that’s where I really became laser-focused on getting into the bureau. Initially I was told I was noncompetitive. They told me to go back for a master’s degree; I did. They still told me I was noncompetitive. I went back for a doctorate and then did not complete that.
But then they did finally give me an appointment to new agents training academy in Quantico in January 2001. Completed that in May of 2001, and was assigned to the New York field office, which is where I spent the majority of my career with one overseas stint in Rome, Italy. And then towards the end of my career, I spent about 18 months at the FBI headquarters.
JAMES GAGLIANO: Stuart mentioned that you were involved to some degree in the March 2020 arrests. What did you know about horse racing before you got involved in those cases?
JOHN PENZA: I knew nothing. I would come up to Saratoga with my mom and dad, my brothers on the way to Lake George every August, and that is all I knew about horse racing.
When the FBI started their investigation, I had to get smart on horse racing really, really quick. At the time I was an FBI supervisor and I had an agent that I had worked with for many, many years who had a history in horse -- I think it was breeding and racing. I said, this is the guy that I need to supervise this investigation.
He would brief me constantly on what was happening on the investigation, and I got smart on horse racing. Not nearly as smart as the people in this room. I’m clearly still a novice. But I got pretty smart pretty quick.
JAMES GAGLIANO: During your long career in the FBI, you were involved in a lot of interesting cases, no doubt, criminal cases. Can you tell us a little bit about some of the cases that created your background, and then let us know a little bit how they bisected with some of the sports corruption cases you’ve been involved in.
JOHN PENZA: The majority of my career was spent in the criminal division in New York working organized crime. For about seven or eight years I worked on the mafia in New York City, so the five families. And then in 2011 I shifted over to Eurasian organized crime. Very, very similar type of investigations. All long term using a multitude of different investigative techniques.
While I was assigned to the Eurasian organized crime squad, we developed a case on FIFA, the international governing body of soccer. I was fortunate enough to be one of the FBI case agents on that investigation, as well as working that -- we worked that case, excuse me, collaboratively with the IRS. That case went on for some time. We did our first round of indictments in I believe it was May of 2015, and did the second wave in December of 2015.
That FIFA investigation, that soccer investigation for the FBI really opened our eyes to kind of sport corruption. The bureau had never really done cases like that. Yes, we had done corruption cases, yes we had done long-term investigations into -- whether it’s a mafia family or another organized crime group, but we had never done anything as it related to sport.
In, I want to say maybe 2016 I got a call from someone who had some information on Russian athletes doping. You know, using performance-enhancing drugs. Those individuals who were using were now in the United States and they wanted to talk to the FBI.
My partner and I went out and we met these individuals. We opened an investigation on the government of Russia sponsoring a doping campaign to dope their own athletes. That investigation went well. It was quite complicated. During that investigation we developed Grigory Rodchenkov, who I don’t know if anyone knows, he was the Russian doping doctor. He was leaving Russia in 2016. I think he had to get out of Russia. He arrived in Los Angeles and he met us and we became his new friends.
The information that Dr. Rodchenkov provided to the FBI and to the United States Attorneys’ office in the Eastern District in New York, and to everyone else that he testified in front of was absolutely incredible. I think it not only assisted the FBI, law enforcement and intelligence in this country, but all over the world to kind of state-sponsored, if you will, doping of athletes.
That investigation was still going on when I got promoted in 2018. Then as Mr. Janney mentioned, in 2017, 2018, we got some information about doping in the Thoroughbred horse racing industry. I found Sean, and the rest is history.
JAMES GAGLIANO: Case agent with the FBI that you worked with, Sean.
JOHN PENZA: Yes.
JAMES GAGLIANO: So you mentioned the government hadn’t really been involved in sports corruption cases before and there is no doubt the federal government and law enforcement has a lot of priorities. We all know after 9/11 that was a huge priority for the FBI across the globe, and there has been other priorities. You mentioned with organized crime, financial crimes.
How do you get a prosecutor to look at a case, cases like the ones that you have been able to develop? What’s the key to getting a prosecutor interested enough to go and empanel a grand jury, for example?
JOHN PENZA: That’s a great question. I would say one word. It’s relationships. As a young FBI agent working certain matters, your job is to conduct an investigation, and then to get those subjects of that investigation prosecuted. It’s simple. But federal prosecutors are really, really busy.
I was an FBI agent. The prosecutors I went to weren’t just working FBI cases. They were working cases from every Federal agency in New York City, to include state and local agencies. How do you convince them or explain to them why your case is so significant?
And that initially is up to the investigator. He or she is supposed to do some, you know, good legwork. Do your surveillance, talk to your confidential informants. Realize or get to a point where you can cannot do anything more on your own and you need the assistance of a United States attorney.
You set up an appointment and you truly sell them on your investigation. I would not be honest if I didn’t say this: Organized crime in New York City is always a hot topic. I had a very easy time selling my cases.
With that being said, however, when we did the Russian doping case with Dr. Rodchenkov, that was a hard sell initially to the U.S Attorneys’ office. But because of my background with FIFA, we prosecuted that in the Eastern District of New York as well, those prosecutors, they were not the same prosecutors as FIFA, but those prosecutors knew the bona fides that our squad had, the kind of case agents we were, and signed on to work that investigation.
So it is truly relationships and selling that case.
JAMES GAGLIANO: That’s interesting. So the sports corruption cases you talked about, how do they compare and contrast with the doping cases in horse racing? What is similar and what’s different?
JOHN PENZA: I’ll start off with the similarities. It’s all the same. People are motivated to engage in this kind of activity for one reason. Everybody is smart in this room. They want to make money.
Difference, it’s just a different sport. I knew nothing, nothing, about soccer when we started the FIFA case. Nothing. But we understood that the subjects in that case were conducting their criminal activity for the sole purpose of making money.
The Russian doping case, a little bit different because you had a government that was supporting their athletes doping, the end result being those athletes are going to potentially win a gold medal or multiple gold medals and they were going to get endorsements, and I am sure those endorsements that those athletes were going to achieve would definitely be -- that money would be given out to everybody.
And then obviously in the most recent case, the purses that go with winning races. The price of selling young horses. I’m not going to pretend to tell you I know the difference between them all because I don’t, but the money that is to be made is just incredibly tempting.
JAMES GAGLIANO: So that’s really interesting that the value of the horses and the purses in your mind is very similar to some of the lure of cheating in other sports.
JOHN PENZA: Absolutely. As someone that had no experience, again, in soccer, no experience in horse racing, and clearly no experience in being a Russian athlete, an Olympics athlete, yeah, to me it’s the money, period.
JAMES GAGLIANO: Interesting. So some of the cases that have now been determined and the subjects have been sentenced, we’ve seen cases or instances where there’s sealed documents. In particular one of the cases involving the vet in Florida referenced extensive customer lists, some of which had been exposed.
Will we ever see those lists? Not speaking specifically about this case, but generally from your experience, after a case is done and documents have been sealed, how can the public, how can the BloodHorse or some of our trade publications gain access to some of that information?
It might be interesting to a lot of us here.
JOHN PENZA: The government is never going to come out once a case concludes and say, Here, everybody, you can take a look at what was presented at trial or what the FBI and United States government was able to gain from an investigation, whether it be any kind of records or things like that.
What average people like me and you can do is a freedom of information request. I’ve never done one, but I’ve been on the site. It’s pretty easy. You just type in FOIA and an actual -- the website pops up and it tells you how to step by step complete the Freedom of Information Act request.
Now, I will say this: When I was an FBI agent, obviously the FBI and the Department of Justice and every federal agency has a FOIA team that triages these requests and then sends them out to the respective field office that had that investigation.
Let’s not use the current Thoroughbred case. Let’s use FIFA, for example. I would get things all the time that a certain journalist or somebody that was writing a book wanted some type of record or something that we had or developed during FIFA.
If a case is ongoing, typically we’re not in a position to release that information. With that being said, there have been things that have been released that are in books about FIFA. I don’t know if there is a movie or what they’re doing with FIFA, but stuff does get released.
I would encourage any one of you, that if you want to see something, you request it via FOIA.
JAMES GAGLIANO: So we all hoped from these indictments for a course correction, probably similarly in those other sports that you talked about, they did as well.
Did it happen in those other sports? For our sport, what should we be looking for next? What should we try to do? No doubt the government can’t continue to try to sustain the level of work they have in looking at corruption in our sport.
Tell us what you saw from other sports in course corrections and what we can expect here.
JOHN PENZA: What we saw in previous investigations, previous sport investigations, as it related to FIFA, as it related to Russian doping, and in the same vein, to Thoroughbred racing, the FBI and law enforcement in general hadn’t done these kinds of investigations and these kinds of arrests.
I’m sure 27 people from the Thoroughbred industry being indicted by the Southern District of New York and arrested by the FBI was significant. I’m not in the Thoroughbred industry, but I can tell you -- at the time I was at FBI headquarters, but I can tell you that that case was all over FBI headquarters.
Course correction is an interesting statement. I do think that there are people in this industry that are like, Yeah, it’s about time that those bad actors, whether they’re charged or were brought to light. When you have individuals that have shoes that say "Juice Man" on them and are not afraid to put them up in their barn, there is something wrong.
Do I think that that behavior is going to continue? Absolutely not. What I can tell you is that with the introduction of HISA, which I have done a lot of reading on and is very, very interesting to me. You now have a national regulating agency that is fair and unbiased that I believe is going to get complaints. I don’t know how Lisa Lazarus is going to get those complaints, whether there will be tip line or a hotline.
But similarly to the FBI, when those complaints come in they’re triaged, investigated, and if a sanction needs to be imposed, it is. But it’s done fairly and uniformly.
JAMES GAGLIANO: So you see HISA stepping into that void after the prosecutions are done? In your view, that is an important aspect that horse racing has in front of it the opportunity of HISA.
JOHN PENZA: Absolutely. 100% hands down.
JAMES GAGLIANO: Thanks for all the time today. I have one last question: What can we all do in this audience to help with the enforcement of rules and to ensure that the best and safest conduct and highest integrity is maintained in our sport? What can we all do to help?
JOHN PENZA: I think all of you can be aware when you see a violation, you make a notification. Every other sport and industry has a whistleblower clause. If you see something, make that notification to HISA. Let HISA do the job they need to do, which is investigate those complaints, whether it involves a safety issue or worse, a doping issue.
I think once the industry begins to trust HISA, that’s the key to success.
JAMES GAGLIANO: John, thank for being with us today, and thanks for all your hard work.
JOHN PENZA: Thank you.
STUART JANNEY III: Fascinating. John, I’m glad I didn’t have to work that hard to get my first job.
You had an incredible career and you have done a lot for us at the FBI, and we look forward to what you may do for us going forward in your next chapter.
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