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Attorneys For Servis Say FBI Misled Court On Wiretaps, Want Evidence Suppressed

Attorneys for indicted trainer Jason Servis filed a motion on Monday in U.S. District Court for the Southern District of New York asking Judge Mary K. Vyskocil to suppress evidence obtained through Title III wiretaps on the telephones of Servis, trainer Jorge Navarro and veterinarian Kristian Rhein in connection with the March 2020 federal indictments of more than two dozen people alleged to be involved in a multi-state racehorse doping scheme.

Attorneys Rita Glavin and Michael Considine said in court filings that the FBI in seeking the wiretaps made “material misstatements and omissions” that were “deliberate or reckless” in seeking the wiretap on Servis authorized on April 30, 2019, and extended three times. The attorneys said the wiretap resulted in the “interception of thousands of communications” of Servis, one of several trainers indicted in the federal investigation that began in 2017.

First, the attorneys state, the FBI chose not to inform the court that no horses under Servis' care failed any post-race drug tests during the span of the investigation. “By contrast,” they wrote, “horses trained by Thoroughbred horse trainer Bob Baffert (who has never been criminally charged) have failed numerous post-race drug tests in the last several years, most recently failing a post-race drug test for the 2021 disqualified Kentucky Derby winner, 'Medina Spirit.'” (Editor's Note: A hearing has yet to be conducted on Medina Spirit's positive drug test and he has not been disqualified from the Derby.)

Secondly, the attorneys allege, FBI agents consistently misstated the nature of two drugs mentioned in connection with Servis: SGF-1000, a product marketed by Kentucky-based Medivet Equine, and the bronchodilator clenbuterol.

“SGF-1000 was repeatedly tested prior to the wiretap and found to contain no performance enhancing substances,” the attorneys claim, citing a number of emails between different parties and the Hong Kong Jockey Club, whose lab apparently tested the substance that is said to contain sheep collagen as a primary ingredient. Despite that, the attorneys wrote, an FBI agent seeking the original wiretap or extensions “repeatedly described SGF-1000 to the court as a 'growth factor' and 'performance enhancing substance.'”

The attorneys' memorandum in support of the motion to suppress also quotes from intercepted comments by Rhein (a part owner of Medivet) that SGF-1000 does not contain any illegal substances. “Everything we've done is by the letter of the law,” Rhein told Servis in one conversation.

On Tuesday, Rhein pleaded guilty in federal court to administering and distributing adulterated and misbranded drugs and faces three years in prison.

“In its zeal to secure and maintain the wiretap,” the attorneys claim, “the government also misled the issuing courts about clenbuterol, wrongfully characterizing it as a performance-enhancing drug that was banned by various state regulators. In fact, clenbuterol was expressly permitted in the jurisdictions Mr. Servis' horses raced. “Although local rules of the relevant jurisdictions provide that a horse cannot race when clenbuterol is present within their system above a certain threshold at the time of a race, none of Mr. Servis' horses failed a single post-race test during the period of the government's investigation. The government withheld this fact from the issuing courts as well,” the attorneys wrote.

Their final argument claims that the FBI “misled the court about the necessity for a wiretap of Mr. Servis' phone in its requirement to explain that 'normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous.' … The government failed to take even the most basic of investigative steps with respect to Mr. Servis, and instead ran to the District Court for a wiretap as essentially its first investigative step.”

The motion also seeks suppression of evidence from wiretaps on the phones of Rhein and Navarro, the latter of whom has asked the court for a hearing to change his “not guilty” plea.

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Rhein Implicates Servis When Switching Doping Plea to ‘Guilty’

Kristian Rhein, a suspended veterinarian formerly based at Belmont Park, on Tuesday changed his plea to guilty on one felony count within the federal government's sprawling prosecution of an allegedly years-long conspiracy to dope racehorses.

Speaking in open court, Rhein also directly implicated five others, most notably co-defendant Jason Servis, the now-barred trainer who was his regular client and allegedly administered performance-enhancing drugs [PEDs] on practically every Thoroughbred under his control.

“I, along with Jason Servis, concealed the administration of SGF-1000 and clenbuterol from the owners by billing for other services and dispensables to avoid scrutiny by the owners,” Rhein said during an Aug. 3 teleconference before Judge Mary Kay Vyskocil of United States District Court (Southern District of New York).

“I, along with Jason Servis, were leaders and organizers [of others who performed allegedly criminal actions], which included my associate, Dr. Alexander Chan; Jason's assistant, Henry Argueta; my other associate, Juliano Suarez, and Michael Kegley [Jr.],” Rhein said.

Also revealed for the first time during Tuesday's hearing was the staggering amount of purse money-$26 million-that federal prosecutors are alleging Servis won illegally by racing horses purportedly hopped up by drugs that Rhein's practice provided.

For perspective, that massive earnings figure represents half the $52 million in purses that Servis's trainees bankrolled during his entire two-decade training career between 2001 and 2020.

And that $26-million amount will be additionally significant when Rhein gets sentenced Dec. 2.

That's because according to federal sentencing guidelines, ill-gotten monetary gains within the $25 million to $65 million range will escalate the nature of Rhein's offense by “22 levels,” assistant U.S. Attorney Sarah Mortazavi told the judge.

“I am not a part of the winnings,” the 49-year-old Rhein was quick to add.

Vyskocil then curtly interjected to clarify that was not what she was asking the defendant to answer. She said she only wanted to confirm whether Rhein was “freely and voluntarily agreeing” that prosecutors were presenting $26 million as the proper amount of Servis's purse winnings. Rhein then said yes.

As part of a plea agreement, Rhein on Tuesday withdrew his initial plea of not guilty from 2020 and instead pled guilty to one count of drug adulteration and misbranding for use in the covert doping of Thoroughbred racehorses.

Vyskocil said that Rhein's maximum penalty is a term of imprisonment up to three years, plus supervised release for up to one year. The maximum fine allowed is $10,000, or two times the amount of gross pecuniary gains or twice the loss to others as result of offense, whichever is greater.

As part of his plea agreement, Rhein also has to forfeit to the U.S. the criminally gained proceeds that are directly traceable to his offense, which he agreed totaled $1,021,800. Vyskocil said he must pay at least $671,800 of that amount before his sentencing date in four months.

Rhein also agreed to pay $729,716 in restitution to an undisclosed list of other victims. Mortazavi said prosecutors will file with the court an under-seal list of exactly who those victims are at the time of Rhein's sentencing.

As she has asked other defendants to do when they have changed their guilty pleas in her court, Vyskocil asked Rhein to detail exactly what he did to constitute his crimes.

“From at least in or about December 2016 through at least in or about March 2020, in the Southern District of New York and elsewhere, I marketed and distributed in interstate commerce misbranded and adulterated drugs to trainers and veterinarians of Thoroughbred racehorses,” Rhein said.

Rhein added that this was “an effort to assist those trainers and veterinarians to improve the performances of racehorses through the administration of such misbranded and adulterated drugs while avoiding detection of that scheme by federal and state drug regulators.”

At a later point in the hearing, when Vyskocil asked Rhein if he understood how his professional standing as a veterinarian would play a role in his sentencing, Rhein admitted that he did.

“Because I was a veterinarian, I am held to a much higher standard as a professional, and I betrayed that trust to the people [who owned] not only the horses that I was taking care of, but also to all the people that listened to me and know me and trust in my professional opinion,” Rhein said.

“When you did all of what you described to me,” Vyskocil asked, “did you know that what you were doing was wrong?”

“Yes, your honor,” Rhein replied.

“And did you know at the time that what you were doing was illegal?” Vyskocil asked.

At that point Rhein paused and said he needed to confer with his attorney before answering. After a brief off-camera pause, Rhein replied, “Yes, your honor, I did.”

Rhein began his veterinary career in 2002 and soon specialized in racehorse treatment. He started a practice at Belmont Park in 2015. In 2017, he partnered to form a bloodstock services company, Empire Thoroughbreds.

Rhein is now the fifth of 28 defendants to plead guilty to charges in the federal government's prosecution of an alleged “corrupt scheme” to manufacture, mislabel, rebrand, distribute, and administer PEDs to racehorses all across America and in international races. Indictments were unsealed to coincide with a flurry of coordinated arrests nationwide on Mar. 9, 2020.

One defendant, the veterinarian Scott Robinson, has already pled guilty to conspiring to unlawfully distribute adulterated and misbranded drugs for the purpose of doping racehorses. In March 2021 he was sentenced to 18 months in prison, and also had to forfeit $3.8 million he gained from his illicit actions.

Scott Mangini, Robinson's business partner, pled guilty in April to conspiring to unlawfully distribute adulterated and misbranded drugs with the intent to defraud and mislead. The government contended that Mangini, a former pharmacist whose license was suspended in 2016, sold and shipped millions of dollars worth of “blood builders” used by trainers to increase red blood cell counts and improve a horse's endurance. He is to be sentenced Sept. 10.

Sarah Izhaki, whose role involved selling misbranded versions of Epogen, pled guilty to the same charge as Robinson and in June was sentenced to time served plus three years of supervised release. Vyskocil could have sentenced Izhaki to a prison term of 12 to 18 months, but opted for the more lenient punishment due to extenuating circumstances that included Izhaki's poor health.

Kegley, an independent contractor for a Kentucky-based company called MediVet Equine, pled guilty in July to one count of drug adulteration and misbranding. He said at his plea hearing that one of those drugs was SGF-1000, and that “I knew that the product was not manufactured in an FDA approved facility, nor was it approved for sale by the FDA.” He is to be sentenced Nov. 22.

Barred trainer Jorge Navarro, who along with Servis is the most notorious and prominent defendant in the alleged doping conspiracy, will have an Aug. 11 change-of-plea hearing at which he is expected to alter his initial “not guilty” pleas to two indicted counts. He is accused of a years-long PED doping program that allegedly involved frequent use of SGF-1000.

According to the initial March 2020 indictment, Rhein was one of those veterinarians to whom Kegley routinely sold SGF-1000, and prosecutors allegedly have Rhein on tape in July 2019 bragging that he sold “assloads” of SGF-1000.

In a separate wiretapped conversation, from June 2019, Rhein allegedly told Servis that the purportedly doped MGISW Maximum Security wouldn't trigger a positive for SGF-1000 because “they don't even have a test for it in America.”

At one point during Tuesday's hearing prior to Rhein's guilty plea, Vyskocil asked Mortazavi to outline the evidence that would be brought against the him so the defendant would know what he was up against if his case instead went to trial.

Mortazavi said the government's proof included:

“Wire intercepts of calls involving Kristian Rhein and others promoting and discussing SGF-1000, including the fact that that drug was untestable on drug tests, and including discussions on relabeling the product once there was increased law enforcement and regulatory scrutiny of the legality of using SGF-1000, particularly on racehorses.

“We would have evidence of controlled purchases of SGF-1000 made before and after there was increased law enforcement scrutiny of the drug, in which the labelling had been altered later, so that the drug was described as 'homeopathic' in order to specifically avoid regulatory detection.

“Archived web pages advertising SGF-1000 on the website of the manufacturer; promotional materials stating that SGF-1000 contained, among other things, multiple growth factors, and that it operated as a vasodilator.

“We would also have evidence of…false veterinary bills altered by Dr. Rhein's veterinary practice for racehorse owners, in which charges for SGF-1000 were hidden, as well as charges for the prescription drug clenbuterol distributed to trainers without a valid prescription….

“We would have proof of shipment of SGF-1000 into the U.S. from overseas into MediVet's distribution center in Kentucky. And we would also have shipment records of SGF-1000 across the United States,” Mortazavi summed up.

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After Judge Denies Motion To Dismiss, Navarro Expected To Change Not Guilty Plea

Trainer Jorge Navarro will likely become the latest in a string of federal defendants changing his not guilty plea, according to documents filed late Friday in an ongoing illegal drugs case. A change of plea hearing for Navarro is set for Aug. 11 before U.S. District Judge Mary Kay Vyskocil. Navarro is charged with two felony counts of drug adulteration and misbranding related to what prosecutors say is a complex ring of veterinarians, drug makers, and suppliers who worked together to manufacture, sell, distribute and use illegal medications to dope racehorses.

The federal case file does not indicate whether Navarro will change his plea in one or both counts.

Also on July 30, Vyskocil filed an order denying a series of motions from Navarro and other defendants to dismiss the charges against them. Several defendants had argued that they could not be charged under federal drug misbranding laws, in part because they did not commit those violations and in part because prosecutors could not identify legitimate victims of their alleged crimes.

Vyskocil asserted in her order that prosecutors were accusing the defendants of a conspiracy to commit violations of the Federal Food, Drug, and Cosmetic Act and that the alleged failure to identify specific and relevant victims of the crimes at hand does not constitute a valid reason to dismiss the case. Prosecutors have depicted the FDA and Customs and Border Protection as victims of the crimes, along with state racing regulators, since the misbranding and use of the drugs were designed to deceive and evade those agencies. Vyskocil stated those were appropriate and proper victims of the crimes alleged.

Some defendants had also tried to have the case dismissed on the grounds that the Horseracing Integrity land Safety Act (HISA) would soon supersede the authority of the FDA in horse racing under the Food, Drug and Cosmetic Act. Vyskocil also did not find that argument compelling, pointing out that HISA has not yet been enacted (it's scheduled to go into effect on or before July 2022) and that legal precedent cautions against the assumption that one new law will automatically alter authorities granted by a previous law. Besides, Vyskocil pointed out, HISA is not concerned with the misbranding of drugs, but rather the use of drugs in horse racing. The former is the basis for the federal charges against Navarro and his co-defendants.

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On July 23, federal defendant Michael Kegley altered his plea to guilty in the case, admitting he marketed and sold adulterated substances to trainers and veterinarians, knowing there was no valid prescription for them and that they were not made in a FDA-approved facility. Earlier this week, a change of plea hearing also appeared on the docket for Dr. Kristian Rhein, who was alleged to help distribute SGF-1000, one of the drugs marketed by Kegley.

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Navarro to Change ‘Not Guilty’ Plea in Doping Scandal

Barred trainer Jorge Navarro, the most notorious and prominent defendant in the international racehorse doping scandal that rocked the racing industry when the feds arrested 28 alleged conspirators in March 2020, has just been granted an Aug. 11 change-of-plea hearing at which he is expected to alter his initial “not guilty” plea from last year.

This bombshell change in the case could mean a new pleading of “guilty” is in the pipeline for Navarro, perhaps as part of a sentencing bargain that has played out behind the scenes between federal prosecutors and defense attorneys.

Within the past week, two other alleged co-conspirators—a veterinarian and a drug distributor—have either already changed their pleas to guilty or are expected to do so at an upcoming hearing.

The news about Navarro's change-of-plea hearing arrived in the form of a July 30 court order signed by Judge Mary Kay Vyskocil that landed on the electronic docket for United States District Court (Southern District of New York) around 5 p.m. Friday afternoon.

Five separate counts are included within the government's series of indictments that allegedly involve a vast network of co-conspirators who purportedly manufactured, mislabeled, rebranded, distributed, and administered performance-enhancing drugs (PEDs) to Thoroughbred and Standardbred racehorses all across America and in international races. Navarro is named in two of the counts.

Count One is being referred to in court documents as the “Navarro Conspiracy,” which alleges

a years-long doping program organized and executed by Navarro on horses that he trained and controlled.

Count Three alleges a similar conspiracy organized by now-barred trainer Jason Servis, who is accused of doping nearly all of the racehorses under his control in a similar time frame during the 2010s decade, including the disqualified 2019 GI Kentucky Derby winner Maximum Security.

That third count, the “Servis Conspiracy,” further implicates Navarro, Michael Kegley Jr., Kristian Rhein, and Alexander Chan.

Rhein and Chan are veterinarians who practiced at racetracks during the time of their alleged conspiracy. Kegley was an independent contractor for a company, MediVet Equine.

Kegley just changed his plea to guilty July 23. In doing so, he told the judge that he “sold a variety of products,” including the PED known as SGF-1000. “I sold these products to veterinarians, horse trainers,” Kegley said at last week's hearing. “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.”

On July 28—five days after Kegley's blunt admission in open court—Rhein asked for and was granted a change-of-plea hearing, which is coming up Aug. 3. The feds allegedly have him taped in a wiretapped conversation stating that he sold “assloads” of SGF-1000 to trainers, presumably then-clients at his Belmont Park base.

In other intercepted phone calls and texts between Navarro and Servis that are to be used as evidence, the two trainers allegedly coordinated the procurement and administration of SGF-1000 and purportedly warned each other about the presence of racetrack regulators and law enforcement officials at Gulfstream Park, where the two were stabled during winter meets.

According to the indictment, on Feb. 18, 2019, “Servis warned Navarro, via text message, of the presence of a racing official in the barn area where Servis and Navarro stored and administered PEDs to their respective racehorses.”

Later that same day, Navarro allegedly recounted the brush with the regulator to Michael Tannuzzo, another defendant: “He would have caught our asses [expletive] pumping and pumping and fuming every [expletive] horse [that ran] today,” Navarro allegedly said.

On March 5, 2019, another intercepted phone call between Servis and Navarro allegedly revealed their attempts to procure and administer SGF-1000.

“I've been using it on everything, almost,” Servis allegedly said in the wiretapped conversation..

Navarro allegedly replied that he's “got more than 12 horses on” that drug, but he ends the call by adding, “Jay, we'll sit down and talk about this shit. I don't want to talk about this shit on the phone, OK?”

Another alleged criminal incident involved Navarro dosing elite-level sprinter X Y Jet “with 50 injections [and] through the mouth” before a big win in the Mar. 30, 2019, GI Golden Shaheen in Dubai.

Ten months later, in January 2020, X Y Jet died suddenly, allegedly from cardiac distress that has never been fully documented or explained.

Two months after that, on Mar. 9, 2020, the feds swooped in and made multi-state arrests of the 28 alleged conspirators.

Sarah Izhaki, whose role in the alleged conspiracy involved selling misbranded versions of Epogen, pled guilty to the same charge as Robinson and in June 2021 was sentenced to time served plus three years of supervised release.

Vyskocil could have sentenced Izhaki to a prison term of 12 to 18 months, but opted for the more lenient punishment due to extenuating circumstances that included Izhaki's poor health.

At Izhaki's sentencing, Vyskocil warned other defendants that the light sentencing in Izhaki's case was a “one-off” that should not be construed as a benchmark for other defendants.

“I want to say on the record, if you are [thinking] that, you are making a mistake,” Vyskocil warned.

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