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Lichoa Enters Guilty Plea To Charge Of Money Laundering Conspiracy

Alfredo Lichoa, longtime Central Florida horseman, has entered a guilty plea to a charge of money laundering conspiracy according to federal court records. Lichoa was indicted alongside four others in March by the U.S. attorney for the Southern District of New York – the same prosecutor's office which, days earlier, had indicted more than two dozen trainers and veterinarians (including trainers Jorge Navarro and Jason Servis) on charges of drug misbranding relating to an alleged horse doping ring. Lichoa and four others were arrested on March 9, the same day the FBI executed arrest and search warrants in Florida and New York in connection with the Navarro/Servis investigation.

Additional defendants charged with money laundering conspiracy in March were Jose “Pepe” Morely Chocron; Isaac Schachtel, a licensed Thoroughbred owner from Venezuela living in Miami; Juan Carlos Balaguera-Villamizar; and Juan Marcos Matos Ruiz.

A superseding indictment filed in the case in early August charged only Lichoa, Schachtel and Chocron with one count of money laundering conspiracy. The new indictment sought forfeiture of assets the defendants may have gained as a result of their actions.

The original indictment described a scheme by the defendants to launder money purportedly from corrupt politicians in Brazil. The money was used to get preferential treatment in business deals. The scheme is alleged to have included the horsemen's accounts belonging to trainers in the South Florida area. Trainers were supposedly able to put money into the accounts and either rapidly resell a horse or rely on consistent wins by the horse to get their money back out.

The original indictment included quotes from Schachtel, who is supposed to have relied on Lichoa to guarantee the safety of funds because of “systematic administration of illicit performance enhancing drugs to the racehorses under his control,” according to federal prosecutors.

Read more about the original indictment here.

A sentencing hearing for Lichoa is set for Feb. 17, 2021 before Judge Jed S. Rakoff.

A trial date for Chocron has been set for March 30, 2021.

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Waiting For New Defendants In Federal Case? You Could Be Waiting A While

Not for the first time, prosecutors hinted Tuesday that there could be additional indictments or additional co-defendants coming in the bombshell federal drug misbranding case from earlier this year — but again, they declined to commit to a timeframe about when any additional action could be coming.

The case focuses on an alleged horse doping ring that prosecutors say included trainers Jason Servis and Jorge Navarro, among others. A superseding indictment released earlier this month revised charges slightly, adding a wire/mail fraud charge against one subgroup of defendants and leaving out several defendants who had been named in the original documents unsealed in March. It remains unclear whether the defendants not named in the new indictment plan to enter guilty pleas. All defendants, either through Tuesday's telephonic conference or through their attorneys, entered pleas of not guilty to the charges in the new indictment.

Read more about the superseding indictment here.

Assistant U.S. Attorney Andrew C. Adams had emphasized in previous conferences that the government's investigation is ongoing and he does not know what new information could still come to light. Defense counsel for Jason Servis and Dr. Seth Fishman expressed frustration with the open-ended nature of Adams' summary of the case, asking U.S. District Judge Mary Kay Vyskocil to set deadlines for the government to produce any further superseding indictments. Vyskocil declined to do so. Adams emphasized that his office did not anticipate any new indictments or new defendants would serve to slow down the existing case.

Adams also took a moment to highlight one distinction he said the government made in its superseding indictment about the types of substances described in the charges. Adams pointed out that it will not be up to the government to show whether or not the drugs named were effective at manipulating a race outcome.

“A drug that is promoted and intended to be a performance enhancer, but is a dud, is nevertheless a misbranded/adulterated drug for the purposes of this indictment and the intent remains the same for the creation and administration of those drugs,” said Adams.

Much of the discussion Tuesday focused on the difficulty of the enormous volume of evidence defense counsel must sort through as they prepare their various pre-trial motions. Adams said his office is making every effort to turn over as much information as possible well ahead of the timeframes normally required of prosecutors in this type of case, specifically so there will be as few large caches of data to go through as possible later on. Adams said his office is still in possession of nine electronic devices seized at the time of the defendants' arrest in March which experts are struggling to unlock and access and he does not know when or whether that information will become available to him.

There are a number of requirements in place for the government to provide evidence in its possession to the defense ahead of trial. That evidence is going through an expert whose job it is to identify any disclosure issues with the evidence, help to organize it, and provide it to the many defense attorneys involved — which avoids technical issues with the evidence, but also slows the process.

By all accounts, there are hundreds of thousands of pages of documents, transcripts, records, receipts, emails, and other evidence already disclosed in this case — terabytes of digital information. Fishman's attorney also revealed there were a number of drug test results and communications with the Hong Kong Jockey Club's drug testing lab as part of that evidence, though he did not expand further on what those results were.

Partially as a result of that volume of evidence, the timeline for the case was laid out only in part by Vyskocil Tuesday. Attorneys were asked to provide their first round of motions by Feb. 5; that first round is likely to include motions from defense attorneys to dismiss all or parts of the superseding indictment. The first round of motions is likely to be considered by the court at some point in April, with May as a possible target for a second round of attorney motions. Those dates could be revised further, depending on how much new evidence surfaces in the meantime.

Last week, a status conference for drug maker Scott Mangini set tentative deadlines for attorney motions and a trial date of May 10. Mangini's case also had a superseding indictment filed which did not substantially change the charges against him but which removed previous co-defendant Scott Robinson from his case. Robinson entered a plea in the case earlier this fall.

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Court Documents Reveal Indicted Trainers, Others Will Move To Exclude Wire Taps

Documents filed in federal court ahead of a status conference scheduled for next week indicate defense teams in the federal case surrounding an alleged horse doping ring will likely try to get as much evidence as possible excluded before the case goes to trial. A letter filed on behalf of trainer Jorge Navarro and several of the co-defendants charged alongside him outlines a series of motions their attorneys plan to file in the route to a trial date. The list anticipates motions to dismiss certain counts, suppress post-arrest statements, expert testimony, “introduction of test results,” and evidence derived from search or seizure of property, including electronic property, among other anticipated motions. The group of co-defendants that includes Navarro is also likely to move “to exclude references to horse deaths or horse injuries at trial.”

Counsel representing trainer Jason Servis indicated that defense team will make motions to suppress wiretaps and cell phone search and seizure, among other motions. That letter to U.S. District Judge Mary Kay Vyskocil emphasized the tremendous volume of evidence provided from prosecutors, who worked with the FBI as part of the investigation, to defense attorneys.

“We note that these recent productions, which we understand total approximately 2.4 million files, are more than 43 times the cumulative volume produced to the defense prior to Sept. 29, 2020,” the letter reads.

There is some debate about how difficult it should be for defense attorneys to review the information provided to them, according to a subsequent letter to the judge from prosecutors. In that letter, acting U.S. Attorney Audrey Strauss states the government's evidence includes eight terabytes of data, including veterinary and shipping records, data from 80 electronic devices, drug marketing material, laboratory test results audio of intercepted calls and other data. All of that, Strauss, wrote, has been organized into folders and subfolders for the defense.

Strauss also outlined three groupings of defendants it expects to try together, but did not provide insight on the reasons for the groupings, as not every defendant is facing the same charges. The groups are:

Group 1: Navarro, Erica Garcia, Christopher Oakes, Michael Tannuzzo, Marcos Zulueta, Rebecca Linke
Group 2: Servis, Kristian Rhein, Michael Kegley Jr., Alexander Chan
Group 3: Seth Fishman, Jordan Fishman, Lisa Giannelli, Rick Dane Jr.

A status conference is scheduled for next week, where it's expected attorneys and the judge will confer on a possible trial schedule.

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Superseding Indictment Shows Navarro And Servis Doping Programs Stretch Back To 2016

A superseding indictment filed this week revealed a few new details about the doping programs orchestrated by embattled trainers Jorge Navarro and Jason Servis and others from the much-reported federal indictments earlier this year. The superseding indictment includes four charges of drug adulteration and misbranding conspiracy as well as one count of mail and wire fraud.

Servis, along with veterinarians Dr. Kristian Rhein and Alexander Chan, were charged with mail and wire fraud conspiracy for using the U.S. mail to distribute and receive misbranded or adulterated drugs. One count of drug adulteration/misbranding includes Navarro, veterinarian Dr. Erica Garcia, Marcos Zulueta, Michael Tannuzzo, Christopher Oakes and Dr. Seth Fishman. Another count groups Fishman with son Jordan Fishman, alleged drug distributor Lisa Giannelli, and trainer Rick Dane Jr. A third count charges Navarro, Servis, Rhein, Chan, and drug representative Michael Kegley Jr., who allegedly sold SGF-1000. The fourth adulteration/misbranding charge is against Rebecca Linke.

Gregory Skelton, Ross Cohen, Nick Surick, Chris Marino and Servis's former assistant Henry Argueta are not named in the superseding indictment. It remains unclear from their federal case files whether this could mean they have made deals with federal prosecutors to provide information or testimony for lighter sentences. Many of the documents in their files in the case remain under seal.

There were no new defendants identified in the indictment beyond those originally indicted in March.

If found guilty, the defendants could be required to forfeit assets obtained as a result of their crimes. The drug adulteration and misbranding charges carry maximum prison sentences of five years, but the mail and wire fraud conspiracy charge carries a maximum sentence of 20 years.

The doping programs are described in this week's indictment much the same way they were in the original indictment from March, depicting performance-enhancing drugs manufactured in laboratories that are not Food and Drug Administration-approved. Those drugs were often deliberately mislabeled to evade suspicion as they traveled through the backstretch or through the mail. Drug makers sold the substances to trainers, and some trainers sold them to one another, occasionally changing their labels along the way. Trainers were assured the drugs could not test, or that in the case of SGF-1000, it could only produce a false positive for dexamethasone, prompting trainers and veterinarians to cause vet records be altered to cover for any accidental or deceptive positives.

This week's indictment did reveal for the first time that doping by both Navarro and Servis went on as far back as 2016 and continued through February or March 2020. Servis stands accused of using SGF-1000 and other illegal substances on “virtually all” of his trainees during that time.

Specific horses named

Like the March indictment, this week's documents described the doping of Navarro trainee XY Jet as an example of Navarro's doping network at play. Prosecutors describe Zulueta shipping an adulterated pain blocker overnight to Navarro on Feb. 9, 2019 from Zulueta's base in Pennsylvania to Navarro in Florida for administration to XY Jet. On Feb. 11, after Navarro expressed disappointment with the horse's workout, Oakes provided Navarro with another pain blocker for the horse, and on Feb. 13, Garcia agreed to administer a misbranded blood builder called “monkey” to the horse. On Feb. 13, XY Jet won an allowance optional claimer at Gulfstream Park in preparation for the Group 1 Dubai Golden Shaheen on March 30.

On March 22, while in the United Arab Emirates, Navarro is accused of personally administering “monkey” to the horse, later telling Zulueta, “I gave it to him through 50 injections. I gave it to him through the mouth.”

Navarro later credited Fishman with the horse's win in the race.

XY Jet would die of a heart attack in January. He had earned $3 million at the time of his death.

Additional details also surfaced about Servis's doping program with regard to Maximum Security. In addition to the SGF-1000 he was already accused of giving the horse, this week's indictment claims the horse also received clenbuterol as a performance enhancer. Although a legal therapeutic drug for lung infections, clenbuterol is known to have an anabolic-like side effect if dosed repeatedly. New Jersey racing regulators pulled biological samples from Maximum Security on June 5, 2019 as part of a pre-race test for the Pegasus Stakes on June 16, where he would run second. According to the indictment, the colt had gotten a dose of SGF-1000 just days prior, but that was not detected in test results.

A representative with the company producing SGF-1000 is on record as admitting he did not know the precise contents of SGF-1000 and acknowledging that Servis accounted for nearly as many sales of the drug as his veterinarian.

Covering their tracks

Drugs were transported in packaging referring to them as “for research purposes only” (likely because the federal restrictions that apply to mailing prescription drugs do not apply to research materials) or as “homeopathic” products.

Another strategy to make the substances look less threatening was to deliberately mislabel them as dietary supplements, which are not under the FDA's purview.

In an intercepted call between Kegley Jr. and Rhein (both of whom were affiliated with SGF-1000 producer MediVet Equine), Kegley stated, “[W]e can even put on the box, you know, 'dietary supplement for equine [horse.]' That way it's not, no one even has to question if it's FDA approved or not — it's strictly a supplement … ”

Read more about the tricky business of regulating dietary supplements, and why producers of PEDs sometimes market their products this way, in this 2016 Paulick Report feature.

SGF-1000 has been marketed in different ways before and after it began drawing scrutiny from regulators, but the indictment claims the substance contains growth factors including fibroblast growth factor and hepatocyte growth factor.

According to the indictment, Servis, Rhein, and Chan would falsify not only veterinary records to conceal the administration of SGF-1000, but also billing records so owners wouldn't know what their horses were receiving. Rhein, Chan, and unnamed others would bill the expense of the drug as “acupuncture and chiropractic” treatments which the horse never received. Misbranded clenbuterol would appear on bills under a designation called “stable supplies.”

New substances

In addition to previously-described SGF-1000, various versions of EPO, and pain blockers, a couple of new substances were mentioned in this week's indictment. ITPP, known more formally as myo-inositol trispyrophosphate, has been studied in human medicine as a treatment option for cancer patients since it increases oxygenation to tissues. Because of that effect however, it has also been a favorite of human athletes looking for illegal performance enhancement.

In 2016, trainer Roy Sedlacek was handed a five-year suspension of his license after two of his horses tested positive for AH-7921, a substance with morphine-like qualities. Sedlacek told officials he thought he was giving his horses ITPP. ITPP is found on a number of dubious websites purporting to offer performance-enhancing drugs or supplements to horse trainers. In reality, testing experts say it's quite expensive to produce, raising questions about how much of the ITPP marketed to trainers is genuine. Australian authorities have voiced concerns about the substance there as far back as 2011, claiming its use was then believed to be common in American harness racing.

Fishman supplied the ITPP to Navarro and others under the name ITP Plus and also offered a similar product called BB3, which purported to be a blood builder. Those blood builders were supposed to pass drug tests that would catch EPO, Fishman explained, because although they acted similarly, they were different substances. Between January 2017, Navarro paid Fishman “tens of thousands of dollars” to purchase PEDs.

On an intercepted April 2019 call with an unidentified prospective customer, Fishman makes no bones about the implications of administering the substances he makes, particularly untestable blood builders.

“Don't kid yourself: if you're giving something to a horse to make it better, and you're not supposed to do that … that's doping,” Fishman said. “You know, whether or not it's testable, that's a different story.”

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