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Report: MGG Asserts Zayat ‘Is A Perpetual Liar,’ ‘Has Done Everything In His Power To Frustrate The Process’

The lengthy legal battle between New York firm MGG Investment Group and Triple Crown-winning owner Ahmed Zayat continues to drag on, according to the Thoroughbred Daily News.

On March 16, Zayat requested that a federal judge not grant his bankruptcy trustee extra time to look at his finances. This week, MGG told the court that the extra time must be allowed because Zayat, despite his “unsupported assertions of cooperation, he has done everything in his power to frustrate the process.”

Zayat declared bankruptcy in the fall of 2020, seeking Chapter 7 protection. MGG is asking a federal judge to order that Zayat can't get his debts to the investment group forgiven because the company says the $24 million in loans Zayat still owes were acquired fraudulently.

MGG's March 23 filing asserts that the Thoroughbred owner and breeder's latest action “does nothing more than establish that Ahmed Zayat is a perpetual liar determined to hinder and obstruct the Trustee, the Court and creditors at every turn.”

Read more at the Thoroughbred Daily News.

For more about Zayat and the legal issues described above, click here.

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MGG to Bankruptcy Judge: ‘Zayat Is a Perpetual Liar Determined to Hinder and Obstruct’

On Mar. 16, Ahmed Zayat asked a federal judge not to grant the trustee in his bankruptcy case extra time that had been requested to scrutinize Zayat's finances so the trustee could make sure the owner and breeder of Triple Crown champ American Pharoah was telling the truth about not being able pay $19 million in debts because he allegedly only had $314.22 to his name.

Now, one week later, MGG Investment Group, LP, the lender who is separately suing Zayat and his family members for allegedly obtaining a $24 million loan by fraud and then not repaying it, told the same court that the trustee's probe must be allowed to go forward because Zayat's attempt to put an end to the discovery process “does nothing more than establish that Ahmed Zayat is a perpetual liar determined to hinder and obstruct the Trustee, the Court and creditors at every turn.”

MGG's Mar. 23 filing in United States Bankruptcy Court (District of New Jersey) is rooted in the New York-based lending company's desire not to have Zayat's debts declared legally forgiven under the Chapter 7 bankruptcy protection he is seeking.

MGG has previously asserted in court that loans it made in 2016 to Zayat's racing and bloodstock business were the product of years of systematic fraud that Zayat allegedly orchestrated, including Zayat Stables' desperate selling-off of equine assets that had been pledged to MGG as collateral.

“There is only one reason the statutory meeting of creditors commenced in this
Case…has been kept open and must remain open—namely, notwithstanding Ahmed Zayat's unsupported assertions of cooperation, he has done everything in his power to frustrate the process,” MGG wrote in its objection to Zayat's recent cross-motion to move the case toward conclusion.

MGG's filing continues: “Far from being the 'honest but unfortunate debtor' that the Chapter 7 process aims to protect, Ahmed Zayat has demonstrated time and again that his ultimate goal is to manipulate the bankruptcy process to shield himself at the expenses of the Trustee and creditors.”

According to MGG, since Zayat filed for bankruptcy protection back in September, he has delayed the administration of his case by 1) Refusing to produce documents prior to the initial hearing; 2) Refusing to respond to “numerous questions” on the basis that he did not have the necessary documents in front of him; 3) Promising, then subsequently refusing, to produce requested materials; 4) Providing paperwork that was so heavily redacted that the documents made no sense.

“Ahmed Zayat should not be able to impede the Trustee's analysis or derail his investigation, all of which is being conducted for the ultimate benefit of the Debtor's creditors,” MGG wrote.

The primary role of a trustee in bankruptcy cases is to ensure that a debtor who files for federal bankruptcy protection is not hiding assets that could instead be used to pay creditors. An objection can be filed to the proceedings if a trustee believes aspects of the filing are not on the up-and-up. A judge can either dismiss a case on his own or by acting on a trustee's objection. A judge can also deny the discharge of a particular debt.

And if alleged fraud is uncovered in a bankruptcy filing, the Federal Bureau of Investigation can investigate, and the U.S. Department of Justice can prosecute if it believes a crime has been committed.

MGG wrote that in addition to supporting the trustee in his request for one more month to sift through documentation, the lender also wanted to “advise the Court of significant recent developments” that arose out of Zayat's testimony under oath at a Feb. 25 hearing.

Specifically, MGG alleged, documents pertaining to bank accounts in the names of Zayat's wife (Joanne Zayat) and son (Justin Zayat) are now “indisputably relevant to the Trustee's investigation and analysis, as they appear to have been used as conduits through which Sherif El Zayat, the Debtor's brother, loaned money to Ahmed Zayat.”

Last week, Ahmed Zayat's cross-motion included a letter from his attorney, Jay Lubetkin, who wrote that the trustee's request for the banking documents of family members didn't “have any apparent relevance to the Trustee's decision whether to file an objection to discharge complaint.”

Lubetkin also wrote Mar. 16 that “The Debtor has been extremely cooperative with the Trustee [and has] provided to the Trustee significant documentation respecting his financial affairs…. The Debtor has responded with voluminous documents in satisfaction of the Trustee's three very extensive document requests, and temporarily withheld only a small portion of those documents for legitimate, good faith, objectively supportable reasons…The Debtor [eventually] provided the Trustee with the temporarily withheld documents, and the Trustee has been in possession of all the requested documents for more than 60 days.”

MGG wrote in its Mar. 23 filing that “Ahmed Zayat has attempted to create a record based on false and misleading assertions.”

MGG's filing contained excerpts from email exchanges between Ahmed Zayat and MGG that date to Jan. 12, 2020, which was 10 days before MGG filed its bombshell lawsuit against him in a Kentucky court.

“It kills me and tore me part, not being transparent with you,” Zayat allegedly wrote at the time, apparently in an effort to stave off the impending legal action.

“I did not disclose to you why we had to sell some assets in order for us to fund and continue to operate Zayat Stables and allowing myself the time to find the capital to get you paid in full…. I did not want you to panic knowing that I still have a chance to save the day…

“There is still a glimpse of light that a miracle can happen,” Zayat allegedly wrote.

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Practical Joke Filly Tops OBS March Sale’s Second Session

Hip No. 311, a daughter of Practical Joke consigned by Top Line Sales LLC, Agent, went to Hideyuki Mori for $750,000 to top the second and final session of the Ocala Breeders' Sales Company's 2021 March Sale of 2-Year-Olds in Training.

The bay filly, whose eighth in :9 4/5 was co-fastest at Friday's Under Tack session, is out of champion Valiant Emilia (PER), by Pegasus Wind, from the family of recent Grade 2 Tampa Bay Derby winner Helium.

Hip No. 547, a daughter of American Pharoah whose quarter in :20 4/5 was co-fastest at Saturday's Under Tack session, was sold to Colombo Bloodstock Agency for $600,000. The bay filly, consigned by consigned by Wavertree Stables, Inc., (Ciaran Dunne), Agent, is out of graded stakes-placed stakes winner Henny Jenney, by Henny Hughes, a half-sister to grade one stakes-placed stakes winner Zeewat.

Spendthrift Farm / Myracehorse.com went to $575,000 for Hip No. 357, a son of Kantharos consigned by Woodford Thoroughbreds, Agent. The chestnut colt, whose quarter in :20 2/5 was Friday's co-fastest, is a full-brother to stakes winner Adventurous Lady out of Ari the Adventurer, by Pioneerof the Nile.

Hip No. 295, a daughter of Uncle Mo consigned by Pike Racing, Agent, was sold to Live Oak Plantation for $550,000. The bay filly, who breezed an eighth in :10 1/5 on Friday, is out of Town Tour, by Speightstown, a half-sister to Grade 1 winner Moonshine Memories.

Sean Flanagan paid $550,000 for Hip No. 504, a daughter of American Pharoah consigned by Eddie Woods, Agent. The bay filly, who breezed a quarter in :21 1/5 on Saturday, is out of Forgotten Miss, by Afleet Alex, a half-sister to graded stakes winner Woodlander.

Hip No. 507, American Passport, a son of American Pharoah who breezed an eighth on Saturday in :10 1/5, went to Hideyuki Mori for $550,000. The bay colt, consigned by Coastal Equine LLC (Jesse Hoppel), Agent, is out of French Passport, by Elusive Quality, a half-sister to graded stakes winner Smooth Air.

Hip No. 531, a son of Gormley consigned by Eddie Woods, Agent, went to Breeze Easy LLC for $550,000. The bay colt, whose eighth on Saturday in :9 4/5 was the day's co-fastest, is a half-brother to stakes winner Little Kansas out of Green Eyed Cat, by Tale of the Cat.

High Point Bloodstock paid $475,000 for Hip No. 506, a son of Quality Road consigned by de Meric Sales, Agent. The dark bay or brown colt, a half-brother to stakes winner Curlin's Fox out of graded stakes winner Foxysox (GB), by Foxhound, turned in an Under Tack eighth in :10 1/5 on Saturday.

For the session, 151 horses sold for a total of $19,004,500 compared with 150 grossing $14,355,000 in 2020. The average was $125,858 compared with $95,700 a year ago while the median was $70,000 compared with $50,000 last year. The buyback percentage was 18.8 percent; it was 37.7 percent a year ago.

For the entire sale, 326 horses sold for $38,265,000 compared with 295 bringing $27,349,500 a year ago. The average price was $117,377 compared with $92,710 in 2020 while the median price was $62,500 compared with $50,000 a year ago. The buyback percentage was 16.2 percent; it was 38.8 percent in 2020.

To view the auction's full results, click here.

The post Practical Joke Filly Tops OBS March Sale’s Second Session appeared first on Horse Racing News | Paulick Report.

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‘Up’ and Coming Son of American Pharoah Set for Hong Kong Derby

Jan Vandebos and her late husband Robert Naify paid a visit to Coolmore on a trip to Ireland several years ago, fueling a desire to seed her high-quality broodmare band with a mare by the world's most dominant stallion. That rendezvous set in motion a chain of events that will see the RanJan Racing-bred Congratulation (American Pharoah), the former 'TDN Rising Star' Monarch of Egypt, take part in one of the world's richest age-restricted events, the HK$24-million (US$ 3.09 million) BMW Hong Kong Derby (NH/SH 4-year-olds only, 2000mT) Sunday afternoon at Sha Tin Racecourse.

“I fell in love with Galileo (Ire) and Montjeu (Ire), when he was still alive on our visit,” she said. “We were just getting started in bloodstock and studied the pedigree and we had decided at the time that we wanted to find a great Galileo mare. I looked for six or seven years at mares that were presented to me from Europe and I didn't see anything I liked.”

That all changed when Galileo's then newly turned 6-year-old daughter Up (Ire) was entered for the 2015 Keeneland January Sale. A half-sister to Group 1-winning juvenile and sire Dutch Art (GB) (Medicean {GB}), Up–fourth to Stephanie's Kitten (Kitten's Joy) in the 2011 GII Breeders' Cup Juvenile Fillies' Turf–was runner-up for the Coolmore ownership group in the 2012 G1 Poule d'Essai des Pouliches (French 1000 Guineas) and was a two-time winner at group level at The Curragh after a sixth against older females in the GI Beverly D. S. She was retired following a seventh-place effort in that year's GI Breeders' Cup Filly & Mare Turf and was covered by War Front in early 2013.

Having produced a filly to the Claiborne stallion, she was bred back to the Danzig son and was consigned to the 2015 January Sale by Four Star Sales.

“I saw her walking video and I'd never seen anything like it,” Vandebos said. “Never seen a shoulder like that or a hip or a walk. I said to [Taylor Made's] Frank [Taylor], 'I think this is the one,' and, on one bid, I was able to get her. She's pure class, she's a lovely, lovely mare. She's not large–she's probably only 15.2 to 15.3, but everything she's produced has been pretty good-sized.”

Taylor signed the sales-topping ticket at $2.2 million.

“That's about where we pegged her,” Taylor told the TDN's Brian DiDonato of Up, whose War Front filly was the top-selling short yearling at the same sale when hammering for $800,000 to Solis/Litt on behalf of LNJ Foxwoods. “We looked at some comparable mares–some of those mares by Galileo in foal to War Front were bringing a lot of money, so we thought that was a fair price.”

Up was among the first book of mares to visit Coolmore America's American Pharoah in 2016 and produced a colt by the Triple Crown winner Mar. 31, 2017. The colt they nicknamed 'six-pack' was raised at Taylor Made by Naify and Marshall Taylor, son of Taylor Made President and CEO Duncan Taylor.

“He was pretty spectacular from the day he was born,” Vandebos said. “Very muscular, very intelligent, everything was just in the perfect place. We sold him well.”

Monarch of Egypt, a $750,000 purchase by M. V. Magnier and Peter Brant's White Birch Farm at KEESEP in 2018, became his sire's first winner from that first crop when scoring by 2 3/4 lengths on debut at Naas to earn his 'Rising Star.' Second to the talented future G1 Irish 2000 Guineas hero Siskin (First Defence) in the G2 Railway S. and G1 Keeneland Phoenix S. at two, Monarch of Egypt was a cracking runner-up in a soft-ground renewal of the G3 Jersey S. at Royal Ascot last June. Sold to Hong Kong interests, the bay gelding was a sound fifth, beaten just over four lengths, in the Class 1 Chinese New Year Cup H. (1400m) at Sha Tin Feb. 14 (video) for former leading jockey and now trainer Douglas Whyte.

“I really thought he would be a 2 1/2 to 3-year-old because of what the dam had done at the races,” Vandebos said. “I honestly don't think he's reached his full potential and I am really excited about this race. I don't really think he's a sprinter, but I think it's very interesting that he's in Hong Kong.”

Up was entered for, but was withdrawn from another trip through the Keeneland sales pavilion in November 2017 when carrying to Pioneerof the Nile. That proved a fruitful decision when that produce, a colt, was sold for $1 million at the 2019 September sale. Now named Khartoum, he is a maiden winner in two starts for Aidan O'Brien.

Up's foal of 2019 is a Medaglia d'Oro filly Vandebos proudly describes as “one of the most–if not the most–beautiful filly I've ever owned.” Vandebos elected to take her home after bidding stalled out at $575,000 at KEESEP last fall. The filly, named Star of India, is with Dr. Barry Eisaman in Ocala, but “I am in no rush with her,” Vandebos said.

Next in the pipeline is a now-yearling filly by Quality Road that will most likely be offered at Keeneland this fall, “unless I fall in love with her before then, which is quite likely!”

Up was not bred in 2020 and was recently covered once again by Medaglia d'Oro. And to bring it all full-circle, Up's first foal is now the dam of the 2-year-old colt Direct (Aus) (Siyouni {Fr}), who was third in the G2 Silver Slipper S. at Rosehill in Sydney last month.

Vandebos, who also bred the late Roaring Lion (Kitten's Joy), keeps her 10-strong broodmare band at Lane's End. One of RanJan's most beloved producers, Cambiocorsa (Avenue of Flags), is likely to be pensioned this year to live out her days at Lane's End, Vandebos said.

“I want to keep it small,” she said. “I have a boutique operation that I manage myself. I am back and forth to Kentucky, I spend a week at a time back there about every other month. It's what I love. It's not about the business. It's about breeding the horses and being proud of my mares and their progeny. It's really a labor of love for me. I don't consider it a business, although my accountant tells me I need to start considering it as a business! But I've had good luck. I just hope my horses and mares stay healthy and they can show the world what we can do.”

The field for the BMW Hong Kong Derby will be drawn Thursday at midday (local time).

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