The Controversy

Chantilly Lace is a small chestnut mare who had one colt in 1977, and was afterwards sold to a family in Texas. Chantilly Lace still lives in Texas. She is now 27 years old. However, if you check your registry records (as on the CDs issued by AMHA), you will see that she is listed as having been sold to a Morgan breeder/trainer in 1990, and having produced many foals by various types of breeding in the years after that to1998 (including many embryo transfers). Several of the resulting foals have recently become extremely well known in Morgan show circles. There has been an AMHA investigation going on for several years that attempted to identify the true mother of all of these offspring via blood and DNA typing. The investigation did not reveal the true dam of these foals, but did locate and eliminate the real Chantilly Lace as the dam. This means that DNA could matchChantilly Lace to her 1977 colt, but to none of the foals attributed to her after that.* (There is some dispute as to whether this colt was actually matched before his rumored death.) Therefore, all of these "offspring" are falsely attributed to Chantilly Lace on their papers. Many, many Members have written to the Board of Directors, expressing their concern and outrage that animals which can be proven to be only half registered Morgan have been allowed to retain their registration status. Making the situation worse is the absolute silence and stonewalling indulged in by our Board of Directors. This situation must not continue to degrade our confidence in our Registry. It must be resolved to the satisfaction of the Members.

The Background Legalities

AMHA is a registered not-for-profit corporation. It is incorporated under the laws of NY state, and subject to the laws of that state. The last filing of any kind with NY was apparently in 1973. Nonprofits are modeled exactly on the usual corporate structure - the nonprofit part just means they have satisfied certain IRS requirements so they are not corporately taxed. Corporations are owned by their shareholders - the people who own the stock. They are not owned by the executives. The Board of Directors does NOT own the corporation. As AMHA is a corporation, who are the shareholders? WE ARE. We, the rank and file members, are the shareholders. Why do you think that you get those ballots in the mail to vote for Board members? They are not a courtesy because you paid your $40 this year. They are a requirement, BECAUSE THE SHAREHOLDERS OWN THE CORPORATION. Each corporation must have a charter and a set of original registered Bylaws on file which meet the corporate registration/incorporation requirements for the state of incorporation. The Bylaws are the controlling documentation for how the corporation may act. You will find a complete copy of the AMHA Bylaws in the front of your Membership Directory. Read it. You must be informed if you wish to guide your Corporation in the direction that you wish it to go.

Rule 3 of the Rules for Hearings and Appeals

In the replies from Board Members in regard to this investigation and controversy, Rule III has been quoted as the controlling Rule in this case. Rule III has had a last sentence added (Rule III is about Integrity of Records) which reads "After May 6, 1995, notwithstanding any provisions of the Rules and Regulations or these Rules for Hearings and Appeals to the contrary, no registration of any animal registered as set forth in the records of the Association in effect on 12/31/91 shall be corrected or expunged without the consent of all persons interested as a matter of record." We can only speculate, as Directors such as Fred Braden who have at least answered a few inquiries keep quoting this Rule at us, that someone "objected" to this matter being corrected on the papers. As this Rule sentence has been written so over broadly as to include "anyone interested" this could be anyone. We have no idea how "interested people" has been defined by the Board. If you read the entire paragraph, Rule III has been completely gutted by the addition of this sentence. This sentence must go.

The Board of Directors may change Rule III at any time on a simple majority vote. For them to quote Rule III as the reason this investigation was closed, and the reason for which they may not discuss the details, is at best a smokescreen.

The Affected Horses Do Not Actually Fall Under Rule III as Written

The Chantilly Lace offspring do not actually fall under Rule III as written. The 1977 colt is not a part of this controversy. The Registry CD#1 lists the 1991 colt as deceased with no offspring. All of the offspring at issue were born after 12/31/91, and obviously their records came into existence after that date. Therefore, all affected offspring foaled from 1992 to the present may have their papers revoked by either the Executive Director or the Board of Directors under Rule 11b of the Register's Rules & Regulations. ("Any Register record found to be inaccurate may be expunged or altered as deemed appropriate ....") By their own admission, the Board has found the registration of these "offspring" to be inaccurate, as Chantilly Lace has been proven to not be their mother.

Changing Rule III, Members Actions, Special Meetings

There are several avenues open to getting Rule III changed. 1)Write your representative and all Directors strongly worded letters that you want this Rule changed. They could do it themselves on a majority vote and stop hiding behind this blatantly fraudulent Rule. 2)There is a legal maneuver that is called a "shareholders derivative action". This is a lawsuit where a group of shareholders sue to force the Board of Directors to do something that is good for the Corporation that they refuse to do on their own. The ByLaw section that attempts to force any dispute between the Registry and the Membership into arbitration would have no effect on this type of lawsuit. 3)Obtain enough signatures of Member Shareholders on a petition for action that a special meeting must be called of the BOD to address the issue. ByLaw 2.8 says that if 10% of the Members request a special meeting, it must be scheduled. The wording of the document must be specific, as nothing outside of the writing could be discussed as an issue, and the people must be entitled to vote on the issue (i.e. - current members). Such a meeting would be 2-3 months from the date of the written request. Such a meeting could be used to revoke Rule III, rewrite Rule III, or simply delete the offending part of Rule III. Then a demand could be made for full disclosure. After the disclosure, then a demand may be made for resolution, if the BOD is still stonewalling. Any of the Directors who have knowingly participated in perpetuating the fraud may be voted out. As the current membership level is about 13,000 - this is 1300 legal signatures of current members to be collected.

The Board of Directors The Board of Directors are volunteers. As volunteers in demanding and often difficult positions, the Members owe them a vote of thanks for bothering to get involved. Like all other nonprofit corporations, AMHA often faces problems with getting people to take on volunteer positions. However, in this case, the Board is acting on the mistaken belief that burying this investigation and controversy is what is best for the Association. Perhaps this is being done because they are afraid of the type of lawsuits we have faced in the past, and the Arabian registry associations are facing now. Perhaps they are afraid that open controversy will further erode public confidence in the Morgan breed. You need to tell them that instead, what their actions have done, is further accelerate the decline in confidence the breed has been facing since the talk of big-name breeders routinely mixing Saddlebred, Standardbred, and Hackney blood into the breed and falsifying registrations became open and commonplace. We, the Members, understand why the move was made to blood typing and then to DNA. DNA typing, while it cannot say what breed a horse is, may easily identify who is a parent of a particular foal and who is not. People who make money at something are always looking for ways to increase the depth of that revenue stream. This is why people openly speak of the BOD as in the pockets of big $$$ breeders and trainers, afraid to do what is right because of the legal bills these people threaten them with. You must contact the Board and remind them that the small breeders, single horse owners, and backyard enthusiasts are still the majority and the backbone of this organization. There are approximately 13,000 members in AMHA. The vast majority of those people, apprised of the facts discussed on this webpage, will want this situation addressed. Remind them who owns this Corporation.

Suggested Actions 1)Write your Representative, the Executive Director, and the Board. Tell them why you find their actions unacceptable and what they must do. A trickle of paper is easy to circular file - an avalanche is harder to ignore. Send them this website. Send them your feelings. Tell them what they must do.

2)Contact members and owners who are not routinely online, and apprise them of this situation. Encourage them to act. Contact people who are still owners, but no longer members.

3)Sign in on this comment page. People from AMHA will be monitoring it, as they monitor the Morgan discussion lists at egroups.com (morgans, sportmorgan, sportmorganS, morgandressage, EquineEthics).

4)Send this website a copy of whatever response you get from AMHA. We will post all submissions for general reading. You may request that your name and address be removed if you are concerned with reprisals.

5)Sign the petition when it is available. We need 1300 signatures of current members to force a Special Meeting where things that AMHA must do may be voted on and passed. We will also be organizing an effort of mailings using the current membership lists. Volunteer to take the mailings for your state or region.

6)Read and understand the ByLaws and the Rules. You may wish to compare the requirements for operation of a nonprofit corporation with the requirements of the NY Attorney General, as AMHA is a NY corporation. Quote the ByLaws and rules in your writings to the Board.

7)Get the word out. Stop sitting on your hands. Do SOMETHING.

Aftermath

When the papers, awards, and breeding privileges of the affected horses discussed here are revoked, AMHA may reasonably assume they will be sued by the owners involved. The reasonable pathway for AMHA to take is to countersue for fraud. On the evidence as it has leaked out into the Morgan community, AMHA will win. Attempting to avoid this issue by allowing the registrations to stand, however, will not help them avoid these lawsuits. The longer action is not taken, the more people and horses will be involved as these fraudulent Chantilly Lace offspring breed more non-registerable non-100% Morgan. Putting this off (which a cynic would say is the strategy of not only Microsoft) will cost AMHA more money in the long run, more members, and more public confidence - as this issue will NOT go away until properly resolved. The civil litigation system in this country is built to take care of these contractual issues, as the originally at fault breeders will be properly sued by the buyers of their fancy and now non-papered horses, and will lose in court to the tune of many, many thousands of $$$.

The Board must not attempt to ignore this case any longer. They must face up to the mess their inactions and the original fraud have created.

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Send the 2000 - 2001 AMHA Board and Officers an Email: George Arnold, President george@morganhorse.com