By Daniel Ross
The trustee overseeing owner, breeder Ahmed Zayat's personal bankruptcy proceedings made several court filings Tuesday to recover roughly $90,000 in allegedly fraudulent payments to various law firms.
According to the court filings, Zayat was insolvent at the time the transfers were made, and therefore, the law firms who are the defendants in the suits received more than they would have done through the Chapter 7 bankruptcy proceedings “had the Transfer[s] not been made.”
Trustee Donald Biase alleges in his court filings that the largest transfer of money Zayat fraudulently made was $42,812.32 to Rabinowitz, Lubetkin and Tully.
Zayat also made separate $20,000 payments to law firms Landrum & Shouse and Lavely & Singer respectively, and another $7,500 to Becker & Poliakoff, the suits allege.
Biase suggests that the monies stipulated might not be the total amounts Zayat allegedly paid to each company, his attorney writing in all filings that Biase is seeking to recover both the stipulated transfers “and such other Transfers that may be unknown to the Trustee.”
TDN reached out via email to each of the law firms listed as defendants in the filings but didn't hear back from any before deadline.
When reached by phone Tuesday, Zayat declined to comment.
This latest round of legal crossfire constitutes just the latest twist in a long, complicated and often-times convoluted war of financial attrition, as creditors have sought to reclaim millions from Zayat and his now-disbanded Thoroughbred racing and breeding stable, one most famously attached to 2015 Triple Crown winner American Pharoah.
In his own Chapter 7 filing in 2020, Zayat admitted to owing some $19 million to 132 non-secured creditors, the majority of whom consisted of Thoroughbred trainers, horse farms, bloodstock businesses, veterinarians, and equine transportation companies.
Towards the end of last month it appeared as though events had drawn to a close with the approval of two settlement plans in separate bankruptcy cases. Neither settlement delivered significant compensation to these 132 non-secured creditors though.
In Zayat's personal bankruptcy case, the trustee in June negotiated a $1.5 million settlement to be paid by the debtor's brother, Sherif Zayat, one which allows Zayat and his family to continue to live in an eight-bedroom, 7,714-square-foot home in Teaneck, New Jersey, that is currently assessed at $2.6 million.
In July, the court-appointed trustee in the involuntary bankruptcy case negotiated a settlement in which Zayat and his family members divvy up $5 million between MGG Investment Group and the trustee.
MGG is the lender that alleged in a 2020 lawsuit that Zayat and his family members fraudulently obtained $30 million in loans, then never repaid a large chunk of that debt.
Of that Zayat Stables settlement, only $30,000 was earmarked for the unsecured creditors who are legally much further down the payment ladder of priority.
In each of the court documents filed Tuesday, Biase seeks judgment against the defendants “for the avoidance and recovery” of the amounts allegedly transferred, for the defendants “to immediately pay to the Trustee the sums owed,” the interest owed and costs of suit, and “for such further relief as the Court may allow.”
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