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Drug Company Sales Director Michael Kegley Sentenced To 30 Months In Prison

Former MediVet sales director Michael Kegley, Jr. was sentenced to 30 months in federal prison Jan. 6 after he entered a plea of guilty to one count of drug adulteration and misbranding in the ongoing case around a series of racehorse doping rings, reports the Thoroughbred Daily News. Among the misbranded and adulterated performance-enhancing drugs marketed and sold by Kegley was “SGF-1000.”

During his plea hearing in July, Kegley stated: “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.”

Kegley's brother-in-law, Dr. Kristian Rhein, received a three-year prison sentence on Wednesday for his involvement in the same case. Trainer Jorge Navarro was last month sentenced to five years in prison.

The sentence requires Kegley to forfeit $3,310,490, equal to the amount of the illegal substances the government seized, but a court order states that if he makes the payment within two years of his prison release he will only need to pay $192,615.

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.

Read more about SGF-1000 in our previous reporting here and here.

Read more at the Thoroughbred Daily News.

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SGF-1000 Salesman Kegley Gets 30 Months in Prison

Michael Kegley, Jr., the former sales director for the company that sold the purportedly performance-enhancing drug (PED) SGF-1000 that is at the heart of a years-long investigation of an international racehorse doping conspiracy, got sentenced to 30 months in prison on Thursday.

Kegley, 41, had pleaded guilty in July 2021 to one count of drug adulteration and misbranding. He had admitted in open court at that time that as sales director for the Kentucky-based MediVet Equine, he sold SGF-1000 and other products to trainers and veterinarians, knowing that there was “no medical prescription for those products” and that the substances were “not manufactured in an FDA-approved facility [nor] approved for sale by the FDA.”

Kegley's Jan. 6 prison sentence was six months shy of the maximum allowable term under federal sentencing guidelines. Just 24 hours previous to his sentencing, the same judge in the same court had handed down a maximum sentence for similar charges to Kristian Rhein, the defendant who is both Kegley's business associate and brother-in-law.

On Jan. 5, Rhein, a suspended veterinarian formerly based at Belmont Park who married Kegley's sister, got sent to prison for three years by Judge Mary Kay Vyskocil in United States District Court (Southern District of New York).

Prosecutors had previously acknowledged in a sentencing recommendation that Kegley should get a somewhat lighter sentence than his brother-in-law because of Rhein's standing as a veterinarian.

“Unlike Kegley, Rhein was a licensed veterinarian who predominantly treated racehorses; as such, Rhein was a more sophisticated actor than Kegley, and well-acquainted with the various legal regimes governing the sale and distribution of an adulterated and misbranded drug,” the government stated in its sentencing recommendation. “Likewise, Rhein, unlike Kegley, personally administered SGF-1000 to racehorses, concealed bottles of that drug, instructed others to do the same, and falsely billed customers for SGF-1000 under a false billing code.”

As a condition of Kegley's plea-bargained sentence, he was required to forfeit $3,310,490, which is a sum equal to the amount of the illegal substances seized by the government. But a court order accompanying the sentence stated that Kegley will only have to pay $192,615 if he does so within two years of his release from prison. If Kegley does not pay that amount by that time, he will be liable for the full sum.

One admitted doper of Thoroughbreds, the former trainer Jorge Navarro, last month got sentenced to five years in prison for administering myriad alleged PEDs, including SGF-1000.

Another barred trainer under indictment for alleged doping, Jason Servis, is scheduled to face trial in early 2022. Prosecutors have produced numerous intercepted communications involving Servis discussing using SGF-1000 on “almost every” horse under his care, including the disqualified 2019 GI Kentucky Derby winner Maximum Security (New Year's Day).

In one wiretapped call from July 16, 2019, Rhein and Kegley discussed how Servis and his associates were “buying literally as much” SGF-1000 as Rhein was able to source from MediVet.

It was further alleged that MediVet later in 2019 attempted to trick the Racing Medication and Testing Consortium (RMTC) into delisting SGF-1000 as a prohibited substance after Kegley's firm had already “reaped millions of dollars in revenue” by selling it illegally.

According to the government's evidence, MediVet and its associates emphasized “the potent effects of SGF-1000,” which were supposedly derived from “an innovative formulation consisting of Regenerative Proteins, Cytokines, Peptides, potent Growth Factors and Signaling Molecules derived from Ovine Placental Extract.”

Court documents filed by the feds had stated that SGF-1000 was explained to trainers as being similar to a vasodilator that would “increase stamina, performance, and overall health.” The materials even listed the growth factors that were purportedly found in SGF-1000, including some that were explicitly prohibited in many major racing jurisdictions.

The feds also alleged that despite what Kegley, Rhein, and other MediVet representatives claimed when they were parroting the company's marketing materials, no one pushing the product really had any accurate idea of what was in it.

“Notably, Kegley and his coconspirators did not know the precise contents of SGF-1000 until at least in or about August 2019–years after MediVet had started marketing and selling the drug,” court documents stated. “But [they] believed that no matter the component parts of the drug, it would enhance a horse's performance.”

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Max Prison Sentence for Vet Rhein

Kristian Rhein, a suspended veterinarian formerly based at Belmont Park who was caught on a wiretap bragging that he sold “assloads” of SGF-1000 to racehorse trainers, was sentenced to three years imprisonment Wednesday after pleading guilty to one felony charge within the federal government's sprawling prosecution of an allegedly years-long conspiracy to dope racehorses.

Judge Mary Kay Vyskocil imposed the maximum-allowable prison term under federal sentencing guidelines Jan. 5 in United States District Court (Southern District of New York).

According to the court order filed in conjunction with his sentencing, Rhein is to report to a to-be-determined prison

Mar. 7. Vyskocil recommended that he serve his term in the medium-security Otisville, New York, facility about 60 miles north of his Long Island residence.

As part of his plea agreement, Rhein also must forfeit to the U.S. the criminally gained proceeds that are directly traceable to his offense, which he agreed totaled $1,021,800. He had previously been ordered to pay at least $671,800 of that amount before or on his sentencing date.

Rhein also must pay $729,716 in restitution to an undisclosed list of victims, the names of whom were filed under seal and thus inaccessible to the general public.

When Rhein spoke in open court back in August to change his plea to “guilty” on one count of drug adulteration and misbranding, he directly implicated five others, most notably co-defendant Jason Servis, the now-barred trainer who was his regular client and allegedly administered purportedly performance-enhancing drugs (PEDs) like SGF-1000 to practically every Thoroughbred under his control.

Rhein, 49, 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.

Five of 27 defendants named in the original indictment have now been sentenced after pleading 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. Trials for the remaining defendants, including Servis, are scheduled to commence in 2022, possibly as early as this month.

Scott Robinson, a former veterinarian, was the first to be sentenced in March 2021. In addition to his 18 months in prison, he had to forfeit $3.8 million in profits.

In June, Sarah Izhaki was sentenced to time already served plus three years of supervised release for selling misbranded versions of Epogen.

In September, Scott Mangini, a former pharmacist who had pled guilty to one felony count related to creating custom drugs for racehorses, got sentenced to 18 months in prison. As part of a plea agreement, prosecutors also demanded a forfeiture order from Mangini in the amount of $8.1 million.

In December, the barred trainer Jorge Navarro wept in court after Vyskocil handed down a maximum-allowable sentence of five years imprisonment. Navarro had pled guilty to one count of conspiring with others to administer non-FDA-approved, misbranded and adulterated drugs, including PEDs that Navarro believed would be untestable and undetectable.

Navarro has also been ordered to pay $25.8 million in restitution to the owners, trainers and jockeys he defeated from 2016 to when he was arrested in March 2020. That money–if Navarro ever has the resources to pay it–is to be deposited into an escrow fund that theoretically would get disbursed to racetracks to use in the form of compensatory purses.

Michael Kegley Jr., the former sales director for MediVet Equine, the Kentucky-based company that marketed and sold SGF-1000, will be the next guilty-pleading defendant to be sentenced by Vyskocil, on Jan. 6.

According to court document field by federal prosecutors, Rhein and Kegley worked in tandem to extoll “the performance-enhancing benefits of [SGF-1000] to racehorse trainers.” Like Rhein, Kegley's maximum possible sentence has been calculated to be three years in prison.

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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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