Owner of American Pharoah Is Fighting Lawsuit Amid Triple Crown Bid

By JOE DRAPE
MAY 20, 2015
While American Pharoah has been winning six of his seven races and making his way to a historic bid next month for thoroughbred racing’s Triple Crown, his owner, Ahmed Zayat, has been contesting a federal lawsuit brought by a felon that alleges Mr. Zayat has failed to pay a $2 million debt he ran up betting via a website in Costa Rica.

The breach-of-contract suit was filed in March 2014 in United States District Court in New Jersey by Howard Rubinsky, 58, who pleaded guilty in 2008 for his role in an illegal bookmaking operation with two brothers, Michael and Jeffrey Jelinsky, who Mr. Zayat has acknowledged as being family friends. Mr. Rubinsky said he had opened a $3 million line of credit for Mr. Zayat at Tradewinds Sportsbook after being introduced to him by the Jelinsky brothers. When Mr. Zayat refused to pay, Mr. Rubinsky said that his commissions were withheld and that he had personally lost $1.65 million plus interest, according to the documents.

Judge William Martini is expected to rule on a request by Mr. Zayat’s lawyers to dismiss Mr. Rubinsky’s lawsuit in the coming weeks. Mr. Zayat declined to comment, but his lawyer, Joseph Vann, called the lawsuit “a meritless claim” from 11 years ago.

Mr. Zayat, who made his fortune selling beer in his native Egypt, is one of the most successful and flamboyant owners in thoroughbred racing. His stable has recently come out of very public bankruptcy proceedings. Before American Pharoah won the Kentucky Derby this month, three of Mr. Zayat’s horses had finished second in the race, but now he has the chance to become the first owner to hoist the Triple Crown trophy in 37 years.


Ahmed Zayat, the owner of American Pharoah, is accused of failing to pay a $2 million gambling debt.
ANDY LYONS / GETTY IMAGES
The lawsuit once more shines a light on Mr. Zayat’s penchant for betting big. The lawsuit alleges that Mr. Zayat, after winning a lot of money, walked away from his debt after an extended cold streak. A year later, in 2004, Mr. Zayat went on a payment plan that reduced the debt to $1.7 million, but then he stopped paying altogether, according to papers filed over the last 14 months.


Mr. Rubinsky was working as a shill, or sales associate, for the sportsbook, bringing bettors to the site in exchange for a commission on their volume of bets as well as a percentage of their losses. At first the arrangement worked well — too well, according to Mr. Rubinsky. Mr. Zayat won so much — $2.8 million — at another website in Costa Rica that Mr. Rubinsky recruited for that the site stopped taking his bets.

In a Nov. 19, 2014, deposition, Mr. Rubinsky said at one point that Mr. Zayat had offered to pay him $1 million if he told the sportsbook that he had died in a car accident. On another occasion, Mr. Zayat told Mr. Rubinsky that during the investigation of the Jelinsky brothers a federal agent told him not to repay the debt. Documents show that agents from the F.B.I., Homeland Security and the Nevada Gaming board visited Mr. Zayat’s office in New Jersey on May 8, 2008.

But Mr. Zayat said that he neither placed any bets nor agreed to place bets through Mr. Rubinsky. In court papers and testimony, Mr. Zayat has denied betting with Tradewinds or any other offshore sites and has said that his debt does not exist.

“I never asked Rubinsky to put up a line of credit for me anywhere, and I was never aware — and I am still not aware — that he ever did so,” Mr. Zayat wrote in a March 31, 2015, letter in support of his request for a summary judgment.

This is not the first time that Mr. Zayat has become entangled in legal troubles. In December 2009, Fifth Third Bank asserted in a lawsuit that Mr. Zayat had defaulted on $34 million in loans, and in February 2010, Mr. Zayat filed for bankruptcy protection for his Zayat Stables. His creditors were a who’s who of thoroughbred racing, including his current trainer, Bob Baffert.

In 2013, a suit filed by the owners of Freehold Raceway against the New Jersey Sports and Exposition Authority alleged that Mr. Zayat was improperly granted credit in the state’s online betting system. New Jersey law prohibits betting more money than is in the account, but court papers show Mr. Zayat was allowed to float $286,000 for several months as a courtesy because he was betting $200,000 a week.

In Mr. Zayat’s bankruptcy papers, he said the Jelinsky brothers owed him $605,000 from loans he made to them in 2006 and 2007. The brothers pleaded guilty to operating an illegal gambling business during that time. Michael Jelinsky was sentenced to 15 months in prison, and Jeffrey received 21 months; together they forfeited nearly $5 million seized by authorities.

Mr. Zayat maintained that they were personal loans, not the repayment of gambling debts. In his Nov. 11 deposition, however, he acknowledged giving the brothers money for legal fees, though he said he did not know if it was for the criminal charges they faced.

He also acknowledged betting at times through the brothers and subsequently being “scammed” by them. He said he learned of the deception when the federal agents came to his office and played tapes of wiretaps of the two explaining how they had taken Mr. Zayat’s money. One brother was telling him to bet on horses that he knew were going to lose, and the other was taking Mr. Zayat’s bet.

“So I would lose because they were giving me the wrong horses,” he admitted.

In 2008, Mr. Rubinsky said he again tried to collect the money from Mr. Zayat. There are transcripts of several text messages between Mr. Zayat and Mr. Rubinsky that indicate they had a warm relationship. Mr. Rubinsky addressed Mr. Zayat as Ephraim, his Jewish name. Mr. Zayat called Mr. Rubinsky “Howie” and asked that he pray for him. In another, Mr. Zayat appears to promise that he will settle the debt and seems to indicate it will come in monthly payments.