Tag: The Biz

As sentencing dates approach for the flurry of federal defendants who entered guilty pleas to drug adulteration and misbranding charges this summer and fall, prosecutors and defense attorneys have filed documents which reveal a few new tidbits about the case that has captivated racing since March 2020.

Trainer Jorge Navarro will be sentenced on Dec. 17, veterinarian Dr. Kristian Rhein on Dec. 22, drug salesman Michael Kegley on Jan. 6, 2022, and trainers Christopher Oakes and Marcos Zulueta on Feb. 17 and Feb. 24, 2022, respectively.

Defense and prosecutors' reports have been submitted for Kegley, who had been due to be sentenced Nov. 22 but whose proceeding was pushed back shortly beforehand. The defense report has been filed for Rhein, but prosecutors have not yet had to file their report detailing what they think his sentence should be.

Below are a few takeaways from the document dumps through this past week:

• Defense attorneys for Rhein mentioned a few new trainers in a passing comment while discussing the calculated loss to victims of his crimes.”To begin with, it is important to note that the defendant sentencing guidelines are enhanced by 22 levels pursuant to U.S.S. G 2B1.1(b)(1)(L) as a result of the loss which is calculated at $53,586,521. The loss does not represent the value of illegal drugs sold by the defendant; rather, it represents the 2017-2020 winnings for Jason Servis, Jorge Abreu, Jeremiah Engelhart and Thomas Albertrani, none of which was shared with the defendant.”The defense sentencing report does not elaborate further on what the involvement of the trainers is supposed to be in relationship to Rhein. Rhein was a racetrack veterinarian who, according to his plea, promoted the use of misbranded and adulterated drugs in his practice and disguised that use on billing statements.
• Rhein agreed to a voluntary suspension of his license after his arrest in the case; after judgment, it will be permanently revoked. Rhein has already agreed to pay $729,716 in restitution and $1,021,800 in forfeiture. Some $671,800 of that will be due at sentencing, which has prompted the Rhein family to mortgage their home.
• Rhein was a 25% owner in Medivet Equine, which sold SGF-1000. his father-in-law, Michael Kegley Sr., owned 25% of the company and the remaining 50% was owned by an unnamed third individual.
• Federal investigators intercepted a phone call — the transcript of which was filed under seal — in which prosecutors say Rhein indicated the use of SGF-1000 may have gone beyond racing.”I got guys going through FEI testing … and they go right through the box for FEI and it's far stricter than anything we got,” Rhein said on the call.
• Previous files in the case have described a panicked call from co-defendant Jason Servis to Rhein after Maximum Security was tested out-of-competition in June 2019. Servis told Rhein he had given the horse SGF-1000 shortly before the test, which prompted reassurances from Rhein that nothing significant would be found. Sentencing documents also revealed Rhein believed the out-of-competition test was not a random or standard event, saying “somebody squealed” regarding Servis' use of the drug.
• Subsequent to the June out-of-competition test on Maximum Security, prosecutors say Rhein and others at Medivet participated in a conference call to discuss their concerns that the substance could be under increased scrutiny from federal regulators. Prosecutors now say an unnamed participant on that call pointed to the Murray Rojas case in Pennsylvania as an example of federal law enforcement taking action related to drugs in racing.During that call, a sentencing report for Kegley reveals Kegley, Rhein, and others strategized on the best way to evade scrutiny.”All we're gonna do is make up, make up a hundred boxes and a hundred labels for a trial and see what happens … we won't mention the word growth factor in any way shape or form … we can even put on the box, you know, dietary supplement for equine. That way it's not, no one even has to question if it's FDA approved or not it's strictly a supplement,” Kegley is alleged to have said.
•  As we reported last year, Medivet changed their marketing materials of SGF-1000 around this time, using words like “rejuvenation and recovery from training” and removing references to growth factors. It also removed references to the product having been imported from Australia. Sales of the product continued.
• Sentencing guidelines ranges for prison terms are out for the remaining defendants who have entered guilty pleas but not been sentenced. Guidelines ranges are considered by the judge at the time of sentencing and represent a consideration of many different factors about the offender's crime and personal history, but the judge is not bound by those ranges. The guidelines ranges for the defendants awaiting sentence are: 30 to 36 months in prison for Zulueta; 36 months for Oakes; 36 for Rhein; 60 months for Navarro; 36 months for Kegley. Pre-sentencing reports are still pending in all but Kegley's case, which means the prosecution and defense still have an opportunity to advocate the judge assign a different sentence than the ranges listed.

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