In an effort to claw back at least $200,000 in transfers by Ahmed Zayat that allegedly constitute “fraudulent conveyance” because they occurred just prior Zayat's filing for Chapter 7 bankruptcy protection, the trustee in charge of vetting Zayat's case filed two complaints in federal court Wednesday that aim to recover that money so it might instead go toward paying creditors.
Zayat claims to be $19 million in debt, and a massive chunk of that money is owed to Thoroughbred-related individuals and entities.
According to documentation filed Apr. 21 in United States Bankruptcy Court (District of New Jersey) by trustee Donald Biase, “The Transfer[s] were made with actual intent to hinder, delay, or defraud creditors of the Debtor.”
As an exhibit, Biase attached a copy of a Sept. 3, 2020, domestic wire transfer for $175,000 between two law firms.
Zayat's name is not listed on that TD Bank document. But the trustee, presumably through forensic accounting practices, is alleging that “the Debtor's books and records disclose” that Zayat orchestrated the transaction, which was allegedly made “without the Debtor receiving a reasonably equivalent value in exchange.”
The recipient of the money was listed as Cohen Tauber Spievack & Wagener, a New York-based law firm. According to a posting from 2015 on that company's website, the firm has represented Zayat in court and “advises Zayat Stables on transactional matters and sponsorship deals related to American Pharoah.”
The timing of that $175,000 transaction is notable because five days later, Zayat filed his petition for bankruptcy protection, signing off on paperwork that alleged he only had $314.22 to his name.
In a separate court complaint, the trustee also wants $28,848 back from New York University (NYU) that Zayat allegedly paid to the school within 90 days prior to his bankruptcy filing.
Zayat has four children, and they all either graduated from or are/were attending NYU. The youngest of the siblings, Emma, just enrolled at the school in 2020, according to her LinkedIn profile (Emma was the inspiration for the name of Littleprincessemma, the dam of American Pharoah).
Even if that money was paid for tuition or a pre-existing debt, the complaint states that (among a list of other legal reasons) the trustee can try to reclaim those funds because “the Debtor was insolvent at the time and [NYU] had reasonable cause to believe that the Debtor was insolvent.”
In the cases of both allegedly fraudulent transfers, the trustee is going after the money not by chasing Zayat himself for it, but by listing both the law firm and NYU as defendants, meaning they would be on the hook for repayment if the judge rules in the trustee's favor.
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