Judge Mary Kay Vyskocil | Horse Racing Free Tips

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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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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Drug Company Sales Director Michael Kegley Pleads Guilty In Federal Doping Case

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that defendant Michael Kegley, Jr. pled guilty on Friday to his role in the distribution of adulterated and misbranded drugs with the intent to defraud and mislead, in connection with the charges filed in United States v. Navarro et al., 20 Cr. 160 (MKV). KEGLEY pled guilty before U.S. District Judge Mary Kay Vyskocil, and will be sentenced by Judge Vyskocil on Nov. 22, 2021.

Manhattan U.S. Attorney Audrey Strauss said: “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.”

According to the allegations contained in the Superseding Information, the prior Indictments[1], other filings in this case, and statements during court proceedings:

The charges in the Navarro case arise from an investigation of widespread schemes by racehorse trainers, veterinarians, performance-enhancing drug (“PED”) distributors, and others to manufacture, distribute, and receive adulterated and misbranded PEDs and to secretly administer those PEDs to racehorses competing at all levels of professional horseracing. By evading PED prohibitions and deceiving regulators and horse racing officials, participants in these schemes sought to improve race performance and obtain prize money from racetracks throughout the United States and other countries, including in New York, New Jersey, Florida, Ohio, Kentucky, and the United Arab Emirates (“UAE”), all to the detriment and risk of the health and well-being of the racehorses. Trainers who participated in the schemes stood to profit from the success of racehorses under their control by earning a share of their horses' winnings, and by improving their horses' racing records, thereby yielding higher trainer fees and increasing the number of racehorses under their control. Veterinarians and drug distributors, such as Kegley, who worked as the director of sales for an unregistered distributor of equine drugs, profited from the sale and administration of these medically unnecessary, misbranded, and adulterated substances.

Among the misbranded and adulterated PEDs marketed and sold by Kegley was the drug “SGF-1000,” which was compounded and manufactured in unregistered facilities. SGF-1000 was an intravenous drug promoted as, among other things, a vasodilator capable of promoting stamina, endurance, and lower heart rates in horses through the purported action of “growth factors” supposedly derived from sheep placenta. Despite marketing, selling, and administering SGF-1000, Kegley acknowledged in intercepted calls that he, along with a co-defendant involved in the sale of SGF-1000, did not know the actual contents of SGF-1000. Nevertheless, Kegley's sales of that drug persisted, aided by the claim that SGF-1000 would be untestable in horses by law enforcement.

According to the Thoroughbred Daily News, Kegley's testimony during Friday's proceedings included the following statement: “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.”

U.S. Attorney Strauss praised the outstanding investigative work of the FBI New York Office's Eurasian Organized Crime Task Force and its support of the FBI's Integrity in Sports and Gaming Initiative.

This case is being handled by the Office's Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Sarah Mortazavi, Andrew C. Adams, Anden Chow, and Benet Kearney are in charge of the prosecution.

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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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