01/26/2007 1:00AM

Jackson alleges added price-inflating


LEXINGTON, Ky. - New documents filed by attorneys for Stonestreet Stable owner Jess Jackson allege that a French bloodstock agent tried to sell him another farm at an inflated price before participating in Jackson's $17.5 million purchase of Buckram Oak Farm in Lexington. Jackson already has sued the agent, Frederic Sauque, and others over the Buckram Oak deal, claiming Sauque and Jackson's own advisors conspired to defraud him by inflating Buckram Oak's price in order to collect about $500,000 in commissions.

The new allegation is in documents Jackson's attorneys filed in the U.S. District Court in Lexington last Sunday. In those papers, Jackson says his agents at the time tried to inflate farm prices or receive secret commissions on two other properties, Adena Springs and Perretti Farm, before Jackson bought Buckram Oak in 2005. Sauque is a common thread in the Perretti and Buckram Oak instances, Jackson alleges.

When asked about the additional allegations, Sauque's attorney, Tom Bullock, said he could not comment on ongoing litigation.

Jackson alleges that Sauque, representing Buckram Oak's late seller Mahmoud Fustok, conspired with Jackson's chief bloodstock advisor, Emmanuel de Seroux, to inflate the farm's price from a public list price of $16 million to the eventual sale price of $17.5 million. Jackson closed on that property in February 2005.

The previous December, Jackson alleges, Sauque had encouraged Jackson to purchase the Perretti Farm in Bourbon County for $6.3 million after a six-month listing of the 900-acre farm with realtor Aubrey Edwards expired. According to an excerpted deposition, Edwards said he had been unable to attract a buyer with his list price of $5.95 million; before Edwards took the listing, the property had been listed with another agent without selling.

Similarly, "Sauque emerged as the principal negotiator and spokesman for Fustok and Buckram Oak Holdings" after its $16 million listing with realtor Tom Biederman expired, Jackson alleges in the court documents, and "affirmatively represent[ed] that Fustok would take no less than $17.5 million" for the property. When the sale between Jackson and Fustok closed at that price, Jackson alleges, Fustok and Sauque violated the terms of the sale by paying Jackson's agent de Seroux $500,000. Sauque himself billed Fustok for $150,000 after the sale, according to a photocopied invoice attached to the filing.

De Seroux's attorney publicly has called Jackson's version of the sale and the alleged $500,000 secret commission to de Seroux "outrageous and false."

Late November, the Kentucky Real Estate Commission found Jackson's agents, including de Seroux and Sauque, in violation of state law for providing real estate services without a license.

For his part, in an interview last year with the Lexington Herald-Leader, Sauque maintained that Jackson himself upped Buckram Oak's price in 30 minutes of personal negotiations with Fustok.

"He wanted the farm and he wanted it done," Sauque said. "He wanted to buy his toy that day."

Jackson attorney Richard Getty disputes that.

"That statement, in light of the documentary evidence that has come out in this case, is ludicrous," he said. "There was a letter of intent, extensive due diligence as to whether or not the farm was acceptable to be purchased based on the soil quality, and a multi-page purchase agreement. Does that sound like something that occurred in 30 minutes?"

Jackson is attempting to prevent Sauque's dismissal from the Kentucky lawsuit. On Dec. 15, a federal judge in California dismissed Sauque from a related case in which Jackson alleged he was part of a scheme to mark up Jackson's purchase prices for horses. In that ruling, judge Jeffrey Barton said the California court had no jurisdiction over Sauque's activities in France and Kentucky and noted that, with regard to any role Sauque played in the horse deals, "Jackson's declaration is silent as to Sauque's conduct and there is no evidence that Sauque participated in any mark-up plan."

Code of conduct for sellers published

The Consignors and Commercial Breeders Association has published its own code of conduct in an effort to promote ethical behavior among Thoroughbred sellers.

Under the code, CBA members will be expected to serve their clients' best interests at all times; conduct business with honesty, integrity, and fairness toward clients, other CBA members, and the buying public; provide truthful answers and avoid misleading statements when asked questions by prospective buyers; refuse to pay or receive commissions that aren't disclosed to their principals; refuse to participate in undisclosed dual agency or other fraud; and comply with all applicable sale company rules of sale and with all applicable state and federal laws.

Like the Thoroughbred Owners and Breeders Association's code of ethics, the CBA code doesn't include any penalties for infractions.

"Blatant violations would be brought up before the board, and the board would determine what types of measures to take," said CBA president Bayne Welker, adding that loss of CBA membership would be one possible action.

* Adena Springs has moved the first of its mares to its new 2,000-acre facility in Paris, Ky. Stallions will relocate after the breeding season. Adena also has named Steven Nicholson general manager of Adena Springs Kentucky. Previous general manager Dr. George Mundy will serve as stallion administrator.