Navarro Enters Guilty Plea To One Count Of Drug Adulteration And Misbranding Conspiracy

Disgraced trainer Jorge Navarro withdrew his plea of not guilty to two felony charges of drug adulteration and misbranding conspiracy on Aug. 11 and entered a guilty plea to one charge of the same offense. In a video conference before District Judge Mary Kay Vyskocil, Navarro admitted he administered and directed others to administer non-Food and Drug Administration approved misbranded and/or adulterated drugs to improve the performance of racehorses under his care. He also said he took specific actions to avoid detection of those drugs, including using drugs he believed were not testable and working with veterinarians to falsify bills sent to owners, hiding the administration of illegal drugs.

At Wednesday's hearing, Navarro admitted he administered illegal medications to racehorses between 2016 and March 2020, including top runners X Y Jet, War Story, Shancelot, Sharp Azteca, and Nanoosh. Specifically, he admitted that he gave X Y Jet “blood building” substances before an allowance optional claiming race on Feb. 13, 2019, at Gulfstream Park and the Group 1 Dubai Golden Shaheen.

X Y Jet died suddenly in January 2020, at which point he had earned over $3 million. Navarro said at the time the horse was “part of my family.”

Additionally, Navarro admitted he gave bronchodilators to co-defendant Jason Servis. Servis recently filed a motion seeking to have wiretaps taken by the FBI suppressed on the basis that the federal agency was misleading at the time of its application for those wiretaps.

Navarro said he shipped a blood doping agent from his home in Florida to co-defendant Michael Tannuzzo in New Jersey, and also that he gave drugs to co-defendant Marcos Zulueta. When asked whether he provided drugs to other trainers, Navarro paused and said, “I don't recall” before saying he had provided bronchodilators to Servis.

The misbranded or adulterated substances included blood doping agents, vasodilators, misbranded bronchodilators, “bleeder pills” and SGF-1000, according to Navarro. The blood doping agents were produced by Seth Fishman and Gregory Skelton, per Navarro. Some of the substances, he said, were shipped in from outside the United States, including Panama and the Dominican Republic. Navarro did not clarify which substances originated outside the U.S.

Had the case proceeded to trial, prosecutors revealed they had a recording of a phone conversation between Navarro and an unidentified owner of Nanoosh made in May 2019 in which Navarro and the owner agreed to continue giving the horse illegal drugs in hopes of improving his performance. Nanoosh, who was owned in partnership between Zayat Stables, Rockingham Ranch, and David A. Bernsen, was the winner of the Zia Park Derby. In May 2019 he finished sixth in the G3 Salvator Mile and would later be third in his final career start in an allowance optional claiming race.

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Vyskocil did not sentence Navarro at the Aug. 11 hearing but did outline the parameters of the sentencing guidelines that he agreed to in his plea deal with prosecutors. According to statute, the charge he pleaded guilty to comes with a maximum prison sentence of five years, and that was the maximum outlined in the sentencing guidelines. However, Vyskocil made it clear that she could choose to assign penalties beyond the sentencing guidelines and this would not empower Navarro to withdraw his plea.

Navarro could also face a period of supervised release after serving his prison sentence, and that release may come with a number of conditions. Violation of those conditions would result in Navarro going back to prison with no credit for time served on supervised release.

There are a number of elements to Navarro's crimes which had suggested a longer sentence in federal prison. The government uses a formula to help suggest a possible sentence depending on aggravating or mitigating factors, and the elements of Navarro's crime could have escalated his prison sentence to 14 to 17.5 years, but Vyskocil said the maximum allowed by statute was five, and that's what was written into the agreement Navarro signed with prosecutors. Aggravating factors or “enhancements” in Navarro's case included his use of “sophisticated means” to conceal his crimes, his abuse of public trust, and his role as an organizer of the conspiracy.

Federal prison sentences, according to Vyskocil, require that at least 85 percent of the sentence be served; although a prisoner may have the sentence shortened slightly for good behavior, they are not eligible for parole.

There are also likely to be financial penalties to Navarro as a result of his plea. He agreed he will be subject to a fine ranging from $40,000 to $400,000. He has also agreed to forfeit $70,000, and is further on the hook for $25,860,514 in restitution payments. The latter amount represents the amount of purse money won by Navarro's horses as a result of his crime. As with fellow defendant Dr. Kristian Rhein, prosecutors will provide a list of victims of the crime at the time of sentencing, which is scheduled to take place in December.

Vyskocil also noted that Navarro may face additional consequences to his guilty plea as a result of his immigration status. Navarro, 46, is not a citizen of the U.S. but is a citizen of Panama. Vyskocil said immigration authorities could choose to detain or deport him at the conclusion of his prison sentence.

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Drug Distributor Kegley Pleads Guilty, Faces up to 36 Months in Jail

Among the individuals originally indicted in the doping scandal involving top trainers Jason Servis and Jorge Navarro, Michael Kegley Jr. entered a guilty plea Friday morning during a teleconference before federal judge Mary Kay Vysockil. Kegley pled guilty to one count of drug adulteration and misbranding.

Kegley had originally pled not guilty to the charges.

Kegley will not be sentenced until a Nov. 22 hearing, but it was revealed during Friday's proceedings that he has entered into a plea agreement with government lawyers in which he has agreed to a sentence ranging from 30 to 36 months. Vysockil noted that there is no parole involved when someone is sentenced on federal charges and that most guilty parties serve at least 85% of their sentence.

Kegley, a 41-year-old Lexington, KY resident, was the director of sales for a company based in Nicholasville, KY called MediVet Equine Associates LLC, and admitted in court that the firm produced and sold drugs that were not permissible to be used on  racehorses. The primary drug sold by Kegley was SGF-1000. In phone calls intercepted by the FBI, Servis admits to using SGF-1000 and, at one point, says, “I've been using it on everything almost.”

Vysockil, a United States District Judge of the United States District Court for the Southern District of New York, confronted Kegley, saying, “At this time I would like you to tell me what you did that makes you guilty of the offense charged…Specifically, what you did, when you did it, with whom you did it, where you did it.”

Kegley responded: “Beginning in 2016, I was an independent contractor for a company, MediVet Equine. We sold a variety of products, including SGF-1000. I sold these products to veterinarians, horse trainers. When I did that I knew there was no medical prescription for those products. Also at the time, I knew that the product was not manufactured in an FDA approved facility, nor was it approved for sale by the FDA.”

Vysockil continued to press Kegley, asking a series of follow-up questions. She asked Kegley if he knew that the trainers buying the products intended to use them on Thoroughbred racehorses and whether or not he knew the products were to be used in such a way that regulators could not detect the products through drug tests. Kegley answered “yes” to both questions.

Shortly after Friday's hearing, Manhattan U.S. Attorney Audrey Strauss issued a statement, which read: “Michael Kegley promoted and sold unregulated performance enhancing substances intended for use by those engaged in fraud and unconscionable animal abuse in the world of professional horseracing. This conviction underscores that our Office and our partners at the FBI are committed to the prosecution and investigation of corruption, fraud, and endangerment at every level of the horse racing industry.”

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Defendant In Federal Doping Case Sentenced To 12 Months Of Home Detention

Sarah Izhaki, one of the defendants in the March 2020 federal indictment surrounding illegal doping rings in horse racing, was sentenced to 12 months of home detention and three years of supervised release by U.S. District Judge Mary Kay Vyskocil on Monday. Izhaki entered a guilty plea at the end of 2020 on a charge of conspiracy to unlawfully distribute adulterated and misbranded drugs.

According to federal documents, Izhaki was a distributor of illegal drugs which were neither approved for sale in the United States nor provided pursuant to prescriptions. Izhaki sold products directly to trainers, sometimes out of her car in various parking lots. The primary drug she was accused of peddling was a Mexican-produced erythropoietin (EPO) which was originally formulated by an unidentified source to treat cancer in pets. Izhaki sold the EPO to an undercover source and an undercover officer and also suggested that she could provide a masking agent she called “The Devil,” as well as amphetamines. Izhaki said The Devil was so strong a horse could be given cocaine and not test positive.

Izhaki appeared before the court during Monday's sentencing proceedings, which took place over video conference.

“I am very sorry for the bad decisions I made against the poor animals,” said Izhaki, speaking through an interpreter. “If I could do it again, I would have made different decisions.

“I know that my being remorseful and being sorry is not enough. The only thing I can do now is make the right decisions moving forward.”

Prosecutors had requested a prison sentence of 12 to 18 months in the case per presentencing guidelines, while the defense requested a ruling of time served. Izhaki had previously agreed to a forfeiture of her proceeds from the drug sales, which were alleged to take place between February 2018 and November 2019. The forfeiture totaled over $103,000 but attorneys had agreed Izhaki would be made to pay only $20,000, citing a failure to pay the full amount.

Vyskocil was very clear that other defendants in the federal case should not feel emboldened by her decision not to send Izhaki to prison.

“I recognize that many people in the horse racing industry and other cases that are pending may well be looking at what the court does today, paying attention to this case and viewing it in effect as a benchmark or bellwether for other horse doping cases and for the abuses in the industry in general,” said Vyskocil. “I want to say on the record that if you're doing that, you're making a mistake. I say that because in the court's view, the circumstances in this case are somewhat unique.”

Vyskocil said she believed Izhaki was manipulated into selling the illegal substances after a difficult upbringing made her overly inclined to please the people around her. Sentencing documents describe a strict orthodox Jewish upbringing in Mexico for Izhaki, followed by an arranged marriage at the age of 14 and a divorce when she was 16 that resulted in estrangement from her family. Izhaki became a naturalized United States citizen in part to seek better medical care for a degenerative condition that has significantly impaired her vision and is expected to leave her legally blind. Additionally, defense counsel cited numerous physical ailments and surgeries, mobility challenges, chronic pain from multiple serious car accidents — one of which delayed her sentencing by several months — and mental health challenges. The uncertainty over her impending sentence is believed to have worsened her health conditions. These factors, Vyskocil stated, made it likely that a prison sentence would cause significant deterioration of her physical and mental health.

Vyskocil said she thought it unlikely that Izhaki would reoffend, given her apparently genuine remorse and almost immediate interest in entering a guilty plea in the case.

Izhaki was indicted alongside her daughter, Ashley Lebowitz. Prosecutors chose in December to defer prosecution in Lebowitz's case.

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Judge Denies Defendant Motions To Dismiss, Request For Recusal In Federal Drugs Case

Ever since March of last year, when more than two dozen trainers, veterinarians, and others were indicted for using or selling misbranded and adulterated drugs, racing fans everywhere have been asking – when is the next round of federal indictments coming? A May 14 status conference in the case provided no more clarity on whether or when a new indictment could be filed.

U.S. District Judge Mary Kay Vyskocil pressed prosecutors on the question Friday, since they – and The Jockey Club, which claims responsibility for part of the federal investigation – have talked about the possibility of a superseding indictment for months. The topic has come up in court before, since defense counsel argue they can't reasonably prepare a defense when they don't know if there are new twists coming for their clients. (A superseding indictment would replace an older indictment, and could include new charges for existing defendants, as well as the addition or removal of defendants.)

“It's certainly not our intention to announce a superseder next week or next month,” said Assistant U.S. Attorney Andrew Adams. “As we sit here today I am not able to say that we are certainly or even likely to add charges in this case. This is all speculation and it need not delay moving the case forward.”

“At some point the government needs to get real and stop speculating here,” replied Vyskocil. “This case is moving forward, and I'm certainly not going to hold anything up for the government.”

Vyskocil was asked by defense attorneys to stretch out the schedule outlining when motions and responses needed to be filed in the case, as they say they're still awaiting documentation on the wire taps used by the FBI. She declined to delay things further.

Previous discussions in the case suggested that the defendants may be split into three groups and tried in three separate trials, and Vyskocil hopes the first one can begin later this year, with the other two in early 2022.

Vyskocil also reacted to a letter motion from defense attorneys requesting she recuse herself from the case, expressing frustration and disgust over the motion, which she said contained “multiple plainly false statements.” Among other things, the defense had claimed Vyskocil could not be objective because she had previously had a financial interest in the outcome of four races, in which horses she co-bred ran against trainees of indicted trainers Jorge Navarro and Jason Servis. Vyskocil pointed out that she did not own the two horses making those four starts by the time they started their careers, and that none of those four starts could have resulted in breeder awards for her.

“All of the information upon which the defense relies has been publicly available since the case was assigned to me,” she said. “This meritless motion appears to be a calculated attempt to divert attention from the serious crimes with which the defendants have been accused and to obstruct and delay the orderly administration of the case. The motion is denied as frivolous, and obvious tactical gambit to delay the determination of the defendants' motion to dismiss.”

Vyskocil said she had been close to ruling on several defendants' motions to dismiss just before receiving notification they were about to ask her to recuse herself. At Friday's hearing, she denied those motions to dismiss.

Attorneys on both sides were given 30 days to confer about the proposed defendant groupings for trial and about the expert witness list each will call. Vyskocil anticipated the next status conference would be held in early September.

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