Receiver In Zayat Case Alleges ‘Possibly Fraudulent’ Billing By Trainers, Care Providers

In her third report to a Fayette County Circuit Court this week, the receiver appointed to control the assets of Zayat Stables noted “unorthodox, possibly fraudulent” billing practices from unnamed trainers and other caretakers to the stable.

Elizabeth Woodward, who was appointed by the court to manage Zayat Stables after it was sued by New York firm MGG Investments for failing to pay back $23 million in loans, issues a report each month on her activities to maximize the business’s profits. Woodward wrote she “identified unorthodox, possibly fraudulent, billing practices and billing errors in which trainers and other care providers effectively overbilled costs as a means of increasing the Receiver’s statutory lien obligations, resulting in a significant savings to the Receivership.”

The report did not elaborate or name individuals Woodward believed were guilty of these activities.

A number of Zayat Stables horses have been sold publicly or privately thus far by the receiver, and the operation retains ownership interests in a total of 32. The report indicates the receiver is “also continuing to seek ownership interest and the location of 15 additional horses.” The receiver intends to race some of the remaining horses to improve their value and bring in cash flow for the business.

Previous reports have noted discrepancies in various lists of equine assets and their locations. Upon further investigation, the receiver found some horses or interests in horses had been sold off months earlier, despite Zayat allegedly having told MGG he still owned them. MGG has claimed Zayat and his family sold collateral without turning over the proceeds to pay back his loan — including a number of lifetime breeding rights to 2015 Triple Crown winner American Pharoah.

The question of how to get trainers paid has come up before. Initially, the parties in the civil case and the receiver expressed confusion about which bills incurred by Zayat Stables under management of owner Ahmed Zayat would actually be paid out by the receiver. Since the receiver is tasked with maximizing profit on behalf of MGG, the investment group which has sued Zayat for not repaying the loan, parties eventually agreed MGG would only be responsible for bills incurred by horses going forward from the time the receiver was appointed, but not before. That means trainers, farms, veterinarians and others who are allegedly owed “hundreds of thousands” of dollars for their services up until early 2020 would have to sue Zayat to be paid.

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