COVINGTON, Ky. -- More than 400 people want to cash in on
Curlin in a move that could put partial ownership of the Preakness
and Breeders' Cup Classic Champion on the sheriff's auction block.
An attorney for 418 people, plaintiffs in a lawsuit against two
of Curlin's minority owners, want a judge to order foreclosure on
Curlin, the stable that officially owns him and its parent company.
A foreclosure could have 20 percent ownership in the horse up for
bid by the Boone County sheriff, with any money made from the
public sale going to settle a $42 million judgment.
The plaintiffs effectively have held a lien against Curlin since
November, when a state judge granted them rights to Tandy LLC, the
parent company of the stable with an ownership stake in the horse.
The award was made to settle the judgment, which stemmed from a
lawsuit accusing Curlin's co-owners, William Gallion and Shirley
Cunningham Jr., of defrauding clients in a $200 million settlement
over the diet drug fen-phen.
A hearing on the foreclosure request was set on Monday for Jan.
22 in Frankfort.
The foreclosure motion is the latest twist in the lawsuit and a
criminal case that have tied up partial ownership of the horse in
various court proceedings.
Angela Ford, a Lexington attorney representing the 418
plaintiffs, requested the foreclosure, saying Gallion and
Cunningham have refused to make any attempt to settle the $42
million debt and even tried to sell their 20 percent ownership to
keep the money away from the plaintiffs.
Gallion, Cunningham and a third attorney, Melbourne Mills Jr.,
are charged with mail fraud related to the fen-phen settlement.
Gallion and Cunningham, in court filings, have maintained that any
money earned by Tandy was the company's and they were entitled to
it. The two men have declined to allow a receiver to handle any
proceeds from a sale of Curlin or his breeding rights.
Until the issue was settled, state Judge Roger Crittenden
appointed a receiver to oversee Curlin as well as Midnight Cry
Stables and other assets on which the plaintiffs held a lien. The
receiver has taken in more than $445,000 in winnings -- Midnight
Cry's share of the Breeders' Cup Classic and Churchill Downs
purses.
An attorney for Jess Jackson, the founder of Kendall-Jackson
Winery and owner of Stonestreet Stables, and his wife, Barbara
Banke, who own 80 percent of Curlin, said in court documents that
until the issue is resolved, it is impossible to sell the horse or
the breeding rights.
"Some of the best and most viable purchasers will not consider
such a transaction while this problem exists," attorney Richard
Getty wrote, declining to name the potential buyers or price.
Last year, Jackson bought out several partners in acquiring an
80 percent interest in Curlin, a candidate for Horse of the Year.
In the criminal case against Gallion, Cunningham and Mills, a
federal judge in a closed hearing Monday heard two hours of
testimony on whether they should be released from jail pending
their trial, The Courier-Journal reported. They were jailed in
August.
U.S. District Judge William O. Bertelsman ordered them to remain
in jail pending the completion of the hearing on Friday, according
to the newspaper, which objected to closing the hearing.
Also Monday, a federal magistrate judge said the three lawyers
cannot subpoena records of contacts between the FBI and potential
witnesses in the wire fraud case against them.
U.S. Magistrate Judge J. Gregory Wehrman dismissed a series of
subpoenas by the men's attorneys. Wehrman did rule that the three
men can probe how the FBI and federal prosecutors put together
their case.
Wehrman set a hearing on that issue for Jan. 23.
Wehrman also ruled that the hearing will be open, unless
attorneys can show reasons why specific evidence or testimony
should not be aired publicly. Wehrman said some evidence may deal
with secret attorney-client information, which can be withheld from
the public.
Gallion's attorneys sought to have Monday's hearing, as well as
the hearing on Jan. 23, closed. An attorney for the Lexington
Herald-Leader opposed the motion, saying there was no reason to
close the entire hearing.