June 4, 2007
A Great Horse, but Who Takes the Winnings?
By JOE DRAPE
When Curlin chased down the Kentucky Derby winner Street Sense to capture the Preakness Stakes, his owners bounded to the winners’ circle at Pimlico
Race Course. They were an eclectic bunch that included a winemaker, a computer magnate, an investment banker and two lawyers.
W. L. Carter was just as ecstatic
while his wife narrated the race over his cellphone as he drove through the horse country of Ocala, Fla. “They could hear me all the way up to
Gainesville,” he said.
But his delight depends on the
answer to one of racing’s thorniest questions: who will Curlin be running for in the Belmont Stakes on Saturday?
Mr. Carter believes he has a
piece of Curlin, a mammoth chestnut colt whose value increases with every stride of his brief but brilliant career and who
is already worth as much as $30 million as a stallion prospect.
Mr. Carter is among more than
400 plaintiffs in a civil suit who were found to have been defrauded by their lawyers out of $64.4 million — money intended
to pay for injuries caused by the diet drug fen-phen.
Two of those lawyers, William
J. Gallion and Shirley A. Cunningham Jr., together own a fifth of Curlin and were in the Pimlico winners’ circle.
“We own part of that horse
— there’s about 400 of us,” Mr. Carter said. “We may not have our names on the papers, but it’s
our horse. He was bought with our blood money.”
It may soon be up to the courts
to determine just who owns Curlin. Mr. Gallion and Mr. Cunningham have had their law licenses suspended. A federal grand jury
has begun to investigate potential criminal wrongdoing arising from the fen-phen settlement.
Angela M. Ford, who represents Mr. Carter and most of the other plaintiffs, argues that her clients own all of Curlin. She
contends that Mr. Gallion and Mr. Cunningham originally purchased the colt with ill-gotten gains — they paid $57,000
for the colt at the 2005 Keeneland September Yearling Sale — and had no legal right to sell 80 percent of the horse
for $3.5 million, as they did in February.
“If the court determines
that Curlin was originally purchased with money that belonged to my clients, then the entire horse belongs to my clients and
clear title could not have been conveyed,” Ms. Ford said.
Mr. Gallion’s and Mr. Cunningham’s
new partners are no strangers to the vagaries of the horse business.
One partner, Jess Jackson, the
founder of Kendall-Jackson wines, has sued several of his former advisers, charging they defrauded him out of $3 million by
overcharging him for horses he purchased and taking kickbacks from sellers.
Another partner, Satish Sanan,
who made his fortune addressing the computer concerns brought on by Y2K, said he, too, had been victimized by slick horse
traders. It prompted him to push for a code of ethics for sellers and buyers. Mr. Sanan is now in the forefront of the industry’s
Mr. Sanan said that he and his
partners were not aware of the legal problems faced by Mr. Gallion and Mr. Cunningham when they purchased their portion of
Curlin. He says that the lawyers that worked on the contract on their behalf have, however, assured them that their interest
in the colt is protected.
Still, Mr. Sanan concedes that
having a colt competing in Triple Crown races under a legal cloud is not the face he or the sport of thoroughbred racing wants
to put forward.
“I don’t think it
says a whole lot good about the industry, to be honest with you,” said Mr. Sanan, who said he had spent $150 million
breeding and racing horses.
“It takes the limelight
away from the horse,” he said. “At the end of the day, racing is all about the horses. Unfortunately, now the
focus is on the ownership and the team.”
The pursuit of a Kentucky Derby
champion can make for strange bedfellows. When Curlin demolished eight other horses, romping by 12 ¾ lengths, in his very
first race, on Feb. 3 at Gulfstream Park in Florida, Mr. Gallion and Mr. Cunningham were bombarded with dozens of offers to
sell the colt.
Most of them were for far more
than the $3.5 million offered by Mr. Jackson, Mr. Sanan and George Bolton, an investment banker in San Francisco. But the higher
bids were for the whole horse. Mr. Jackson, Mr. Sanan and Mr. Bolton were willing to let Midnight Cry Stable, the banner under
which Mr. Gallion and Mr. Cunningham race, retain a piece of Curlin and chase a Kentucky Derby victory.
In the days before the Derby,
in which Curlin finished third, photographs of Mr. Cunningham and Mr. Gallion in connection with the colt appeared in a couple
of Kentucky newspapers. It did not go unnoticed among the fen-phen plaintiffs in a horse-crazy state.
“You can imagine how my
phone began to ring off the hook,” said Ms. Ford, who expects a ruling on damages in the civil suit in the next couple
of weeks. “Here are the lawyers that had defrauded them, and now they have a Derby contender.”
The $200 million fen-phen settlement,
paid by American Home Products Corporation in 2001, was earmarked to compensate the plaintiffs for claims of heart damage
caused by the drug combination, which had been withdrawn from the market at the request of the Food and Drug Administration.
When the plaintiffs sued the
drug maker, they agreed to pay the lawyers 30 percent to 33 percent of any money that was recovered, in addition to expenses.
In this case, that would have left the 440 clients to divide perhaps $135 million. The clients, however, received only $74
million and, on average, received less than 40 percent of what the settlement agreement specified, instead of the roughly
70 percent to which they were entitled.
Mr. Sanan said he and the other
partners are focused
Mr. Sanan said he and the other
partners are focused solely on Curlin and have found Mr. Cunningham and Mr. Gallion pleasant team members. On the night before
the Preakness, the group met for dinner at a farm near Pimlico owned by Mr. Bolton’s father. They will unite in New York on Saturday to see
if Curlin can win for the fifth time in six races when he goes in the Belmont Stakes, the final leg of thoroughbred racing’s
W. L. Carter cannot be as benevolent.
But Mr. Carter, a builder of industrial models from Lawrenceburg, Ky., will be watching the Belmont intently, rooting for a horse and its growing worth, a value he someday hopes to share in.
“I’m cheering for
the colt,” Mr. Carter said. “He was bought with stolen money, but I want Curlin to do well. He is one magnificent
racehorse, and I’m invested in him.”
Back to Top
Copyright 2007 The New York Times Company