Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
COMMONWEALTH OF KENTUCKY FAYETTE CIRCUIT COURT DIVISION 9 CIVIL ACTION NO. 20-CI-00248
Electronically Filed
MGG INVESTMENT GROUP LP PLAINTIFF
v. AMENDED COMPLAINT
ZAYAT STABLES, LLC Serve: Ahmed Zayat, Registered Agent DEFENDANTS 401 Hackensack Ave., 7th Floor Hackensack, NJ 07601 and
AHMED ZAYAT
and
JUSTIN ZAYAT
and
ASHLEY ZAYAT
and
BENJAMIN ZAYAT
and
EMMA ZAYAT
and
JOANNE ZAYAT
000001 of 000076 AMC : 000001 of 000076
Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
and
ORPENDALE UNLIMITED COMPANY d/b/a COOLMORE STUD
and
BEMAK, N.V. LTD. CO d/b/a ASHFORD STUD
and
LNJ FOXWOODS LLC
Serve: New York Department of State
and
HILL ‘N’ DALE EQUINE HOLDINGS, INC.
and
MULL ENTERPRISES LIMITED d/b/a YEOMANSTOWN STUD
and 000002 of 000076 AMC : 000002 of 000076 2 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
MY RACEHORSE CA LLC d/b/a MYRACEHORSE.COM
and
FLINTSHIRE FARM, LLC
and
Thomas B. Sears a/k/a Brad Sears
and
THOMAS CLARK BLOODSTOCK, LLC
and
MCMAHON OF SARATOGA THOROUGHBREDS, LLC
Serve: New York Department of State One Commerce Plaza 99 Washington Avenue Albany, New York 12231
For its Amended Complaint against Defendants Zayat Stables, LLC (“Zayat
Stables”), Ahmed Zayat, Justin Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat, Joanne Zayat
(collectively, the “Zayat Family,” and with Zayat Stables, the “Zayat Defendants”), Orpendale
Unlimited Company d/b/a Coolmore Stud (“Orpendale”), Bemak, N.V. Ltd. Co. d/b/a Ashford 000003 of 000076 Stud (“Ashford Stud”), LNJ Foxwoods LLC (“LNJ Foxwoods”), Hill ‘N’ Dale Equine Holdings, AMC : 000003 of 000076 3 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Inc. (“Hill ‘N’ Dale”), Mull Enterprises Limited d/b/a Yeomanstown Stud (“Yeomanstown Stud”),
My Racehorse CA LLC d/b/a MyRacehorse.com (“My Racehorse”), Flintshire Farm, LLC
(“Flintshire Farm”), Thomas B. Sears a/k/a Brad Sears (“Brad Sears”), Thomas Clark Bloodstock,
LLC (“Thomas Clark Bloodstock”), and McMahon of Saratoga Thoroughbreds LLC (“McMahon
Thoroughbreds”), Plaintiff MGG Investment Group LP (“MGG Investment Group,” the “Agent,”
or “Plaintiff”) states as follows:
NATURE OF THE ACTION
1. In 2016 certain affiliates and related funds of MGG Investment Group
(collectively, “MGG”) made a series of loans to the thoroughbred horse racing company Zayat
Stables secured by all the company’s assets (including all its horses and breeding rights). As
additional collateral, Ahmed Zayat, the sole owner of Zayat Stables, pledged the stock of Zayat
Stables to further secure the loans.
2. In order to induce MGG to make the loans, Zayat Stables and Ahmed Zayat
made several fraudulent misrepresentations concerning Zayat Stables’ assets, as well as their intent
to abide by the negotiated terms of the agreements.
3. Further, after MGG made the loans, Zayat Stables, Ahmed Zayat and his
eldest son, Justin Zayat, who managed Zayat Stables’ day-to-day operations with his father, made
several fraudulent misrepresentations concerning the status of Zayat Stables’ assets, all of which
had been pledged as collateral to secure MGG’s loans. The purpose of those fraudulent
misrepresentations was to conceal from MGG numerous existing and continuing Events of Default
under the loan agreements and thereby induce MGG to refrain from accelerating Zayat Stables’ 000004 of 000076 AMC : 000004 of 000076 4 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
repayment obligations and otherwise exercising and enforcing its rights and remedies under the
loan agreements and applicable law.
4. As part of Zayat Stables’ fraudulent scheme, orchestrated by Ahmed Zayat
and Justin Zayat and perpetrated upon MGG, Ahmed Zayat together with his children and his wife
attempted to sell Zayat Stables’ assets (all of which were pledged as collateral under the loan
agreements) out from under MGG.
5. In addition to several other prior Events of Default (all of which MGG has
only recently discovered), including improper purported sales that were fraudulently concealed
from MGG by Zayat Stables, Ahmed Zayat and Justin Zayat, Zayat Stables defaulted on its
payment obligations under the loan agreements on September 30, 2019, and more than $23 million
in principal, plus accrued interest, remains outstanding. None of these Events of Default have
been cured.
6. Among other things, upon the existence and continuation of an Event of
Default, the loan agreements provide for Zayat Stables’ unconditional consent to the appointment
of a receiver to manage and conserve its assets.
7. In January 2020, only after MGG had repeatedly raised concerns regarding
the collateral pledged to secure the loans to Zayat Stables and requested information regarding the
same, Ahmed Zayat admitted to the fraudulent scheme and supplied evidence to MGG
demonstrating that Zayat Stables, Ahmed Zayat, Justin Zayat and the rest of the Zayat Family had
(unknown to MGG) purported to sell at a steep discount several millions of dollars of Zayat
Stables’ assets pledged as collateral, including but not limited to breeding rights to the 2015 Triple
Crown winner, AMERICAN PHAROAH. 000005 of 000076 AMC : 000005 of 000076 5 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
8. As a result of the fraudulent scheme perpetrated by Zayat Stables and
members of the Zayat Family, MGG brings this action asserting claims for fraud and breach of
contract against Zayat Stables, fraud against Ahmed Zayat and Justin Zayat, as well as for the
appointment of a receiver. MGG also brings claims for intentional interference with contract
against the other members of the Zayat Family for the part they played in these purported sales,
whereby each member of the Zayat Family knowingly acted to cause and assist Zayat Stables in
breaching its loan agreements. MGG also brings claims for intentional interference with contract
against two affiliated horse breeding organizations, Orpendale and Ashford Stud, for their
facilitation of the purported sales which they knew would cause Zayat Stables to breach its loan
agreements. MGG further brings claims against several purported buyers of the collateral
improperly sold by Zayat Stables and the Zayat Family for the return of the collateral.
THE PARTIES
9. Plaintiff MGG Investment Group is a Delaware limited partnership and is
located at One Pennsylvania Plaza, New York, New York 10119. Pursuant to the Financing
Agreement, described below, MGG Investment Group is the Administrative Agent and Collateral
Agent (the “Agent”) and was appointed and authorized by the lenders party thereto to enforce the
rights and remedies of the lenders under the Financing Agreement, the Pledge and Security
Agreement referenced below and the other loan documents referenced in the Financing Agreement
(collectively, the “Loan Documents”). (Financing Agreement § 10.01.)
10. Upon information and belief, Defendant Zayat Stables is a Delaware limited
liability company, with its principal place of business located at 401 Hackensack Avenue, 7th
Floor, Hackensack, New Jersey 07601. Zayat Stables is the borrower under the Financing
Agreement at issue in this action. 000006 of 000076 AMC : 000006 of 000076 6 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
11. Upon information and belief, Defendant Ahmed Zayat is an individual with
an address of . Ahmed Zayat is the owner and
sole member of Zayat Stables.
12. Upon information and belief, Defendant Justin Zayat is an individual with
an address of . With his father,
Ahmed Zayat, Justin Zayat was in charge of running the day-to-day operations of Zayat Stables.
13. Upon information and belief, Defendant Ashley Zayat is an individual with
an address of .
14. Upon information and belief, Defendant Benjamin Zayat is an individual
with an address of .
15. Upon information and belief, Defendant Emma Zayat is an individual with
an address of .
16. Upon information and belief, Defendant Joanne Zayat is an individual with
an address of .
17. Upon information and belief, Defendant Orpendale Unlimited Company is
an entity organized under the laws of Ireland which does business in the United States under the
trade name Coolmore Stud, with its principal place of business located at Castlehyde Stud,
Castlehyde, Fermoy, Co. Cork, P61 TR29, Ireland.
18. Upon information and belief, Defendant Bemak, N.V. Ltd. Co. is a
Netherlands business entity doing business in the United States under the trade names Ashford
Stud and Coolmore America, with its principal place of business at 5095 Frankfort Road,
Versailles, Kentucky 40383. 000007 of 000076 AMC : 000007 of 000076 7 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
19. Upon information and belief, Defendant LNJ Foxwoods is a New York
limited liability company, with its principal place of business at
.
20. Upon information and belief, Defendant Hill ‘N’ Dale Equine Holdings,
Inc. is a Kentucky corporation doing business under the trade name Hill ‘N’ Dale Farm with its
principal place of business at 640 N. Yarnallton Pike, Lexington, Kentucky 40511.
21. Upon information and belief, Defendant Mull Enterprises Limited is an
entity organized under the laws of Ireland which does business in the United States under the trade
name Yeomanstown Stud, with its principal place of business located at Yeomanstown Stud,
Yeomanstown, Caragh, Naas, Co. Kildare, W91 C993, Ireland.
22. Upon information and belief, Defendant My Racehorse CA LLC is a
Nevada limited liability company with its principal place of business at
, and operates the website MyRacehorse.com and does business
under that name.
23. Upon information and belief, Defendant Flintshire Farm, LLC is a Texas
limited liability company with its principal place of business located at
.
24. Upon information and belief, Defendant Thomas B. Sears, also known as
Brad Sears, is an individual with an address of .
25. Upon information and belief, Defendant Thomas Clark Bloodstock, LLC is
a Kentucky limited liability company with its principal place of business located at
. 000008 of 000076 AMC : 000008 of 000076 8 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
26. Upon information and belief, Defendant McMahon of Saratoga
Thoroughbreds LLC is a New York limited liability company with its principal place of business
located at .
JURISDICTION AND VENUE
27. This Court has subject matter jurisdiction under KRS Chapter 23A as the
amount in controversy exceeds the jurisdictional minimum on the Court.
28. This Court has personal jurisdiction over the Defendants because, among
other things, each Defendant has (a) purposefully committed, within the Commonwealth of
Kentucky, the acts from which these claims arise and/or has committed unlawful acts outside the
Commonwealth of Kentucky, knowing that such acts would cause injury in the Commonwealth;
(b) transacted business in the Commonwealth of Kentucky; and/or (c) contracted for goods and/or
services in the Commonwealth of Kentucky.
29. Venue is proper in this judicial circuit under KRS 452.480 because a
substantial part of the events and omissions giving rise to MGG’s claims occurred in this judicial
circuit and because Defendants have transacted business in this judicial circuit and may be properly
joined in this Court.
FACTS
Background
30. MGG is in the business of providing financing solutions to mid-size and
growing companies.
31. Zayat Stables is a thoroughbred horseracing organization. In 2015, Zayat
Stables’ homebred horse, AMERICAN PHAROAH, became horseracing’s 12th Triple Crown
winner as well as the Breeders’ Cup Classic champion. 000009 of 000076 AMC : 000009 of 000076 9 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
32. Upon information and belief, Ahmed Zayat is the owner and sole member
of Zayat Stables.
33. Upon information and belief, Joanne Zayat is Ahmed Zayat’s wife.
34. Upon information and belief, Justin Zayat, Ashley Zayat, Benjamin Zayat,
and Emma Zayat are children of Ahmed Zayat.
35. Upon information and belief, Justin Zayat is the President of Zayat Stables,
and at all times relevant hereto was actively involved in the day-to-day operations and management
of Zayat Stables.
Zayat Stables Provides MGG with Confirmation That Its Assets Included Certain Breeding Rights to AMERICAN PHAROAH
36. On or about January 16, 2015, Zayat Stables sold 100% of the stallion shares
of AMERICAN PHAROAH pursuant to a purchase agreement (the “AP Purchase Agreement”) to
Orpendale, a thoroughbred horseracing organization affiliated with the thoroughbred horseracing
organizations Coolmore Stud, Coolmore America and Ashford Stud. Zayat Stables received over
$23 million in proceeds from Orpendale in connection with the AP Purchase Agreement. A true
and accurate copy of the bill of sale recording the January 16, 2015 sale is attached hereto as
Exhibit A. A true and accurate copy of the AP Purchase Agreement is attached hereto as Exhibit
B.
37. Pursuant to the AP Purchase Agreement, Zayat Stables retained the racing
rights to AMERICAN PHAROAH. Additionally, upon AMERICAN PHAROAH’s transition to
his breeding career after retiring from his racing career in 2015, Ahmed Zayat’s wife and children
were assigned between them nine of the horse’s lifetime breeding rights (the “Zayat AP Breeding
Rights”). Each of the nine Zayat AP Breeding Rights entitle its holder to breed one thoroughbred 000010 of 000076 AMC : 000010 of 000076 10 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
mare with AMERICAN PHAROAH in each breeding season over the course of the horse’s life.
(AP Purchase Agreement § 4(b).)
38. In the Spring of 2016, Zayat Stables expressed interest in refinancing its
existing debt while obtaining additional cash for equine acquisitions.
39. MGG first met with Zayat Stables and Ahmed Zayat on or about May 16,
2016, to discuss the potential for MGG to provide financing to Zayat Stables.
40. Between that initial meeting and July 26, 2016, when the financing closed,
Zayat Stables and MGG negotiated the terms of the loans at issue in this action, which were to be
secured by, among others, all of Zayat Stables’ assets.
41. During this period, MGG learned that pursuant to the AP Purchase
Agreement, the Zayat AP Breeding Rights were owned by Ahmed Zayat’s wife and children.
42. MGG informed Ahmed Zayat that any loan from MGG to Zayat Stables
would be contingent upon the Zayat AP Breeding Rights being among Zayat Stables’ assets.
43. On July 6, 2016, Zayat Stables’ counsel represented in an email to MGG’s
counsel that Ahmed Zayat’s wife and children would transfer their interests in the Zayat AP
Breeding Rights to Zayat Stables and that Ahmed Zayat would be willing to indemnify MGG for
any losses, liabilities, costs and expenses, direct or indirect, in connection with those transfers.
Ahmed Zayat ultimately provided such an indemnity in a member pledge agreement, dated as of
July 26, 2016 (the “Member Pledge Agreement”).
44. On July 8, 2016, Zayat Stables provided MGG with documentation
confirming that Ahmed Zayat’s wife and children had transferred the Zayat AP Breeding Rights
to Zayat Stables (the “Zayat AP Breeding Rights Transfer Document”). The Zayat AP Breeding
Rights Transfer Document is a letter from Justin Zayat instructing Aisling Duignan, the Director 000011 of 000076 AMC : 000011 of 000076 11 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
of Bloodstock at Ashford Stud and Coolmore America, to transfer all of the Zayat Family’s Zayat
AP Breeding Rights to Zayat Stables. The letter refers to text messages between Justin Zayat and
Aisling Duignan regarding the transfer of the Zayat AP Breeding Rights. Ahmed Zayat signed the
Zayat AP Breeding Rights Transfer Document in his personal capacity and in his capacity as the
CEO of Zayat Stables. Ahmed Zayat’s wife, Joanne Zayat, and their children, Justin Zayat, Ashley
Zayat, Benjamin Zayat, and Emma Zayat, also signed the Zayat AP Breeding Rights Transfer
Document. Upon information and belief, Joanne Zayat, Justin Zayat, Ashley Zayat, Benjamin
Zayat, and Emma Zayat knew the Zayat AP Breeding Rights Transfer Document would be
provided to MGG. A true and accurate copy of the Zayat AP Breeding Rights Transfer Document
is attached hereto as Exhibit C.
45. That same day, on July 8, 2016, Ashford Stud (which often does business
as Coolmore America and was the thoroughbred breeding organization stabling AMERICAN
PHAROAH in Kentucky along with its affiliate Orpendale, and that, upon information and belief,
along with its affiliates, held 100% of the stallion shares of AMERICAN PHAROAH) provided
further confirmation of the transfer of the Zayat AP Breeding Rights from Ahmed Zayat’s wife
and children to Zayat Stables (the “Zayat AP Breeding Rights Transfer Confirmation”). The Zayat
AP Breeding Rights Transfer Confirmation, which was executed by Frank Phelan on behalf of
Ashford Stud, was also sent to MGG as further evidence of the transfer of the Zayat AP Breeding
Rights to Zayat Stables. A true and accurate copy of the Zayat AP Breeding Rights Transfer
Confirmation is attached hereto as Exhibit D.
46. Upon information and belief, due to the close affiliation and day-to-day
working relationship between representatives of Orpendale, Ashford Stud, Coolmore America,
and Coolmore Stud, representatives of each organization, including but not limited to Michael 000012 of 000076 AMC : 000012 of 000076 12 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Ryan of Orpendale and Coolmore Stud, and Frank Phelan and Aisling Duignan of Ashford Stud
and Coolmore America, were aware of the July 8, 2016 transfer of the Zayat AP Breeding Rights
from the Ahmed Zayat’s wife and children to Zayat Stables at the time of the transfer or shortly
thereafter.
The Financing Agreement
47. Thereafter, on or about July 26, 2016, Zayat Stables as the Borrower entered
into a financing agreement with certain affiliates of MGG Investment Group as Lenders, and MGG
Investment Group as Administrative Agent and Collateral Agent (the “Financing Agreement”). A
true and accurate copy of the Financing Agreement is attached hereto as Exhibit E.
48. Pursuant to the Financing Agreement,
Borrower has requested the Lenders to extend credit to the Borrower consisting of (a) a term loan in the aggregate principal amount of $25,000,000 and (b) a delayed draw term loan in the aggregate principal amount of $10,000,000. The proceeds of the term loans made available on the Effective Date shall be used to (i) refinance existing indebtedness of the Borrower in an amount not to exceed $10,860,000, (ii) to pay down accounts payable in an amount not to exceed $4,500,000, (iii) to fund the acquisition of additional equine assets in an aggregate amount of at least $7,000,000, and (iv) to pay fees and expenses related to this Agreement and for general working capital purposes of the Borrower. The availability of any Delayed Draw Term Loan by any Lender shall be at the sole and absolute discretion of the Agents, it being expressly understood and agreed that no Lender has any obligation whatsoever to make any Delayed Draw Term Loan.
(Financing Agreement at 1, Recitals.)
49. The Financing Agreement further provides for a schedule of repayment of
the term loan as follows:
The outstanding principal of the Term Loans shall be repayable on the following dates and in the following amounts set forth opposite such dates [. . .] :
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(Financing Agreement § 2.03(a).)
50. As a condition precedent to the Financing Agreement going into effect, the
Financing Agreement provided that MGG must have first received a duly executed Pledge and
Security Agreement, detailed below, whereby Zayat Stables pledged all of its assets as Collateral
for the loans. (Financing Agreement § 5.01(d)(i).)
51. Under the Financing Agreement, “Collateral” is defined as:
All of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations, including, without limitation, all Equine Collateral.
(Financing Agreement § 1.01.)
52. “Equine Collateral” is defined under the Financing Agreement as: 000014 of 000076 AMC : 000014 of 000076 14 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
All horses, stallions, mares, weanlings, foals, thoroughbred bloodstock and/or stallion shares, breeding rights, lifetime breeding rights and/or fractional interests therein, their offspring and young, both born and unborn, and/or fractional interests therein, stallion seasons and shares, and any other interests in any of the foregoing, owned by the Borrower or any of its Subsidiaries, howsoever classified, whether now owned or hereafter acquired, and including all substitutions and replacements thereof.
(Financing Agreement § 1.01) (emphasis supplied).
53. The Financing Agreement provides that:
Upon the occurrence and during the continuance of an Event of Default, (i) the principal of, and all accrued and unpaid interest on, all Loans, fees, indemnities or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate.
(Financing Agreement § 2.04(b).)
54. Additionally, pursuant to the Financing Agreement § 2.05(c)(ii), in the
event of a disposition (other than the involuntary loss, damage or destruction of property or any
involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, or confiscation or requisition of use of property), including the disposition of Equine
Collateral, whether such disposition was a Permitted Disposition or not, among other things, Zayat
Stables is obligated to use a certain percentage of the proceeds of the disposition (not less than
50% and in some cases up to 100%, depending on the disposition at issue) to partially pre-pay the
outstanding principal of the loans.
55. Further, pursuant to the Financing Agreement, Zayat Stables made several
covenants. For instance, Zayat Stables covenanted that it would, while any Loans remained
outstanding, deliver to MGG a compliance certificate along with monthly, quarterly, and annual
financial statements in which Zayat Stables was required to state whether any Events of Default 000015 of 000076 AMC : 000015 of 000076 15 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
had occurred during the applicable period and to describe any dispositions of Equine Collateral
made during the applicable period. (Financing Agreement § 7.01(a)(i)-(iv).)
56. Additionally, Zayat Stables covenanted that it would not, while any Loans
remained outstanding,
Make any Disposition, whether in one transaction or a series of related transactions, of all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing), or permit any of its Subsidiaries to do any of the foregoing; provided, however, that any Loan Party and its Subsidiaries may make Permitted Dispositions.
(Financing Agreement § 7.02(c)(ii).)
57. The Financing Agreement allows for certain Permitted Dispositions,
including of Equine Collateral, but only under certain conditions, including that the sale be in the
ordinary course of business and for fair market value. As such, none of the dispositions of Equine
Collateral at issue in this action, described below, were Permitted Dispositions. However, even if
they were, pursuant to the Financing Agreement § 2.05(c)(ii) and as stated above, Zayat Stables
was obligated to use a certain percentage of the proceeds of the disposition (not less than 50% and
in some cases up to 100%, depending on the disposition at issue) to partially pre-pay the
outstanding principal of the loans. And Zayat Stables did not make any principal payments as the
result of any of the dispositions at issue in this action.
58. Additionally, as a condition precedent to all loans made pursuant to the
Financing Agreement:
The following statements shall be true and correct, and the submission by the Borrower to the Administrative Agent of a Notice of Borrowing with respect to each such Loan, and the Borrowers’ acceptance of the proceeds of such Loan, shall each be deemed to be a representation and warranty by each Loan Party on the date of such Loan that:
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(i) the representations and warranties contained in Article VI [. . .] on or prior to the date of such Loan are true and correct in all material respects [. . .] on and as of such date as though made on and as of such date [. . .],
(ii) at the time of and after giving effect to the making of such Loan and the application of the proceeds thereof, no Default or Event of Default has occurred and is continuing or would result from the making of the Loan to be made, on such date and
(iii) the conditions set forth in this Section 5.02 have been satisfied as of the date of such request.
(Financing Agreement § 5.02(c).)
59. Pursuant to Section 6.01 of the Financing Agreement, Zayat Stables
“represents and warrants to the Secured Parties” that it “has good and marketable title to, valid
leasehold interests in, or valid licenses to use, all property and assets material to its business
(including the Equine Collateral), free and clear of all Liens, except Permitted Liens.” (Financing
Agreement § 6.01(o).)
60. Under the Financing Agreement, certain events constitute an Event of
Default, including the following:
(a) The Borrower shall fail to pay, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), (i) any interest on any Loan, any Collateral Agent Advance, or any fee, indemnity or other amount payable under this Agreement (other than any portion thereof constituting principal of the Loans) or any other Loan Document, and such failure continues for a period of two (2) Business Days or (ii) all or any portion of the principal of the Loans;
(b) Any representation or warranty made or deemed made by or on behalf of any Credit Party [i.e. Zayat Stables or Ahmed Zayat] or by any officer of the foregoing under or in connection with any Loan Document or under or in connection with any certificate or other writing delivered to any Secured Party pursuant to any Loan Document shall prove to have been incorrect in any material respect [. . .] when made or deemed made;
(c) The Borrower or any of its Subsidiaries shall fail to perform or comply with any covenant or agreement contained in:
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(i) [. . .] Section 7.02 [. . .], or the Borrower or any of its Subsidiaries shall fail to perform or comply with any covenant or agreement contained in any Security Agreement to which it is a party or any Mortgage to which it is a party, [. . .]
(d) Any Credit Party shall fail to perform or comply with any other term, covenant or agreement contained in any Loan Document to be performed or observed by such Person and [. . .] such failure, if capable of being remedied, shall remain unremedied for 15 days after [. . .] any Loan Party or the Permitted Holder has knowledge of such failure and the date written notice of such default shall have been given by any Agent to such Credit Party; or
(s) An event or development occurs that could reasonably be expected to have a Material Adverse Effect.
(Financing Agreement § 9.01 (a)-(d), (s).)
61. Pursuant to the Financing Agreement, if an Event of Default occurs:
The Collateral Agent may [. . .] by notice to the Borrower,
(i) terminate or reduce all Commitments, whereupon all Commitments shall immediately be so terminated or reduced,
(ii) declare all or any portion of the Loans then outstanding to be accelerated and due and payable, whereupon all or such portion of the aggregate principal of all Loans, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, together with the payment of the Applicable Premium with respect to the Commitments so terminated and the Loans so repaid, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and
(iii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents [. . . .]
(Financing Agreement § 9.01.)
62. In late September 2016, in connection with the Financing Agreement, the
Agent filed a UCC-1 financing statement with the Secretary of State of the State of Delaware (and
as an additional precautionary measure, also at the applicable recording offices for the States of
Kentucky, New York, Florida, and California), each documenting the Agent’s security interests in 000018 of 000076 AMC : 000018 of 000076 18 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Zayat Stables’ assets, including any assets acquired in the future. True and accurate copies of the
UCC-1 financing statements are compiled and attached hereto as Exhibit F.
63. By filing the UCC-1 statement with the Secretary of State of the State of
Delaware, the Agent perfected its lien on all of Zayat Stables’ current and after acquired assets,
including its horses and breeding rights.
64. Since their filing in late September 2016 and up through the present, the
UCC-1 financing statements have remained active and in full effect.
65. On September 30, 2016, Zayat Stables and MGG executed the first
amendment to the Financing Agreement (the “First Amendment to Financing Agreement”)
whereby MGG provided Zayat Stables with $5 million of the delayed draw term loan. A true and
accurate copy of the First Amendment to Financing Agreement is attached hereto as Exhibit G.
The Pledge and Security Agreement
66. On or about July 26, 2016, Zayat Stables as Grantor entered into a pledge
and security agreement (the “Pledge and Security Agreement”) in favor of the Agent, a true and
accurate copy of which is attached hereto as Exhibit H. (The Pledge and Security Agreement and
the Financing Agreement and the other loan documents referenced in the Financing Agreement
are sometimes collectively referred to herein as the “Loan Documents”.)
67. Pursuant to the Pledge and Security Agreement,
As collateral security for the payment, performance and observance of all of the Secured Obligations, each Grantor hereby pledges and assigns to the Collateral Agent [. . .], and grants to the Collateral Agent [. . .], for the benefit of the Secured Parties, a continuing security interest in, all personal property and Fixtures, if any, of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the following (all being collectively referred to herein as the “Collateral”):
(a) all Equine Collateral, including, without limitation, (i) all racing income, 000019 of 000076 breeders’ awards, Accounts and General Intangibles arising from any stallion AMC : 000019 of 000076 19 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
syndication agreement, any sale or other Disposition of any stallion seasons or shares or otherwise derived from or in any way related to any Equine Collateral, (ii) all certificates of title, certificates of registration and other evidences of ownership in any way relating to, or connected with, any Equine Collateral, including, without limitation, all Jockey Club Certificates of Registration and all stallion share certificates, and (iii) all policies of insurance on any of the Equine Collateral and all rights to proceeds thereof and refunds thereunder;
(b) all Accounts (including without limitation, Accounts relating to any of the Equine Collateral); and
(o) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral.
(Pledge and Security Agreement § 2.)
68. Pursuant to the Pledge and Security Agreement, Zayat Stables irrevocably
and unconditionally:
(i) Consents to the appointment (after the occurrence and during the continuance of an Event of Default) of pre-judgment and/or post-judgment receiver with all of the same powers that would otherwise be available to the Grantors, including, without limitation, the power to (A) hold, manage, control or dispose of the Collateral wherever located, (B) take any action with respect to the Collateral to the maximum extent permitted by law and (C) conduct a public or private sale of any or all of the Grantors’ right, title and interest in and to such Collateral, including any disposition of the Collateral to the Collateral Agent or the Lenders in exchange for cancellation of all or a portion of the Obligations;
(ii) Consents that any such receiver can be appointed without a hearing or prior notice to the Grantors;
(iii) Agrees not to oppose or otherwise interfere (directly or indirectly) with any effort by Collateral Agent to seek the appointment of a receiver;
(iv) Waives any right to demand that a bond be posted in connection with the appointment of any such receiver; and
(v) Waives any right to appeal the entry of an order authorizing the appointment of a receiver.
(Pledge and Security Agreement § 9(h)) (emphasis supplied).
000020 of 000076 AMC : 000020 of 000076 20 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Zayat Defendants Begin to Purport to Sell Off Assets in Violation of the Loan Documents
69. Based on documents and information only recently provided to MGG, and
upon information and belief, beginning in September 2017 and potentially earlier, and continuing
through at least as recently as January 2020, Zayat Stables, Ahmed Zayat and Justin Zayat engaged
in a fraudulent scheme in violation of the Loan Documents whereby they purported to sell off
millions of dollars of the Collateral that secured the loans from MGG without obtaining MGG’s
consent, and while concealing the purported sales from MGG.
70. Based on documents and information only recently provided to MGG, and
upon information and belief, Zayat Stables, Ahmed Zayat and Justin Zayat made these improper
purported sales because of severe financial troubles at Zayat Stables. The purported sales were
fraudulently concealed from MGG so as to avoid having to use the sales proceeds to pay down
principal on the MGG loans, as required by the Loan Documents, and to conceal the continuing
Events of Default under the Loan Documents that, if discovered by MGG, would have caused
MGG to accelerate Zayat Stables’ repayment obligations and/or exercise rights or remedies under
the Loan Documents or applicable law.
71. The improper purported sales included some of Zayat Stables’ most
valuable assets, most notably the nine breeding rights to AMERICAN PHAROAH that were
expressly contemplated throughout the loan negotiations as being among Zayat Stables’ assets and
constituting Equine Collateral, all of which were pledged to secure the loans.
72. The improper purported sales also included other valuable Equine
Collateral that were pledged to MGG to secure the loans pursuant to the Loan Documents,
including, but not limited to, Zayat Stables’ interests in EL KABEIR, AMERICAN CLEOPATRA
(and one of her foals), LEMOONA, AMANDREA, and SOLOMINI. 000021 of 000076 AMC : 000021 of 000076 21 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
73. In addition to the failure to disclose the purported sales to MGG and to make
required prepayments of loan principal with the proceeds of any such sales as required under the
Loan Documents, the improper purported sales of MGG’s collateral were made at prices that were
significantly discounted from the known fair market value of those assets as determined by
independent appraisers.
74. Specifically, following Zayat Stables’ default on its payment obligations
under the loans, and in connection with MGG’s attempts to work with Zayat Stables toward an
orderly liquidation of Zayat Stables’ assets, on or about December 12, 2019, Justin Zayat delivered
MGG a proposed liquidation plan which set forth the assets of Zayat Stables and the value of such
assets, a true and accurate copy of which is attached hereto as Exhibit I (the “Liquidation Plan”).
As detailed further herein, the prices at which Zayat Stables, Ahmed Zayat and Justin Zayat had
purported to sell-off the Equine Collateral in violation of the Financing Agreement without MGG’s
knowledge were significantly lower than the values for those assets as set forth in the Liquidation
Plan.
75. In addition, as detailed further herein, the prices at which Zayat Stables,
Ahmed Zayat and Justin Zayat had purported to sell-off the Equine Collateral in violation of the
Financing Agreement without MGG’s knowledge were also significantly lower than the appraised
values provided to MGG by an independent appraiser commissioned by Zayat Stables in or around
July 2019. A true and accurate copy of that independent appraisal is attached hereto as Exhibit J.
76. Each of these purported sales were made notwithstanding the previously
filed UCC-1 Financing Statements putting the general public on notice of MGG’s perfected
security interest in those assets. 000022 of 000076 AMC : 000022 of 000076 22 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
The Purported Sale of Zayat Stables’ Interests in EL KABEIR
77. Upon information and belief, the first improper purported sale of Equine
Collateral in connection with the fraudulent scheme perpetrated by Zayat Stables, Ahmed Zayat
and Justin Zayat was of the horse EL KABEIR. Specifically, on or around September 20, 2017,
Zayat Stables improperly purported to sell its interests in EL KABEIR in a private sale for
$500,000 to Defendant Yeomanstown Stud. A true and accurate copy of the purported bill of sale
for Zayat Stables’ interests in EL KABEIR is attached as Exhibit K.
78. Ahmed Zayat signed the purported bill of sale on behalf of Zayat Stables.
79. At the time of Zayat Stables’ purported sale of EL KABEIR, Yeomanstown
Stud knew or should have known that MGG had a perfected security interest in all of Zayat Stables’
assets, including its interests in EL KABEIR, as a result of the UCC-1 Financing Statements
previously filed by MGG.
80. In addition, the $500,000 price at which Zayat Stables purportedly sold EL
KABEIR in September 2017 did not reflect fair market value. In fact, in or around July 2017, an
independent appraisal commissioned by Zayat Stables determined EL KABEIR to be worth $4.25
million. The $500,000 purported sale price also represents a deep discount from Zayat Stables’
own $2.5 million valuation of its interests in EL KABEIR as reflected in the proposed Liquidation
Plan (see Exhibit I), as well as the July 2019 updated appraisal from the independent appraiser
commissioned by Zayat Stables which determined EL KABEIR to be worth $5.75 million. (See
Exhibit J.)
81. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG. Instead, MGG only learned of this purported sale in January 2020, as part of 000023 of 000076 its ongoing investigation of the Zayat Defendants’ malfeasance. AMC : 000023 of 000076 23 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
The Purported Sale of Zayat Stables’ Interests in AMERICAN CLEOPATRA
82. Less than two months after the purported sale of EL KABEIR, on or around
November 15, 2017, Zayat Stables improperly, and without disclosing it to MGG for several years,
purported to sell its interests in AMERICAN CLEOPATRA in a private sale for $1.3 million to
Defendant Hill ‘N’ Dale. A true and accurate copy of the purported bill of sale for Zayat Stables’
interests in AMERICAN CLEOPATRA is attached as Exhibit L.
83. Justin Zayat signed the purported bill of sale on behalf of Zayat Stables.
84. The purported sale of Zayat Stables’ interests in AMERICAN
CLEOPATRA took place in Kentucky, shortly after the horse was unsuccessfully entered in an
auction at the Fasig-Tipton auction house in Lexington, Kentucky.
85. At the time of Zayat Stables’ purported sale of AMERICAN CLEOPATRA,
Hill ‘N’ Dale knew or should have known that MGG had a perfected security interest in all of
Zayat Stables’ assets, including its interests in AMERICAN CLEOPATRA, as a result of the UCC-
1 Financing Statements previously filed by MGG.
86. In addition, the $1.3 million price at which Zayat Stables purportedly sold
AMERICAN CLEOPATRA in November 2017 did not reflect fair market value. In fact, in or
around July 2017, an independent appraisal commissioned by Zayat Stables determined
AMERICAN CLEOPATRA to be worth $6.5 million.
87. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG. Instead, MGG only learned of this purported sale in January 2020, as part of
its ongoing investigation of the Zayat Defendants’ malfeasance.
88. Furthermore, upon information and belief, AMERICAN CLEOPATRA 000024 of 000076 was pregnant with a foal sired by UNCLE MO at the time of her purported sale to Hill ‘N’ Dale. AMC : 000024 of 000076 24 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
In furtherance of their scheme to conceal the purported sale of AMERICAN CLEOPATRA, Zayat
Stables, Ahmed Zayat and Justin Zayat provided MGG with what they asserted were the proceeds
of the sale of AMERICAN CLEOPATRA’s foal with UNCLE MO, as if the purported sale of
AMERICAN CLEOPATRA had not taken place.
89. Upon information and belief, after the purported sale and after the birth of
her first foal, AMERICAN CLEOPATRA became pregnant with a foal sired by TAPIT and has
since given birth to that foal. Upon information and belief, the AMERICAN
CLEOPATRA/TAPIT foal is currently located at Hill ‘N’ Dale.
90. Due to its perfected security interest in AMERICAN CLEOPATRA, MGG
also holds a security interest in the AMERICAN CLEOPATRA/TAPIT foal.
The Purported Sales of Zayat Stables’ AMERICAN PHAROAH Breeding Rights
91. Beginning in at least December 2018 and through June 2019, Ahmed
Zayat’s wife and children were active participants in the fraudulent scheme set forth herein through
their improper purported sales of the Zayat AP Breeding Rights.
92. Zayat Stables and the entire Zayat Family knew that MGG’s loans to Zayat
Stables were contingent upon the AMERICAN PHAROAH breeding rights being among Zayat
Stables’ assets pledged as collateral to secure the loans, as evidenced by the Zayat AP Breeding
Rights Transfer Document, which transferred all of the Zayat AP Breeding Rights to Zayat Stables
and was signed by all members of the Zayat Family in July 2016 at or around the time Zayat
Stables entered into the Loan Documents with MGG.
93. Nevertheless, as detailed below, Ahmed Zayat’s wife and children
purported to own and sell all nine of the Zayat AP Breeding Rights between December 2018 and
June 2019, with proceeds of the purported sales totaling $3.3 million. 000025 of 000076 AMC : 000025 of 000076 25 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
94. On or about December 21, 2018, upon information and belief, Justin Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 1 of
AMERICAN PHAROAH to LNJ Foxwoods in exchange for $375,000. A true and accurate copy
of the purported bill of sale and assignment is attached hereto as Exhibit M.
95. On or about December 21, 2018, upon information and belief, Justin Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 2 of
AMERICAN PHAROAH to LNJ Foxwoods in exchange for $375,000. A true and accurate copy
of the purported bill of sale and assignment is attached hereto as Exhibit N.
96. Before finalizing its purported purchases from Justin Zayat and Zayat
Stables of the Zayat AP Breeding Rights Nos. 1 and 2, LNJ Foxwoods was on notice of MGG’s
security interest in all of Zayat Stables’ assets, including Zayat AP Breeding Rights Nos. 1 and 2,
due to the UCC-1 Financing Statements filed by MGG.
97. Thus, whatever interests in the Zayat AP Breeding Rights that LNJ
Foxwoods purported to purchase from the Zayat Family and Zayat Stables are subject to MGG’s
priority security interests.
98. On or about March 26, 2019, upon information and belief, Justin Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 3 of
AMERICAN PHAROAH to Orpendale in exchange for $400,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit O.
99. On or about March 29, 2019, upon information and belief, Justin Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 4 of
AMERICAN PHAROAH to Orpendale in exchange for $400,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit P. 000026 of 000076 AMC : 000026 of 000076 26 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
100. On or about April 14, 2019, upon information and belief, Benjamin Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 5 of
AMERICAN PHAROAH to Orpendale in exchange for $350,000.
101. On or about April 14, 2019, upon information and belief, Ashley Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 6 of
AMERICAN PHAROAH to Orpendale in exchange for $350,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit Q.
102. On or about May 1, 2019, upon information and belief, Emma Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 7 of
AMERICAN PHAROAH to Orpendale in exchange for $350,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit R.
103. On or about June 5, 2019, upon information and belief, Joanne Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 8 of
AMERICAN PHAROAH to Orpendale in exchange for $350,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit S.
104. On or about June 5, 2019, upon information and belief, Joanne Zayat
purported to execute a bill of sale and assignment of Lifetime Breeding Right No. 9 of
AMERICAN PHAROAH to Orpendale in exchange for $350,000. A true and accurate copy of
the purported bill of sale and assignment is attached hereto as Exhibit T.
105. Orpendale, the purported purchaser of the Zayat AP Breeding Rights Nos.
3-9, is affiliated with and shares employees with Coolmore Stud, Ashford Stud, and Coolmore
America, and was fully aware at the time of its purported purchases that all of the Zayat AP
Breeding Rights had been expressly transferred to Zayat Stables to be pledged as collateral for 000027 of 000076 AMC : 000027 of 000076 27 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Zayat Stables’ loan from MGG. In fact, the Zayat AP Breeding Rights Transfer Document was
addressed to Aisling Duignan of Coolmore America, and the Zayat AP Breeding Rights Transfer
Confirmation was on Coolmore America and Ashford Stud letterhead, and was signed by Ashford
Stud’s CFO, Frank Phelan. Further, both the AP Purchase Agreement and the bill of sale for
Orpendale’s January 16, 2015 purchase of AMERICAN PHAROAH were signed on behalf of
Orpendale by Michael Ryan, who, upon information and belief, was an accountant at Coolmore
Stud at the time of the purchase, a position he still holds currently.
106. Orpendale was also on notice of MGG’s security interest in all of Zayat
Stables’ assets, including its interests in Zayat AP Breeding Rights Nos. 3-9, before it finalized its
purported purchases of the Zayat AP Breeding Rights Nos. 3-9 from Ahmed Zayat’s wife and
children and Zayat Stables, due to the UCC-1 Financing Statements filed by MGG.
107. In fact, as detailed herein, Orpendale was fully aware of MGG’s security
interests in all of Zayat Stables’ assets, as further evidenced by the partial lien release Orpendale
requested and received from MGG in connection with Orpendale’s purchase of 50% of Zayat
Stables’ ownership stake in SOLOMINI on or around January 2, 2018, over a year before
Orpendale’s first purported purchase of the Zayat AP Breeding Rights.
108. Thus, whatever interests in the Zayat AP Breeding Rights that Orpendale
purported to purchase from Ahmed Zayat’s wife and children and Zayat Stables are subject to
MGG’s priority security interests.
109. Further, the $3.3 million total price received by Zayat Stables for the
purported sales of the Zayat AP Breeding Rights did not reflect their fair market value and
represents a deep discount from Zayat Stables’ own $14 million valuation of the Zayat AP
Breeding Rights as reflected in the proposed Liquidation Plan (see Exhibit I), as well as an 000028 of 000076 AMC : 000028 of 000076 28 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
independently appraised value commissioned by Zayat Stables in July 2019 that determined the
Zayat AP Breeding Rights to be worth a total of $12.6 million. (See Exhibit J.)
110. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of any of the purported sales of the Zayat AP Breeding Rights and did not use
the proceeds to pay down the principal on its loan from MGG. Instead, MGG only learned of the
purported sales of the Zayat AP Breeding Rights in January 2020 after Ahmed Zayat admitted to
the Zayat Defendants’ scheme once confronted by MGG as part of its ongoing investigation of the
Zayat Defendants’ malfeasance.
The Purported Sale of Zayat Stables’ Interests in LEMOONA
111. On or around March 6, 2019, Zayat Stables improperly, and without
disclosing it to MGG, purported to sell its breeding interests in LEMOONA (while purporting to
retain the racing rights) in a private sale for $150,000 to Flintshire Farm and Brad Sears, through
their agent West Bloodstock LLC. A true and accurate copy of the purported bill of sale for the
breeding interests in LEMOONA is attached as Exhibit U.
112. Justin Zayat signed the purported bill of sale on behalf of Zayat Stables as
President of Zayat Stables.
113. At the time of Zayat Stables’ purported sale of LEMOONA’s breeding
rights, Flintshire Farm, Brad Sears, and their agent West Bloodstock LLC knew or should have
known that MGG had a perfected security interest in all of Zayat Stables’ assets, including its
interests in LEMOONA, as a result of the UCC-1 Financing Statements previously filed by MGG.
114. Thus, whatever interests in LEMOONA’s breeding rights that Flintshire
Farm or Brad Sears purported to purchase from Zayat Stables are subject to MGG’s priority
security interests. 000029 of 000076 AMC : 000029 of 000076 29 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
115. In addition, the $150,000 purported sale price did not reflect fair market
value for LEMOONA’s breeding rights. Such sales price represents a deep discount from an
independently appraised value commissioned by Zayat Stables in July 2019 that determined
LEMOONA to be worth $925,000. (See Exhibit J.)
116. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG. Instead, MGG only learned of this purported sale in January 2020, as part of
its ongoing investigation of the Zayat Defendants’ malfeasance.
117. Upon information and belief, after LEMOONA retired from racing,
Flintshire Farm and Brad Sears sold LEMOONA to Thomas Clark Bloodstock at Keeneland
Association’s January 2020 Horses of All Ages Sale.
118. At the time of Flintshire Farm’s and Brad Sears’ subsequent purported sale
of LEMOONA’s breeding rights, Thomas Clark Bloodstock knew or should have known that
MGG had a perfected security interest in all of Zayat Stables’ assets, including its interests in
LEMOONA, as a result of the UCC-1 Financing Statements previously filed by MGG.
The Purported Sale of Zayat Stables’ Interests in AMANDREA
119. Upon information and belief, and according to documents filed by My
Racehorse with the Securities and Exchange Commission on or around October 11, 2019, Zayat
Stables purported to transfer a 55% ownership stake in AMANDREA to My Racehorse in
exchange for $115,500.
120. At the time of Zayat Stables’ purported sale of AMANDREA, My
Racehorse knew or should have known that MGG had a perfected security interest in all of Zayat
Stables’ assets, including its interests in AMANDREA, as a result of the UCC-1 Financing 000030 of 000076 Statements previously filed by MGG. AMC : 000030 of 000076 30 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
121. Thus, whatever interests in AMANDREA that My Racehorse purported to
purchase from Zayat Stables are subject to MGG’s priority security interests.
122. In addition, the $115,500 purported sale price did not reflect fair market
value for the interests in AMANDREA. In fact, that sales price represents a deep discount from
an independently appraised value commissioned by Zayat Stables in July 2019 that determined
Zayat Stables’ interests in AMANDREA to be worth $375,000. (See Exhibit J.)
123. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG. Instead, MGG only learned of this purported sale in January 2020, as part of
its ongoing investigation of the Zayat Defendants’ malfeasance.
The Purported Sale of Zayat Stables’ Interests in SOLOMINI
124. As mentioned above, on or around January 2, 2018, at the request of both
Zayat Stables and Orpendale, MGG entered into a partial lien release agreement with Zayat Stables
whereby MGG partially released its secured lien against Zayat Stables’ Equine Collateral
SOLOMINI so as to allow Zayat Stables to sell 50% of its 100% ownership stake in SOLOMINI
to Orpendale (the “Partial Release Agreement”). A true and accurate copy of the Partial Release
Agreement is attached hereto as Exhibit V.
125. Pursuant to the Partial Release Agreement, MGG retained its priority
security interest in the 50% ownership interest in SOLOMINI retained by Zayat Stables. Further,
pursuant to the agreement, Zayat Stables transferred to MGG the $800,000 in sale proceeds it
received from Orpendale in exchange for 50% of SOLOMINI.
126. Thereafter, on or around December 3, 2019, Zayat Stables and Orpendale
purported to sell 100% of SOLOMINI, including Zayat Stables’ remaining 50% interest, in a 000031 of 000076 AMC : 000031 of 000076 31 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
private sale for $250,000 to Defendant McMahon Thoroughbreds. A true and accurate copy of
the purported bill of sale for Zayat Stables’ interests in SOLOMINI is attached as Exhibit W.
127. Upon information and belief, at the time of the purported sale of
SOLOMINI to McMahon Thoroughbreds, the horse was located in Kentucky.
128. At the time of the purported sale of SOLOMINI to McMahon
Thoroughbreds, McMahon Thoroughbreds knew or should have known that MGG had a perfected
security interest in all of Zayat Stables’ assets, including its interests in SOLOMINI, as a result of
the UCC-1 Financing Statements previously filed by MGG.
129. Thus, whatever interests in SOLOMINI that McMahon Thoroughbreds
purported to purchase from Zayat Stables are subject to MGG’s priority security interests.
130. In addition, the $250,000 purported sale price did not reflect fair market
value for SOLOMINI. In fact, that sales price represents a deep discount from an independently
appraised value commissioned by Zayat Stables in July 2019 that determined Zayat Stables’
remaining interests in SOLOMINI to be worth $3 million. (See Exhibit J.)
131. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale of its remaining 50% interest in SOLOMINI and did not
use the proceeds to pay down the principal on its loan from MGG. Instead, MGG only learned of
this purported sale in January 2020, as part of its ongoing investigation of the Zayat Defendants’
malfeasance.
Other Purported Sales of Equine Collateral
132. Upon information and belief, Zayat Stables’, Ahmed Zayat’s and Justin
Zayat’s pattern and practice of purporting to sell Zayat Stables’ pledged Equine Collateral out from
under the Plaintiff’s security interests and without Plaintiff’s knowledge goes beyond the 000032 of 000076 purported sales detailed above. AMC : 000032 of 000076 32 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
133. Even though MGG is not aware of all of the deceptive actions of Zayat
Stables, Ahmed Zayat, Justin Zayat and other members of the Zayat Family, it has already
uncovered improper purported sales of, in addition to those items set forth above, the following
Equine Collateral: BODEMIESTER, ESKENDEREYA, ZENSATIONAL, JUSTIN PHILLIP,
GRAMMAJO, DANYELLI, LEZENDARY, OLD GLORY, ASH N’ EM, MAJID, and PRAYER
FOR RELIEF.
134. As they did with the purported sales discussed in detail above, Zayat
Stables, Ahmed Zayat and Justin Zayat concealed these transactions from MGG and others so as
to allow the fraudulent scheme to continue undetected.
135. Additionally, as they did with the purported sales discussed in detail above,
Zayat Stables did not make any principal payments as the result of any of these purported sales of
Equine Collateral, as was required pursuant to the Financing Agreement § 2.05(c)(ii).
Zayat Stables Defaults on Its Loan Payments
136. Zayat Stables failed to pay the principal installment of the term loan on
September 30, 2019, as was required pursuant to Section 2.03(a) of the Financing Agreement,
giving rise to an Event of Default under Section 9.01(a) of the Financing Agreement.
137. A few days before the September 30, 2019 payment was due, Ahmed Zayat
informed MGG that Zayat Stables would not be able to make the required loan payments.
138. On or about October 24, 2019, Ahmed Zayat visited MGG’s offices in New
York. After that meeting, Ahmed Zayat informed MGG that several hundreds of thousands of
dollars in proceeds of a recent sale of his family’s personal assets were used to pay other debts of
Zayat Stables and were not used to pay MGG as required by the Loan Documents. 000033 of 000076 AMC : 000033 of 000076 33 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
139. On or about December 4, 2019, MGG sent Zayat Stables a notice of default
and reservation of rights (the “Notice of Default”), a true and accurate copy of which is attached
hereto as Exhibit X.
140. In addition to the Event of Default related to Zayat Stables’ failure to make
the payment due on September 30, 2019, the Notice of Default lists two additional Events of
Default.
141. First, the Notice of Default lists an Event of Default that arose under Section
9.01(a) of the Financing Agreement as a result of Zayat Stables’ failure to pay interest on the Loan
pursuant to Section 2.04(c) of the Financing Agreement due on October 1, 2019, November 1,
2019, and December 1, 2019.
142. Second, the Notice of Default lists an Event of Default that arose under
Section 9.0l(a) of the Financing Agreement as a result of the Loan Parties’ failure to pay the Loan
Servicing Fee pursuant to Section 2.06(c) of the Financing Agreement due on October 31, 2019.
143. In addition to the Events of Default listed in the Notice of Default, there are
additional Events of Default, including but not limited to Events of Default resulting from Zayat
Stables’ purported sales of Equine Collateral that were not reported to MGG or permitted by the
Loan Documents, as described herein, as well as additional payment defaults.
144. These Events of Default are continuing under the Loan Documents and as
a result MGG is currently owed over $23 million in the principal of the loan plus accrued interest.
Zayat Stables and MGG Discuss Potential Liquidation Plan
145. In response to the Notice of Default, on or about December 12, 2019, Justin
Zayat prepared and sent to MGG the proposed Liquidation Plan for Zayat Stables’ assets.
146. The Liquidation Plan lists as assets of Zayat Stables numerous equine assets 000034 of 000076 (including, without limitation, the Zayat AP Breeding Rights) that, as MGG subsequently AMC : 000034 of 000076 34 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
discovered, Zayat Stables has in fact purported to have sold prior to the delivery of the Liquidation
Plan to MGG and, as detailed above, at a steep discount to the values set forth in the Liquidation
Plan. (See Exhibit I.)
147. In fact, as reflected in the Liquidation Plan, Zayat Stables agreed to ensure
that the Zayat AP Breeding Rights and EL KABEIR would be among the last of Zayat Stables’
assets to be sold. Justin Zayat made this representation with full knowledge that the Zayat
Defendants had already purported to sell the Zayat AP Breeding Rights and EL KABEIR.
148. On or about December 16, 2019, Dane Joella, a Director at MGG, met with
Ahmed Zayat and Justin Zayat in MGG’s offices in New York to discuss the Liquidation Plan. At
this meeting, Ahmed Zayat and MGG agreed to meet again in mid-January 2020 upon completion
of Ahmed Zayat’s capital raising roadshow in Asia.
149. On or about December 18, 2019, MGG asked Zayat Stables to sell certain
assets listed in the Liquidation Plan in order to generate proceeds with which to pay MGG as soon
as possible. As MGG would thereafter come to discover, several of the assets it requested be sold
had already been purportedly sold by Zayat Stables in breach of the Loan Documents.
MGG Uncovers the Zayat Defendants’ Fraudulent Scheme
150. On or about January 2, 2020, the asset appraiser appointed pursuant to the
Loan Documents called Dane Joella of MGG and informed Joella of his belief that Zayat Stables
no longer owned any breeding rights to AMERICAN PHAROAH. After the call, pursuant to the
Financing Agreement’s periodic appraisal requirement, the appraiser provided MGG with his most
recent appraisal, indicating his suspicion of Zayat Stables’ ownership in the Zayat AP Breeding
Rights. 000035 of 000076 AMC : 000035 of 000076 35 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
151. On that same day, on or about January 2, 2020, Dane Joella of MGG called
Frank Phelan, the CFO of Ashford Stud, who said that he would not discuss AMERICAN
PHAROAH’s breeding rights without permission from Ahmed Zayat.
152. On or about January 7, 2020, Kevin Griffin of MGG called Ahmed Zayat
to confront him regarding the breeding rights to AMERICAN PHAROAH. On that call, Ahmed
Zayat denied that any of the breeding rights had been sold.
153. On or about January 8, 2020, at the request of MGG, Ahmed Zayat gave
Aisling Duignan at Coolmore permission to speak with MGG.
154. On or about January 9, 2020, Dane Joella of MGG emailed Aisling Duignan
to schedule a time to discuss Zayat Stables’ breeding rights in AMERICAN PHAROAH.
155. On or about January 10, 2020, Dane Joella of MGG called and emailed
Frank Phelan, the CFO of Ashford Stud, to discuss Zayat Stables’ breeding rights in AMERICAN
PHAROAH.
156. On or about January 11, 2020, MGG’s former counsel spoke with Aisling
Duignan at Coolmore, who refused to provide any information at that time, but noted that the
matter had been elevated to her superior.
Ahmed Zayat Admits That He and His Family Purported To Sell Collateral in Violation of the Loan Documents
157. On or about January 12, 2020, Ahmed Zayat called Patrick Flynn of MGG
and admitted that the Zayat Defendants purported to have sold the Zayat AP Breeding Rights.
158. On that same day, Ahmed Zayat sent an email to MGG and admitted that
the Zayat Defendants purported to have sold the Zayat AP Breeding Rights over the course of
seven months between December 2018 and June 2019 for a total of $3.3 million. A true and
accurate copy of Ahmed Zayat’s January 12, 2020 email is attached hereto as Exhibit Y. 000036 of 000076 AMC : 000036 of 000076 36 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
159. In that January 12, 2020 email, Ahmed Zayat wrote the following: “I am
ready if needed to walk away and give you the keys and full control if that is what you want.”
160. On or about January 13, 2020, Dane Joella of MGG spoke on the phone
with Aisling Duignan at Coolmore who confirmed the purported sales of the breeding rights to
AMERICAN PHAROAH.
161. On or about January 15, 2020, Ahmed Zayat sent an email to MGG in which
he admitted Zayat Stables had purported to sell without permission, notice, or pay-down additional
Equine Collateral, including the following or assets related to the following: AMERICAN
CLEOPATRA, GRAMMAJO, DANYELLI, LEZENDARY, OLD GLORY, and LEMOONA.
162. On or about January 16, 2020, MGG’s preliminary investigation uncovered
information to suggest that Zayat Stables had purported to sell without permission, notice, or pay-
down additional Equine Collateral, including the following or assets related to the following:
AMANDREA, ASH N’ EM, MAJID, BODEMIESTER, ESKENDEREYA, EL KABEIR,
ZENSATIONAL, JUSTIN PHILLIP, and PRAYER FOR RELIEF.
163. On or around January 20, 2020, in response to a request for documentation
regarding the sale of EL KABEIR, Ahmed Zayat continued his attempts to conceal the massive
fraud perpetrated by the Zayat Defendants, falsely stating that “[w]e never sold any position in that
stallion.” A true and accurate copy of this email is attached hereto as Exhibit Z.
164. In fact, EL KABEIR had been purportedly sold by Zayat Stables more than
two years before, on or about September 20, 2017. (See Exhibit K).
MGG’s Collateral Is in Jeopardy Such That a Receiver Should Be Appointed
165. As stated above, the Agent obtained security interests in all of Zayat
Stables’ assets, including all of its horses and breeding rights, as Collateral to secure a series of 000037 of 000076 loans totaling $30 million. AMC : 000037 of 000076 37 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
166. As demonstrated above, the Zayat Defendants have shown through their
actions that they are willing to purport to sell Zayat Stables’ valuable assets out from under the
Agent’s security interest, and they will continue to do so unless a receiver is appointed.
167. In addition, on the basis of Ahmed Zayat’s communications with MGG it is
clear that Zayat Stables and Ahmed Zayat no longer have the resources necessary to continue to
pay for the upkeep of their valuable equine assets that are MGG’s Collateral. In fact, according to
Ahmed Zayat’s January 12, 2019 email to MGG, in order to keep Zayat Stables in operation, he
has exhausted all of his savings and his business and personal bank accounts, and has resorted to
seeking loans from friends, family, and even payday lenders. (See Exhibit Y.)
168. Because Zayat Stables and Ahmed Zayat lack the cash flow necessary to
fund basic services, the Equine Collateral will at best diminish in value and at worst be
permanently lost.
169. If Zayat Stables or Ahmed Zayat are unable to feed and care for the Equine
Collateral, or make additional efforts to dispose of assets, the foreclosure process will simply take
too long and the Equine Collateral will be lost.
170. MGG is prepared to expend the necessary capital for a receiver to oversee
the liquidation of the Collateral.
171. By Order dated January 22, 2020, the Court granted MGG’s motion to
appoint a Receiver “to take charge of, operate, preserve, maintain and care for all of the assets of
the Defendant Zayat Stables, LLC.”
172. On February 6, 2020, the Court denied Zayat Stables’ motion to dissolve
the Court’s January 22, 2020 Order appointing the Receiver. 000038 of 000076 AMC : 000038 of 000076 38 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
COUNT I: Breach of Contract (Against Zayat Stables)
173. Plaintiff repeats the allegations contained in Paragraphs 1 through 172 as if
fully set forth herein.
174. The Loan Documents are valid and enforceable contracts between MGG
and Zayat Stables.
175. MGG has performed its obligations under the Loan Documents and has
satisfied all conditions precedent to their enforcement.
176. Zayat Stables has breached the terms of the Loan Documents by, among
other things:
i. Failing to pay the principal installment of the Term Loan on September 30,
2019, as was required pursuant to Section 2.03(a) of the Financing
Agreement, which constitutes an Event of Default under, inter alia, Section
9.01(a) of the Financing Agreement;
ii. Failing to pay interest on the Loan pursuant to Section 2.04(c) of the
Financing Agreement due on October 1, 2019, November 1, 2019, and
December 1, 2019, which constitute Events of Default under, inter alia,
Section 9.01(a) of the Financing Agreement;
iii. Failing to pay the Loan Servicing Fee pursuant to Section 2.06(c) of the
Financing Agreement due on October 31, 2019, which constitutes an Event
of Default under, inter alia, Section 9.01(a) of the Financing Agreement;
and
iv. Purporting to sell Equine Collateral, including but not limited to the
breeding rights of AMERICAN PHAROAH and Zayat Stables’ interests in 000039 of 000076 AMC : 000039 of 000076 39 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
EL KABEIR, AMERICAN CLEOPATRA, LEMOONA, AMANDREA,
and SOLOMINI, in violation of Section 7.02(c)(ii) of the Financing
Agreement which constitutes an Event of Default under, inter alia, Section
9.01(c) of the Financing Agreement;
v. Failing to pay amounts due to MGG as a result of Defendants’ purported or
actual disposition of Collateral, including Equine Collateral, in violation of
Section 2.04(c)(ii) of the Financing Agreement, which constitute Events of
Default under, inter alia, Section 9.01(a) of the Financing Agreement; and
vi. Failing to deliver to MGG accurate monthly, quarterly and/or annual
financial statements and other reports for Zayat Stables disclosing the
purported dispositions of Equine Collateral and resulting Events of Default,
in violation of Sections 7.01(a)(i-v), 7.01(viii) and 7.01 (xiv), which
constitute Events of Default under, inter alia, Section 9.01(c).
177. Pursuant to the Loan Documents, these breaches constitute Events of
Default under the Financing Agreement and the Pledge and Security Agreement.
178. Zayat Stables has failed to cure its numerous breaches of the Loan
Documents, despite written demand to do so, and the resulting Events of Default under those
agreements are continuing.
179. Under the Financing Agreement, upon an Event of Default, MGG is entitled
to all remedies provided for in the Financing Agreement, including but not limited to, (i)
terminating or reducing all commitments under the Loan Documents, (ii) accelerating and
declaring the principal, all accrued interest and any other amounts owing under the Loan
Documents due and payable, without presentment, demand, protest or further notice of any kind, 000040 of 000076 AMC : 000040 of 000076 40 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
and (iii) exercising any and all other rights and remedies under applicable law, the Financing
Agreement or the other Loan Documents.
180. Under the Pledge and Security Agreement, upon an Event of Default, MGG
is entitled to all remedies provided for in the Pledge and Security Agreement, including but not
limited to, (i) taking absolute control of the Collateral, (ii) requiring Zayat Stables to assemble the
Collateral and make it available to MGG at a location determined by MGG, and (iii) selling the
Collateral at a public or private sale, for cash or on credit.
181. Due to Zayat Stables’ numerous breaches of the Loan Documents and the
resulting Events of Default, MGG has declared all amounts owing under the Loan Documents,
including but not limited to all outstanding principal and accrued and unpaid interest on the Loans,
due and payable.
182. As a direct and proximate result of Zayat Stables’ breaches of the Loan
Documents, MGG has been damaged and is continuing to be damaged in an amount to be proven
at trial, but not less than $23 million.
COUNT II: Fraud (Against Zayat Stables, Ahmed Zayat and Justin Zayat)
183. Plaintiff repeats the allegations contained in Paragraphs 1 through 182 as if
fully set forth herein.
184. Commencing no later than September 2017, and thereafter, Zayat Stables,
Ahmed Zayat and Justin Zayat engaged in a fraudulent scheme whereby they purported to sell off
millions of dollars of Collateral pledged to secure the Loans, including Equine Collateral, without
obtaining MGG’s consent or otherwise notifying MGG as required by Loan Documents or paying
MGG the proceeds of these Collateral sales. 000041 of 000076 AMC : 000041 of 000076 41 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
185. The improper purported sale of Collateral by Defendants in furtherance of
their fraudulent scheme included some of Zayat Stables’ most valuable assets, including the
purported sale of nine breeding rights to 2015 Triple Crown winner AMERICAN PHAROAH for
$3.3 million.
186. At the time of their purported sales of Collateral, Zayat Stables, Ahmed
Zayat and Justin Zayat knew that the Collateral at issue was pledged to MGG to secure the Loans,
and that the Loans were contingent upon the Collateral at issue – including specifically the
AMERICAN PHAROAH breeding rights, and Zayat Stables’ interests in EL KABEIR,
AMERICAN CLEOPATRA, LEMOONA, AMANDREA, and SOLOMINI – being among Zayat
Stables’ assets.
187. In furtherance of their fraudulent scheme, Zayat Stables, Ahmed Zayat and
Justin Zayat concealed their purported sales of Collateral, including Equine Collateral, from MGG
so as to allow their fraudulent scheme to continue undetected.
188. Under the Financing Agreement, Zayat Stables was required to provide
MGG with certain periodic financial statements and other reports concerning its assets and
operations. Among other things, those reporting requirements obligated Zayat Stables to list the
horses and other Equine Collateral owned by Zayat Stables by type and value, and disclose any
purported sales of such Equine Collateral by Zayat Stables.
189. Since at least September 2017, the periodic reports which Zayat Stables,
Ahmed Zayat and Justin Zayat provided to MGG omitted material information concerning the
Equine Collateral owned by Zayat Stables, including the Zayat Defendants’ purported dispositions
of the breeding rights to AMERICAN PHAROAH and other Equine Collateral pledged to MGG
to secure the Loans, as set forth herein. 000042 of 000076 AMC : 000042 of 000076 42 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
190. On or about December 12, 2019, in response to a Notice of Default sent by
MGG, Zayat Stables, Ahmed Zayat and Justin Zayat prepared and sent, or caused to be prepared
and sent, to MGG the Liquidation Plan purporting to list the assets of Zayat Stables available to
satisfy its payment obligations under the Loan Documents. (See Exhibit I.)
191. Among other things, the Liquidation Plan listed equine assets purportedly
belonging to Zayat Stables, including breeding rights to AMERICAN PHAROAH and Zayat
Stables’ interests in EL KABEIR, AMERICAN CLEOPATRA, LEMOONA, AMANDREA, and
SOLOMINI, that MGG later discovered were already purportedly sold by the Zayat Defendants
to third parties.
192. MGG reasonably relied on the fraudulent misrepresentations made in the
Liquidation Plan, as well the numerous other fraudulent misrepresentations alleged herein that
were made by Zayat Stables, Ahmed Zayat and Justin Zayat over the course of their dealings with
MGG.
193. On or about January 12, 2020, Ahmed Zayat admitted to MGG that certain
of the Zayat Defendants’ prior statements concerning Zayat Stables’ assets were untrue, and in
fact the Zayat Defendants had purportedly sold the breeding rights to AMERICAN PHAROAH
over the course of seven months between December 2018 and June 2019 for a total of $3.3 million.
194. On or about January 15, 2020, Ahmed Zayat admitted to MGG that certain
other of the Zayat Defendants’ prior statements concerning Zayat Stables’ assets were untrue, and
in fact Zayat Stables, Ahmed Zayat and Justin Zayat had purportedly sold other Equine Collateral
to third parties, including Equine Collateral relating to AMERICAN CLEOPATRA,
GRAMMAJO, DANYELLI, LEZENDARY, OLD GLORY and LEMOONA. 000043 of 000076 AMC : 000043 of 000076 43 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
195. On or about January 16, 2020, MGG discovered that more of the Zayat
Defendants’ prior statements concerning Zayat Stables’ assets were untrue, and in fact the Zayat
Defendants had purportedly sold other Equine Collateral to third parties, including Equine
Collateral relating to AMANDREA, ASH N’ EM, MAJID, BODEMIESTER, ESKENDEREYA,
EL KABEIR, ZENSATIONAL, JUSTIN PHILLIP, and PRAYER FOR RELIEF.
196. Notwithstanding their purported sales of Equine Collateral, Zayat Stables
failed to make mandatory prepayments towards the principal of the loans from the proceeds of
those transactions, as required. Instead, Zayat Stables, Ahmed Zayat and Justin Zayat hid those
transactions from MGG and, upon information and belief, improperly pocketed the sale proceeds
for their own use.
197. The foregoing statements and omissions by Zayat Stables, Ahmed Zayat
and Justin Zayat constitute material misstatements, which Zayat Stables, Ahmed Zayat and Justin
Zayat knew or should have known at the time were materially misleading and were relied upon by
MGG as a material inducement to, among other things, make the loans, and to refrain from
asserting its rights to accelerate re-payment of the loans and exercise other available remedies.
198. As a direct and proximate result of the Zayat Defendants’ material
misstatements, MGG has been damaged and is continuing to be damaged in an amount to be
proven at trial, but not less than $23 million.
COUNT III: Intentional Interference with Contract (Against Justin Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat, and Joanne Zayat)
199. Plaintiff repeats the allegations contained in Paragraphs 1 through 198 as if
fully set forth herein.
200. The Loan Documents are valid and enforceable contracts between MGG
and Zayat Stables. 000044 of 000076 AMC : 000044 of 000076 44 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
201. MGG has performed its obligations under the Loan Documents and has
satisfied all conditions precedent to their enforcement.
202. On or around July 8, 2016, Defendants Justin Zayat, Ashley Zayat,
Benjamin Zayat, Emma Zayat, and Joanne Zayat each signed the Zayat AP Breeding Rights
Transfer Document, demonstrating that each knowingly transferred their interest in the Zayat AP
Breeding Rights to Zayat Stables to ensure that the Zayat AP Breeding Rights would be collateral
under the Loan Documents.
203. Defendants Justin Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat, and
Joanne Zayat each had knowledge of the Loan Documents, and specifically that the Zayat AP
Breeding Rights constituted collateral under the Loan Documents.
204. Beginning in December 2018 and through June 2019, Defendants Justin
Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat, and Joanne Zayat each signed purported bills
of sale and assignment which caused Zayat Stables to breach the Loan Documents by purporting
to sell off the Zayat AP Breeding Rights, which Defendants Justin Zayat, Ashley Zayat, Benjamin
Zayat, Emma Zayat, and Joanne Zayat had knowingly transferred to Zayat Stables in
contemplation of the MGG loan in July 2016.
205. No privilege or other legal justification excuses the tortious conduct of
Defendants Justin Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat, and Joanne Zayat.
206. As a direct and proximate result of Zayat Stables’ breaches of the Loan
Documents that were directly and proximately caused by Defendants Justin Zayat, Ashley Zayat,
Benjamin Zayat, Emma Zayat, and Joanne Zayat, MGG has been damaged and is continuing to be
damaged in an amount to be proven at trial, but not less than $14 million. 000045 of 000076 AMC : 000045 of 000076 45 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
COUNT IV: Intentional Interference with Contract (Against Orpendale and Ashford Stud)
207. Plaintiff repeats the allegations contained in Paragraphs 1 through 206 as
if fully set forth herein.
208. Upon information and belief, Orpendale is an experienced and sophisticated
entity in the business of thoroughbred horse breeding and is affiliated with and does business as
Coolmore Stud, the largest breeding operation of thoroughbred horses in the world.
209. Upon information and belief, Ashford Stud is an experienced and
sophisticated entity in the business of thoroughbred horse breeding and often conducts business
under the trade name Coolmore America. Ashford Stud is affiliated with Coolmore Stud.
210. The Loan Documents are valid and enforceable contracts between MGG
and Zayat Stables.
211. MGG has performed its obligations under the Loan Documents and has
satisfied all conditions precedent to their enforcement.
212. The Zayat AP Breeding Rights Transfer Document was addressed to
Aisling Duignan of Coolmore America, and the Zayat AP Breeding Rights Transfer Confirmation
was on Coolmore America and Ashford Stud letterhead, and was signed by Ashford Stud’s CFO,
Frank Phelan.
213. Further, both the AP Purchase Agreement and the AMERICAN
PHAROAH bill of sale were signed on behalf of Orpendale by Michael Ryan, who, upon
information and belief, was an accountant at Coolmore Stud at the time of the sale, a position he
still holds currently. 000046 of 000076 AMC : 000046 of 000076 46 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
214. As such, Defendants Orpendale and Ashford Stud each had knowledge of
the Loan Documents, and specifically that the Zayat AP Breeding Rights were pledged as collateral
under the Loan Documents.
215. Further, Orpendale demonstrated it was aware of MGG’s priority security
interest in all of Zayat Stables’ assets by requesting that MGG and Zayat Stables enter into the
Partial Release Agreement in connection with Orpendale’s purchase of 50% of Zayat Stables’
ownership stake in SOLOMINI on or around January 2, 2018.
216. Beginning in March 2019 and through June 2019, Defendant Orpendale
purported to purchase from Defendants Justin Zayat, Ashley Zayat, Benjamin Zayat, Emma Zayat,
and Joanne Zayat their purported interests in the Zayat AP Breeding Rights, which caused Zayat
Stables to breach the Loan Documents by purporting to sell off the Zayat AP Breeding Rights,
despite the fact that Defendants Orpendale and Ashford Stud knew that the Zayat AP Breeding
Rights had been transferred to Zayat Stables in contemplation of the MGG loan in July 2016.
217. No privilege or other legal justification excuses the tortious conduct of
Defendants Orpendale and Ashford Stud.
218. As a direct and proximate result of Zayat Stables’ breaches of the Loan
Documents that were directly and proximately caused by Defendants Orpendale and Ashford Stud,
MGG has been damaged and is continuing to be damaged in an amount to be proven at trial, but
not less than $10.89 million.
COUNT V: Replevin (Against Yeomanstown Stud)
219. Plaintiff repeats the allegations contained in Paragraphs 1 through 218 as if
fully set forth herein. 000047 of 000076 AMC : 000047 of 000076 47 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
220. Upon information and belief, Yeomanstown Stud is an experienced and
sophisticated entity in the business of thoroughbred horse breeding.
221. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in EL KABEIR, as collateral to secure the loans it received from MGG.
222. Nevertheless, on or around September 20, 2017, Zayat Stables purported to
sell its interests in EL KABEIR to Defendant Yeomanstown Stud in a private sale for $500,000,
far below Zayat Stables’ appraised value of its interests in EL KABEIR.
223. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
224. At the time of Zayat Stables’ purported sale of EL KABEIR, Yeomanstown
Stud knew or should have known that MGG had a perfected security interest in all of Zayat Stables’
assets, including its interests in EL KABEIR, as a result of the UCC-1 Financing Statements
previously filed by MGG.
225. Nevertheless, Defendant Yeomanstown Stud misappropriated and took
actual possession of EL KABEIR pursuant to the purported sale, and EL KABEIR remains in the
actual possession of Yeomanstown Stud.
226. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including EL KABEIR.
227. Pursuant to its perfected priority security interest in EL KABEIR, MGG
hereby respectfully requests that Yeomanstown Stud be ordered to promptly return EL KABEIR 000048 of 000076 AMC : 000048 of 000076 48 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
to the receiver who has been appointed by this Court to protect Zayat Stables’ assets for the benefit
of its creditors.
COUNT VI: Constructive Trust (Against Yeomanstown Stud)
228. Plaintiff repeats the allegations contained in Paragraphs 1 through 227 as if
fully set forth herein.
229. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in EL KABEIR, as collateral to secure the loans it received from MGG.
230. Nevertheless, on or around September 20, 2017, Zayat Stables purported to
sell its interests in EL KABEIR to Defendant Yeomanstown Stud in a private sale for $500,000,
far below Zayat Stables’ appraised value of its interests in EL KABEIR.
231. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
232. At the time of Zayat Stables’ purported sale of EL KABEIR, Yeomanstown
Stud knew or should have known that MGG had a perfected security interest in all of Zayat Stables’
assets, including its interests in EL KABEIR, as a result of the UCC-1 Financing Statements
previously filed by MGG.
233. Nevertheless, Defendant Yeomanstown Stud misappropriated and took
actual possession of EL KABEIR shortly after the purported sale, and EL KABEIR remains in the
actual possession of Yeomanstown Stud.
234. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including EL KABEIR. 000049 of 000076 AMC : 000049 of 000076 49 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
235. MGG has asserted herein a replevin claim against Yeomanstown Stud,
seeking the prompt return of EL KABEIR to the receiver who has been appointed by this Court to
protect Zayat Stables’ assets for the benefit of its creditors.
236. Until such time that EL KABEIR is promptly returned to the receiver, MGG
respectfully requests that Yeomanstown Stud be ordered to hold all its purported interests in EL
KABEIR and its purported interests in all of EL KABEIR’s past and future offspring, if any, and
any proceeds related to EL KABEIR or his offspring, if any, in constructive trust for the benefit of
MGG, and that Yeomanstown Stud provide MGG with an accounting of the same.
COUNT VII: Replevin (Against Hill ‘N’ Dale)
237. Plaintiff repeats the allegations contained in Paragraphs 1 through 236 as if
fully set forth herein.
238. Upon information and belief, Hill ‘N’ Dale is an experienced and
sophisticated entity in the business of thoroughbred horse breeding.
239. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in AMERICAN CLEOPATRA, as collateral to secure the loans it received
from MGG.
240. Nevertheless, on or around November 15, 2017, Zayat Stables purported to
sell its interests in AMERICAN CLEOPATRA to Defendant Hill ‘N’ Dale in a private sale for
$1.3 million, far below Zayat Stables’ appraised value of its interests in AMERICAN
CLEOPATRA.
241. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG. 000050 of 000076 AMC : 000050 of 000076 50 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
242. At the time of Zayat Stables’ purported sale of AMERICAN CLEOPATRA,
Hill ‘N’ Dale knew or should have known that MGG had a perfected security interest in all of
Zayat Stables’ assets, including its interests in AMERICAN CLEOPATRA, as a result of the UCC-
1 Financing Statements previously filed by MGG.
243. Nevertheless, Defendant Hill ‘N’ Dale misappropriated and took actual
possession of AMERICAN CLEOPATRA pursuant to the purported sale, and AMERICAN
CLEOPATRA remains in the actual possession of Hill ‘N’ Dale.
244. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including AMERICAN CLEOPATRA.
245. Pursuant to its perfected priority security interest in AMERICAN
CLEOPATRA, MGG hereby respectfully requests that Hill ‘N’ Dale be ordered to promptly return
AMERICAN CLEOPATRA to the receiver who has been appointed by this Court to protect Zayat
Stables’ assets for the benefit of its creditors.
COUNT VIII: Constructive Trust (Against Hill ‘N’ Dale)
246. Plaintiff repeats the allegations contained in Paragraphs 1 through 245 as if
fully set forth herein.
247. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in AMERICAN CLEOPATRA, as collateral to secure the loans it received
from MGG.
248. On or around November 15, 2017, Zayat Stables purported to sell its
interests in AMERICAN CLEOPATRA to Defendant Hill ‘N’ Dale in a private sale for $1.3
million, far below Zayat Stables’ appraised value of its interests in AMERICAN CLEOPATRA. 000051 of 000076 AMC : 000051 of 000076 51 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
249. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
250. At the time of Zayat Stables’ purported sale of AMERICAN CLEOPATRA,
Hill ‘N’ Dale knew or should have known that MGG had a perfected security interest in all of
Zayat Stables’ assets, including its interests in AMERICAN CLEOPATRA, as a result of the UCC-
1 Financing Statements previously filed by MGG.
251. Nevertheless, Defendant Hill ‘N’ Dale misappropriated and took actual
possession of AMERICAN CLEOPATRA pursuant to the purported sale, and AMERICAN
CLEOPATRA remains in the actual possession of Hill ‘N’ Dale.
252. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including AMERICAN CLEOPATRA.
253. MGG has asserted herein a replevin claim against Hill ‘N’ Dale, seeking the
prompt return of AMERICAN CLEOPATRA to the receiver who has been appointed by this Court
to protect Zayat Stables’ assets for the benefit of its creditors.
254. Until such time that AMERICAN CLEOPATRA is promptly returned to
the receiver, MGG respectfully requests that Hill ‘N’ Dale be ordered to hold all its purported
interests in AMERICAN CLEOPATRA and its purported interests in all of AMERICAN
CLEOPATRA’s past and future offspring, including the AMERICAN CLEOPATRA/TAPIT foal
that is currently located at Hill ‘N’ Dale, and any proceeds related to AMERICAN CLEOPATRA
or her offspring, if any, in constructive trust for the benefit of MGG, and that Hill ‘N’ Dale provide
MGG with an accounting of the same. 000052 of 000076 AMC : 000052 of 000076 52 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
COUNT IX: Replevin (Against LNJ Foxwoods)
255. Plaintiff repeats the allegations contained in Paragraphs 1 through 254 as if
fully set forth herein.
256. Upon information and belief, LNJ Foxwoods is an experienced and
sophisticated thoroughbred horseracing organization formed in 2012 and since that time has
received over $7 million of racing purse earnings including from multiple graded stakes race wins.
257. Shortly before the Zayat Stables entered into the Loan Documents, all of the
Zayat AP Breeding Rights were transferred to Zayat Stables to be pledged as collateral for the
loans it was to receive from MGG.
258. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in the Zayat AP Breeding Rights, as collateral to secure the loans it received
from MGG.
259. Nevertheless, on or around December 21, 2018, Zayat Stables and Justin
Zayat purported to sell Zayat AP Breeding Rights Nos. 1 and 2 to Defendant LNJ Foxwoods in
two private sales, each for $375,000, for a total of $750,000, far below Zayat Stables’ appraised
value of its interests in the Zayat AP Breeding Rights.
260. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
261. At the time of Zayat Stables’ purported sale of the Zayat AP Breeding
Rights Nos. 1 and 2, LNJ Foxwoods knew or should have known that MGG had a perfected
security interest in all of Zayat Stables’ assets, including its interests in the Zayat AP Breeding
Rights, as a result of the UCC-1 Financing Statements previously filed by MGG. 000053 of 000076 AMC : 000053 of 000076 53 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
262. Nevertheless, Defendant LNJ Foxwoods misappropriated and took actual
possession of Zayat AP Breeding Rights Nos. 1 and 2 pursuant to the purported sales, and Zayat
AP Breeding Rights Nos. 1 and 2 remain in the actual possession of LNJ Foxwoods.
263. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including Zayat AP Breeding Rights Nos.
1 and 2.
264. Pursuant to its perfected priority security interest in Zayat AP Breeding
Rights Nos. 1 and 2, MGG hereby respectfully requests that LNJ Foxwoods be ordered to promptly
return the Zayat AP Breeding Rights Nos. 1 and 2 to the receiver who has been appointed by this
Court to protect Zayat Stables’ assets for the benefit of its creditors.
COUNT X: Constructive Trust (Against LNJ Foxwoods)
265. Plaintiff repeats the allegations contained in Paragraphs 1 through 264 as if
fully set forth herein.
266. Shortly before the Zayat Stables entered into the Loan Documents, all of the
Zayat AP Breeding Rights were transferred to Zayat Stables to be pledged as collateral for the
loans it was to receive from MGG.
267. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in the Zayat AP Breeding Rights, as collateral to secure the loans it received
from MGG.
268. Nevertheless, on or around December 21, 2018, Zayat Stables and Justin
Zayat purported to sell Zayat AP Breeding Rights Nos. 1 and 2 to Defendant LNJ Foxwoods in 000054 of 000076 AMC : 000054 of 000076 54 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
two private sales, each for $375,000, for a total of $750,000, far below Zayat Stables’ appraised
value of its interests in the Zayat AP Breeding Rights.
269. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
270. At the time of Zayat Stables’ purported sale of the Zayat AP Breeding
Rights Nos. 1 and 2, LNJ Foxwoods knew or should have known that MGG had a perfected
security interest in all of Zayat Stables’ assets, including its interests in the Zayat AP Breeding
Rights, as a result of the UCC-1 Financing Statements previously filed by MGG.
271. Nevertheless, Defendant LNJ Foxwoods misappropriated and took actual
possession of Zayat AP Breeding Rights Nos. 1 and 2 pursuant to the purported sales, and Zayat
AP Breeding Rights Nos. 1 and 2 remain in the actual possession of LNJ Foxwoods.
272. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including Zayat AP Breeding Rights Nos.
1 and 2.
273. MGG has asserted herein a replevin claim against LNJ Foxwoods, seeking
the prompt return of Zayat AP Breeding Rights Nos. 1 and 2 to the receiver who has been appointed
by this Court to protect Zayat Stables’ assets for the benefit of its creditors.
274. Until such time that Zayat AP Breeding Rights Nos. 1 and 2 are promptly
returned to the receiver, MGG respectfully requests that LNJ Foxwoods be ordered to hold all its
purported interest in Zayat AP Breeding Rights Nos. 1 and 2 and its purported interests in any past
and future offspring related to Zayat AP Breeding Rights Nos. 1 and 2, if any, and any proceeds 000055 of 000076 AMC : 000055 of 000076 55 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
related to Zayat AP Breeding Rights Nos. 1 and 2, if any, in constructive trust for the benefit of
MGG, and that LNJ Foxwoods provide MGG with an accounting of the same.
COUNT XI: Replevin (Against Orpendale)
275. Plaintiff repeats the allegations contained in Paragraphs 1 through 274 as if
fully set forth herein.
276. Shortly before the Zayat Stables entered into the Loan Documents, all of the
Zayat AP Breeding Rights were transferred to Zayat Stables to be pledged as collateral for the
loans it was to receive from MGG. Orpendale and its Coolmore Stud and Ashford Stud affiliates
were directly involved in the transfer of the Zayat AP Breeding Rights to Zayat Stables.
277. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in the Zayat AP Breeding Rights, as collateral to secure the loans it received
from MGG.
278. Nevertheless, between March 26, 2019 and June 5, 2019, Zayat Stables and
the Zayat Family purported to sell Zayat AP Breeding Rights Nos. 3-9 to Defendant Orpendale in
seven private sales for between $350,000 and $400,000 each, for a total of $2.55 million, far below
Zayat Stables’ appraised value of its interests in the Zayat AP Breeding Rights.
279. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
280. At the time of Zayat Stables’ purported sale of the Zayat AP Breeding
Rights Nos. 3-9, Orpendale knew or should have known that MGG had a perfected security interest
in all of Zayat Stables’ assets, including its interests in the Zayat AP Breeding Rights Nos. 3-9 as
a result of the UCC-1 Financing Statements previously filed by MGG, as well as the direct role 000056 of 000076 AMC : 000056 of 000076 56 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Orpendale and its Coolmore Stud and Ashford Stud affiliates had in the initial transfers of the
Zayat AP Breeding Rights to Zayat Stables.
281. Nevertheless, Defendant Orpendale misappropriated and took actual
possession of Zayat AP Breeding Rights Nos. 3-9 pursuant to the purported sales, and Zayat AP
Breeding Rights Nos. 3-9 remain in the actual possession of Orpendale and its Coolmore Stud and
Ashford Stud affiliates.
282. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including Zayat AP Breeding Rights Nos.
3-9.
283. Pursuant to its perfected priority security interest in Zayat AP Breeding
Rights Nos. 3-9, MGG hereby respectfully requests that Orpendale be ordered to promptly return
the Zayat AP Breeding Rights Nos. 3-9 to the receiver who has been appointed by this Court to
protect Zayat Stables’ assets for the benefit of its creditors.
COUNT XII: Constructive Trust (Against Orpendale)
284. Plaintiff repeats the allegations contained in Paragraphs 1 through 283 as if
fully set forth herein.
285. Shortly before the Zayat Stables entered into the Loan Documents, all of the
Zayat AP Breeding Rights were transferred to Zayat Stables to be pledged as collateral for the
loans it was to receive from MGG. Orpendale and its Coolmore Stud and Ashford Stud affiliates
were directly involved in the transfer of the Zayat AP Breeding Rights to Zayat Stables. 000057 of 000076 AMC : 000057 of 000076 57 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
286. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in the Zayat AP Breeding Rights, as collateral to secure the loans it received
from MGG.
287. Nevertheless, between March 26, 2019 and June 5, 2019, Zayat Stables and
the Zayat Family purported to sell Zayat AP Breeding Rights Nos. 3-9 to Defendant Orpendale in
seven private sales for between $350,000 and $400,000 each, for a total of $2.55 million, far below
Zayat Stables’ appraised value of its interests in the Zayat AP Breeding Rights.
288. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
289. At the time of Zayat Stables’ purported sale of the Zayat AP Breeding
Rights Nos. 3-9, Orpendale knew or should have known that MGG had a perfected security interest
in all of Zayat Stables’ assets, including its interests in the Zayat AP Breeding Rights, as a result
of the UCC-1 Financing Statements previously filed by MGG, as well as the direct role Orpendale
and its Coolmore Stud and Ashford Stud affiliates had in the initial transfers of the Zayat AP
Breeding Rights to Zayat Stables.
290. Nevertheless, Defendant Orpendale misappropriated and took actual
possession of Zayat AP Breeding Rights Nos. 3-9 pursuant to the purported sales, and Zayat AP
Breeding Rights Nos. 3-9 remain in the actual possession of Orpendale and its Coolmore Stud and
Ashford Stud affiliates.
291. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG 000058 of 000076 AMC : 000058 of 000076 58 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
has the right to take absolute control of the Collateral, including Zayat AP Breeding Rights Nos.
3-9.
292. MGG has asserted herein a replevin claim against Orpendale, seeking the
prompt return of Zayat AP Breeding Rights Nos. 3-9 to the receiver who has been appointed by
this Court to protect Zayat Stables’ assets for the benefit of its creditors.
293. Until such time that Zayat AP Breeding Rights Nos. 3-9 are promptly
returned to the receiver, MGG respectfully requests that Orpendale be ordered to hold all its
purported interest in Zayat AP Breeding Rights Nos. 3-9 and its purported interests in any past and
future offspring related to Zayat AP Breeding Rights Nos. 3-9, if any, and any proceeds related to
Zayat AP Breeding Rights Nos. 3-9, if any, in constructive trust for the benefit of MGG, and that
Orpendale provide MGG with an accounting of the same.
COUNT XIII: Unjust Enrichment (Against Flintshire Farm and Brad Sears)
294. Plaintiff repeats the allegations contained in Paragraphs 1 through 293 as if
fully set forth herein.
295. Upon information and belief, Flintshire Farm is an experienced and
sophisticated entity in the business of thoroughbred horse breeding.
296. Upon information and belief, Brad Sears is the Manager of Flintshire Farms.
297. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in LEMOONA, as collateral to secure the loans it received from MGG.
298. Nevertheless, on or around March 6, 2019, Zayat Stables purported to sell
its interests in LEMOONA to Defendant Flintshire Farm and Brad Sears, through their agent West
Bloodstock LLC in a private sale for $150,000. 000059 of 000076 AMC : 000059 of 000076 59 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
299. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
300. The $150,000 purported sale price did not reflect fair market value for
LEMOONA’s breeding rights. Such sales price represents a deep discount from an independently
appraised value commissioned by Zayat Stables in July 2019 that determined LEMOONA to be
worth $925,000. (See Exhibit J.)
301. At the time of Zayat Stables’ purported sale of LEMOONA’s breeding
rights, Flintshire Farm, Brad Sears, and their agent West Bloodstock LLC knew or should have
known that MGG had a perfected security interest in all of Zayat Stables’ assets, including its
interests in LEMOONA, as a result of the UCC-1 Financing Statements previously filed by MGG.
302. Defendants Flintshire Farm and Brad Sears misappropriated and took actual
possession of LEMOONA pursuant to the purported sale, and subsequently sold their purported
rights to Defendant Thomas Clark Bloodstock.
303. By selling their purported interests in LEMOONA, which were not theirs to
sell, at a $100,000 mark-up from their purchase price, Defendants Flintshire Farm and Brad Sears
unjustly enriched themselves to the detriment of MGG’s security interests in LEMOONA, thereby
causing damage to MGG in an amount to be proven at trial.
COUNT XIV: Replevin (Against Thomas Clark Bloodstock)
304. Plaintiff repeats the allegations contained in Paragraphs 1 through 303 as if
fully set forth herein.
305. Upon information and belief, Thomas Clark Bloodstock is an experienced
and sophisticated entity that operates as a thoroughbred horse bloodstock agency. 000060 of 000076 AMC : 000060 of 000076 60 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
306. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in LEMOONA, as collateral to secure the loans it received from MGG.
307. Nevertheless, on or around March 6, 2019, Zayat Stables purported to sell
its interests in LEMOONA to Defendant Flintshire Farm and Brad Sears, through their agent West
Bloodstock LLC in a private sale for $150,000.
308. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
309. The $150,000 purported sale price did not reflect fair market value for
LEMOONA’s breeding rights. Such sales price represents a deep discount from an independently
appraised value commissioned by Zayat Stables in July 2019 that determined LEMOONA to be
worth $925,000. (See Exhibit J.)
310. At the time of Zayat Stables’ purported sale of LEMOONA’s breeding
rights, Flintshire Farm, Brad Sears, and their agent West Bloodstock LLC knew or should have
known that MGG had a perfected security interest in all of Zayat Stables’ assets, including its
interests in LEMOONA, as a result of the UCC-1 Financing Statements previously filed by MGG.
311. Defendants Flintshire Farm, Brad Sears misappropriated and took actual
possession of LEMOONA pursuant to the purported sale, and subsequently sold their purported
rights to Defendant Thomas Clark Bloodstock.
312. LEMOONA remains in the actual possession of Thomas Clark Bloodstock.
313. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including LEMOONA. 000061 of 000076 AMC : 000061 of 000076 61 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
314. Pursuant to its perfected priority security interest in LEMOONA, MGG
hereby respectfully requests that Thomas Clark Bloodstock be ordered to promptly return
LEMOONA to the receiver who has been appointed by this Court to protect Zayat Stables’ assets
for the benefit of its creditors.
COUNT XV: Constructive Trust (Against Thomas Clark Bloodstock)
315. Plaintiff repeats the allegations contained in Paragraphs 1 through 314 as if
fully set forth herein.
316. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in LEMOONA, as collateral to secure the loans it received from MGG.
317. Nevertheless, on or around March 6, 2019, Zayat Stables purported to sell
its interests in LEMOONA to Defendant Flintshire Farm and Brad Sears, through their agent West
Bloodstock LLC in a private sale for $150,000.
318. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
319. The $150,000 purported sale price did not reflect fair market value for
LEMOONA’s breeding rights. Such sales price represents a deep discount from an independently
appraised value commissioned by Zayat Stables in July 2019 that determined LEMOONA to be
worth $925,000. (See Exhibit J.)
320. At the time of Zayat Stables’ purported sale of LEMOONA’s breeding
rights, Flintshire Farm, Brad Sears, and their agent West Bloodstock LLC knew or should have
known that MGG had a perfected security interest in all of Zayat Stables’ assets, including its
interests in LEMOONA, as a result of the UCC-1 Financing Statements previously filed by MGG. 000062 of 000076 AMC : 000062 of 000076 62 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
321. Defendants Flintshire Farm, Brad Sears misappropriated and took actual
possession of LEMOONA pursuant to the purported sale, and subsequently sold their purported
rights to Defendant Thomas Clark Bloodstock.
322. LEMOONA remains in the actual possession of Thomas Clark Bloodstock.
323. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including LEMOONA.
324. MGG has asserted herein a replevin claim against Thomas Clark
Bloodstock, seeking the prompt return of LEMOONA to the receiver who has been appointed by
this Court to protect Zayat Stables’ assets for the benefit of its creditors.
325. Until such time that LEMOONA is promptly returned to the receiver, MGG
respectfully requests that Thomas Clark Bloodstock be ordered to hold all its purported interests
in LEMOONA and its purported interests in all of LEMOONA’s past and future offspring, and
any proceeds related to LEMOONA or his offspring, if any, in constructive trust for the benefit of
MGG, and that Thomas Clark Bloodstock provide MGG with an accounting of the same.
COUNT XVI: Replevin (Against My Racehorse)
326. Plaintiff repeats the allegations contained in Paragraphs 1 through 325 as if
fully set forth herein.
327. Upon information and belief, My Racehorse is an experienced and
sophisticated thoroughbred horseracing organization that offers “micro-shares” in thoroughbred
horses to the investing public.
328. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in AMANDREA, as collateral to secure the loans it received from MGG. 000063 of 000076 AMC : 000063 of 000076 63 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
329. Nevertheless, sometime before October 11, 2019, Zayat Stables purported
to sell a 55% ownership stake AMANDREA to Defendant My Racehorse in a private sale for
$115,000, far below Zayat Stables’ appraised value of its interests in AMANDREA.
330. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
331. Before finalizing the purported sale, due to the UCC-1 Financing
Statements filed by MGG, My Racehorse knew or should have known that MGG had a perfected
security interest in all of Zayat Stables’ assets, including its interests in AMANDREA.
332. Nevertheless, Defendant My Racehorse misappropriated and took actual
possession of the 55% ownership stake in AMANDREA pursuant to the purported sale, and that
55% interest in AMANDREA remains in the actual possession of My Racehorse.
333. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including AMANDREA.
334. Pursuant to its perfected priority security interest in AMANDREA, MGG
hereby respectfully requests that My Racehorse be ordered to promptly return the 55% ownership
stake in AMANDREA, and the horse itself, to the receiver who has been appointed by this Court
to protect Zayat Stables’ assets for the benefit of its creditors.
COUNT XVII: Constructive Trust (Against My Racehorse)
335. Plaintiff repeats the allegations contained in Paragraphs 1 through 334 as if
fully set forth herein. 000064 of 000076 AMC : 000064 of 000076 64 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
336. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in AMANDREA, as collateral to secure the loans it received from MGG.
337. Nevertheless, sometime before October 11, 2019, Zayat Stables purported
to sell a 55% ownership stake AMANDREA to Defendant My Racehorse in a private sale for
$115,000, far below Zayat Stables’ appraised value of its interests in AMANDREA.
338. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
339. Before finalizing the purported sale, due to the UCC-1 Financing
Statements filed by MGG, My Racehorse knew or should have known that MGG had a perfected
security interest in all of Zayat Stables’ assets, including its interests in AMANDREA.
340. Nevertheless, Defendant My Racehorse misappropriated and took actual
possession of the 55% ownership stake in AMANDREA pursuant to the purported sale, and that
55% interest in AMANDREA remains in the actual possession of My Racehorse.
341. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including AMANDREA.
342. MGG has asserted herein a replevin claim against My Racehorse, seeking
the prompt return of the 55% ownership stake in AMANDREA that My Racehorse purportedly
purchased, and the horse itself, to the receiver who has been appointed by this Court to protect
Zayat Stables’ assets for the benefit of its creditors.
343. Until such time that the 55% ownership stake in AMANDREA that My
Racehorse purportedly purchased is promptly returned to the receiver, MGG respectfully requests 000065 of 000076 AMC : 000065 of 000076 65 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
that My Racehorse be ordered to hold all its purported interests in AMANDREA and its purported
interests in all of AMANDREA’s past and future offspring, and any proceeds related to
AMANDREA or her offspring, if any, in constructive trust for the benefit of MGG, and that My
Racehorse provide MGG with an accounting of the same.
COUNT XVIII: Replevin (Against McMahon Thoroughbreds)
344. Plaintiff repeats the allegations contained in Paragraphs 1 through 343 as if
fully set forth herein.
345. Upon information and belief, McMahon Thoroughbreds is an experienced
and sophisticated entity in the business of thoroughbred horse breeding.
346. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in SOLOMINI, as collateral to secure the loans it received from MGG.
347. Nevertheless, on or around December 3, 2019, Zayat Stables purported to
sell its remaining 50% ownership stake in SOLOMINI to Defendant McMahon Thoroughbreds in
a private sale for $250,000, far below Zayat Stables’ appraised value of its interests in SOLOMINI.
348. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
349. At the time of Zayat Stables’ purported sale of SOLOMINI, McMahon
Thoroughbreds knew or should have known that MGG had a perfected security interest in all of
Zayat Stables’ assets, including its interests in SOLOMINI, as a result of the UCC-1 Financing
Statements previously filed by MGG.
350. Nevertheless, Defendant McMahon Thoroughbreds misappropriated and
took actual possession of the 50% ownership stake in SOLOMINI pursuant to the purported sale, 000066 of 000076 AMC : 000066 of 000076 66 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
and that 50% interest in SOLOMINI remains in the actual possession of McMahon
Thoroughbreds.
351. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including SOLOMINI.
352. Pursuant to its perfected priority security interest in SOLOMINI, MGG
hereby respectfully requests that McMahon Thoroughbreds be ordered to promptly return its 50%
ownership stake in SOLOMINI, and the horse itself, to the receiver who has been appointed by
this Court to protect Zayat Stables’ assets for the benefit of its creditors.
COUNT XIX: Constructive Trust (Against McMahon Thoroughbreds)
353. Plaintiff repeats the allegations contained in Paragraphs 1 through 352 as if
fully set forth herein.
354. Pursuant to the Loan Documents, Zayat Stables pledged all of its assets,
including its interests in SOLOMINI, as collateral to secure the loans it received from MGG.
355. Nevertheless, on or around December 3, 2019, Zayat Stables purported to
sell its remaining 50% ownership stake SOLOMINI to Defendant McMahon Thoroughbreds in a
private sale for $250,000, far below Zayat Stables’ appraised value of its interests in SOLOMINI.
356. Despite its obligation to do so under the Loan Documents, Zayat Stables did
not inform MGG of the purported sale and did not use the proceeds to pay down the principal on
its loan from MGG.
357. At the time of Zayat Stables’ purported sale of SOLOMINI, McMahon
Thoroughbreds knew or should have known that MGG had a perfected security interest in all of 000067 of 000076 AMC : 000067 of 000076 67 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
Zayat Stables’ assets, including its interests in SOLOMINI, as a result of the UCC-1 Financing
Statements previously filed by MGG.
358. Nevertheless, Defendant McMahon Thoroughbreds misappropriated and
took actual possession of the 50% ownership stake in SOLOMINI pursuant to the purported sale,
and that 50% interest in SOLOMINI remains in the actual possession of McMahon
Thoroughbreds.
359. As set forth herein, due to Zayat Stables’ numerous breaches of the Loan
Documents and the resulting Events of Default, under the Pledge and Security Agreement, MGG
has the right to take absolute control of the Collateral, including SOLOMINI.
360. MGG has asserted herein a replevin claim against McMahon
Thoroughbreds, seeking the prompt return of the 50% ownership stake in SOLOMINI that
McMahon Thoroughbreds purportedly purchased, and the horse itself, to the receiver who has been
appointed by this Court to protect Zayat Stables’ assets for the benefit of its creditors.
361. Until such time that the 50% ownership stake in SOLOMINI that McMahon
Thoroughbreds purportedly purchased is promptly returned to the receiver, MGG respectfully
requests that McMahon Thoroughbreds be ordered to hold all its purported interests in SOLOMINI
and its purported interests in all of SOLOMINI’s past and future offspring, and any proceeds
related to SOLOMINI or his offspring, if any, in constructive trust for the benefit of MGG, and
that McMahon Thoroughbreds provide MGG with an accounting of the same.
COUNT XX: Declaratory Judgment (Against Orpendale, Ashford Stud, LNJ Foxwoods, Hill ‘N’ Dale, Yeomanstown Stud, My Racehorse, Flintshire Farm, Brad Sears, Thomas Clark Bloodstock, and McMahon Thoroughbreds)
362. Plaintiff repeats the allegations contained in Paragraphs 1 through 361 as
if fully set forth herein. 000068 of 000076 AMC : 000068 of 000076 68 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
363. The Court is authorized to issue a declaratory judgment pursuant to KRS
418.040.
364. There is an actual and justiciable controversy between Plaintiff and
Defendants Orpendale, Ashford Stud, LNJ Foxwoods, Hill ‘N’ Dale, Yeomanstown Stud, My
Racehorse, Flintshire Farm, Brad Sears, Thomas Clark Bloodstock, and McMahon Thoroughbreds
in that Plaintiff holds priority security interests over all of the assets that Zayat Stables held when
it entered the Loan Documents, as well as any assets Zayat Stables came to hold since entering the
Loan Documents, but the Zayat Defendants have nevertheless purported to sell or transfer certain
of Zayat Stable’s assets to Defendants Orpendale, Ashford Stud, LNJ Foxwoods, Hill ‘N’ Dale,
Yeomanstown Stud, My Racehorse, Flintshire Farm, Brad Sears, Thomas Clark Bloodstock, and
McMahon Thoroughbreds.
365. Plaintiff is entitled to a judicial declaration that it holds priority security
rights over all the Equine Collateral that Zayat Stables improperly transferred in violation of the
Loan Documents.
COUNT XXI: Appointment of a Receiver
366. Plaintiff repeats the allegations contained in Paragraphs 1 through 365 as if
fully set forth herein.
367. Upon information and belief, the Collateral may be inadequate to satisfy the
debts and obligations Zayat Stables owes MGG under the Loan Documents.
368. Upon information and belief, the financial condition of Zayat Stables is in
question because of its inability to make payments to MGG. 000069 of 000076 AMC : 000069 of 000076 69 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
369. Upon information and belief, Zayat Stables and the Zayat Family have
purported to sell portions of the Equine Collateral securing the Loans, yet still failed to make
scheduled payments to MGG.
370. In addition, at numerous points in the lending relationship, Zayat Stables
and members of the Zayat Family have provided inaccurate information to MGG and/or have
failed to provide requested information.
371. As demonstrated above, Plaintiff has valid claims against Zayat Stables for
breaches of the Financing Agreement and Pledge and Security Agreement.
372. Based on the foregoing, there is no adequate remedy at law to preserve
MGG’s security interest in the Collateral.
373. Equity demands that a Receiver be appointed to protect MGG’s security
interest in the Collateral.
374. MGG requests that a Receiver be appointed to manage the day-to-day
operations of Zayat Stables, to conserve the assets of Zayat Stables, and to protect MGG’s security
interest in the Collateral.
COUNT XXII: Attorneys’ Fees and Costs
375. Plaintiff repeats the allegations contained in Paragraphs 1 through 374 as if
fully set forth herein.
376. Pursuant to Section 12.06 the Financing Agreement and the Pledge and
Security Agreement, MGG is entitled to reasonable attorneys’ fees and costs incurred, with interest
accruing thereon, due to the MGG’s enforcement of the terms of the Financing Agreement and the
Pledge and Security Agreement.
PRAYER FOR RELIEF 000070 of 000076 AMC : 000070 of 000076 70 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
WHEREFORE, Plaintiff respectfully requests that the Court enter an Order in its
favor against Defendants granting the following relief:
a. On Count I, an award of damages against Zayat Stables in an amount to be proven
at trial, but no less than $23 million plus all other amounts that are owed, have
accrued or that will continue to accrue under the Loan Documents, together with
attorneys’ fees and other costs of collection, as well as all other remedies provided
for in the Loan Documents; and
b. On Count II, an award of damages against Zayat Stables, Ahmed Zayat and Justin
Zayat in an amount to be proven at trial, but no less than $23 million plus all other
amounts that are owed, have accrued or that will continue to accrue under the Loan
Documents, together with attorneys’ fees and other costs of collection, as well as
all other remedies provided for in the Loan Documents; and
c. On Count III, an award of damages against Justin Zayat, Ashley Zayat, Benjamin
Zayat, Emma Zayat, and Joanne Zayat in an amount to be proven at trial, but no
less than $14 million plus all other amounts that are owed, have accrued or that will
continue to accrue under the Loan Documents, together with attorneys’ fees and
other costs of collection, as well as all other remedies provided for in the Loan
Documents; and
d. On Count IV, an award of damages against Orpendale and Ashford Stud in an
amount to be proven at trial, but no less than $10.89 million plus all other amounts
that are owed, have accrued or that will continue to accrue under the Loan
Documents, together with attorneys’ fees and other costs of collection, as well as
all other remedies provided for in the Loan Documents; and 000071 of 000076 AMC : 000071 of 000076 71 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
e. On Count V, an Order that Yeomanstown Stud be required to promptly return EL
KABEIR to the receiver pursuant to Plaintiffs’ rights to Zayat Stables’ Equine
Collateral under the Loan Documents; and
f. On Count VI, an Order that, in addition to ensuring that EL KABEIR is promptly
returned to the receiver, Yeomanstown Stud must hold all its purported interests in
EL KABEIR and its purported interests in all of EL KABEIR’s past and future
offspring, if any, and any proceeds related to EL KABEIR or his offspring, if any,
in constructive trust for the benefit of MGG, and that Yeomanstown Stud provide
MGG with an accounting of the same; and
g. On Count VII, an Order that Hill ‘N’ Dale be required to promptly return
AMERICAN CLEOPATRA to the receiver pursuant to Plaintiffs’ rights to Zayat
Stables’ Equine Collateral under the Loan Documents; and
h. On Count VIII, an Order that, in addition to ensuring that AMERICAN
CLEOPATRA is promptly returned to the receiver, Hill ‘N’ Dale must hold all its
purported interests in AMERICAN CLEOPATRA and its purported interests in all
of AMERICAN CLEOPATRA’s past and future offspring, including the
AMERICAN CLEOPATRA/TAPIT foal, and any proceeds related to AMERICAN
CLEOPATRA or his offspring, if any, in constructive trust for the benefit of MGG,
and that Hill ‘N’ Dale provide MGG with an accounting of the same; and
i. On Count IX, an Order that LNJ Foxwoods be required to promptly return the Zayat
AP Breeding Rights Nos. 1 and 2 to the receiver pursuant to Plaintiffs’ rights to
Zayat Stables’ Equine Collateral under the Loan Documents; and 000072 of 000076 AMC : 000072 of 000076 72 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
j. On Count X, an Order that, in addition to ensuring that the Zayat AP Breeding
Rights Nos. 1 and 2 are promptly returned to the receiver, LNJ Foxwoods must
hold all its purported interests in the Zayat AP Breeding Rights Nos. 1 and 2 and
any past or future offspring or proceeds therefrom, in constructive trust for the
benefit of MGG, and that LNJ Foxwoods provide MGG with an accounting of the
same; and
k. On Count XI, an Order that Orpendale be required to promptly return the Zayat AP
Breeding Rights Nos. 3-9 to the receiver pursuant to Plaintiffs’ rights to Zayat
Stables’ Equine Collateral under the Loan Documents; and
l. On Count XII, an Order that, in addition to ensuring that the Zayat AP Breeding
Rights Nos. 3-9 are promptly returned to the receiver, Orpendale must hold all its
purported interests in the Zayat AP Breeding Rights Nos. 3-9 and any past or future
offspring or proceeds therefrom, in constructive trust for the benefit of MGG, and
that Orpendale provide MGG with an accounting of the same; and
m. On Count XIII, an award of damages against Flintshire Farm and Brad Sears in an
amount to be proven at trial, but no less than $100,000, together with attorneys’
fees and other costs of collection, as well as all other remedies provided for in the
Loan Documents; and
n. On Count XIV, an Order that Thomas Clark Bloodstock be required to promptly
return LEMOONA to the receiver pursuant to Plaintiffs’ rights to Zayat Stables’
Equine Collateral under the Loan Documents; and
o. On Count XV, an Order that, in addition to ensuring that LEMOONA is promptly
returned to the receiver, Thomas Clark Bloodstock must hold all its purported 000073 of 000076 AMC : 000073 of 000076 73 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
interests in LEMOONA and its purported interests in all of LEMOONA’s past and
future offspring, if any, and any proceeds related to LEMOONA or his offspring,
if any, in constructive trust for the benefit of MGG, and that Thomas Clark
Bloodstock provide MGG with an accounting of the same; and
p. On Count XVI, an Order that My Racing be required to promptly return
AMANDREA to the receiver pursuant to Plaintiffs’ rights to Zayat Stables’ Equine
Collateral under the Loan Documents; and
q. On Count XVII, an Order that, in addition to ensuring that AMANDREA is
promptly returned to the receiver, My Racing must hold all its purported interests
in AMANDREA and its purported interests in all of AMANDREA’s past and future
offspring, if any, and any proceeds related to AMANDREA or her offspring, if any,
in constructive trust for the benefit of MGG, and that My Racing provide MGG
with an accounting of the same; and
r. On Count XVIII, an Order that McMahon Thoroughbreds be required to promptly
return SOLOMINI to the receiver pursuant to Plaintiffs’ rights to Zayat Stables’
Equine Collateral under the Loan Documents; and
s. On Count XIX, an Order that, in addition to ensuring that SOLOMINI is promptly
returned to the receiver, McMahon Thoroughbreds must hold all its purported
interests in SOLOMINI and its purported interests in all of SOLOMINI’s past and
future offspring, if any, and any proceeds related to SOLOMINI or his offspring, if
any, in constructive trust for the benefit of MGG, and that McMahon
Thoroughbreds provide MGG with an accounting of the same; and 000074 of 000076 AMC : 000074 of 000076 74 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
t. On Count XX, a judicial declaration that Plaintiff holds priority security rights over
all the Equine Collateral that Zayat Stables improperly transferred in violation of
the Loan Documents; and
u. On Count XXI, an Order that a Receiver be appointed to manage the day-to-day
operations of Zayat Stables, to conserve the assets of Zayat Stables, and to protect
MGG’s security interest in the Collateral; and
v. On Count XXII, an award of costs and attorneys’ fees, as expressly authorized by
the Financing Agreement and the Pledge and Security Agreement; and
w. On all Counts, an award of pre- and post- judgment interest at the default rate of
interest specified in the Financing Agreement, the Pledge and Security Agreement
and/or the other Loan Documents; and
x. Such other relief as the Court may deem just and proper.
Dated: Lexington, Kentucky WYATT, TARRANT & COMBS, LLP February 11, 2020
By: /s/ W. Craig Robinson III W. Craig Robinson III Daniel E. Hitchcock Thomas E. Travis
250 West Main Street, Suite 1600 Lexington, KY 40507-1746 Phone: (859) 288-7667 Email: [email protected]
Attorneys for Plaintiff MGG Investment Group LLP 000075 of 000076 AMC : 000075 of 000076 75 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk
CERTIFICATE OF SERVICE
This is to certify that on February 11, 2020, I electronically filed the foregoing document with the counsel of record through the eFiling system. I further certify that I mailed the foregoing documents by first-class mail to all non-eFiling participants:
Jay E. Ingle Ellen Arvin Kennedy Alexander H. Gardner Dinsmore & Shohl LLP Jackson Kelly, PLLC 100 West Main Street, Suite 900 100 West Main Street, Suite 700 Lexington, Kentucky 40507 Lexington, Kentucky 40507 Counsel for Receiver, Elizabeth Z. Woodward Counsel for Defendant, Zayat Stables, LLC
/s/W. Craig Robertson, III W. Craig Robertson III 000076 of AMC : 000076 of 76 Filed 20-CI-00248 02/11/2020 Vincent Riggs, Fayette Circuit Clerk