03/14/2009 12:00AM

Lake seeks Chapter 11 protection

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Scott Lake, who ranks seventh all-time among trainers in races won, filed for Chapter 11 bankruptcy protection in federal court earlier this month, but said it should not affect his multistate racing operation.

The 43-year-old Lake, who had won 4,572 races through Friday, filed for bankruptcy in U.S. Bankruptcy Court Eastern District of New York on March 4. According to published reports, Lake's bankruptcy petition states that he has between $500,000 and $1 million in assets and between $1 million and $10 million in liabilities.

The majority of his debts are owed to veterinarians, feed companies, and van companies.

In a phone interview Saturday, Lake said he was victimized by an old friend who also served as his accountant. Lake alleges that the friend - whom he declined to name - stole $1.2 million from him over a five-year period and failed to file his tax returns to the Internal Revenue Service.

"I'm guilty of being naive," Lake said. "It wasn't like I found an accountant and interviewed him. This guy was part of my family - best friend for 20 years. I never dreamed of this. He had a gambling problem and now he doesn't have a dime."

Lake said he has not filed any charges against his friend, but did not rule out doing so later on. Lake said one of his owners, Ben Mondello, is his new accountant.

Lake, who led the nation in wins for four years between 2000-06 and twice was an Eclipse Award finalist, said he has about 150 horses in training based at five different tracks: Belmont Park, Gulfstream Park, Laurel Park, Philadelphia Park and Delaware Park. He said he has 120 employees.

Both Lake and his attorney, Ken Reynolds, said that by filing for bankruptcy it will enable Lake to conduct business as usual.

"The case is in its infancy. We're going to do the best we can to get in and out," Reynolds said. "It's business as usual for Scott as we go along and he'll continue to pay [his employees] on a timely basis."

Lake said that most of the vendors to whom he owes money have told him that they will continue to do business with him while he's in bankruptcy.

"Most of the vendors have been very good about it," Lake said. "They're taking a hit, but they've made a lot of money off my operation over the last 10 years. They're all understanding of what's going on."

According Reynolds, Lake has 120 days to file a reorganization plan with the bankruptcy court "that will take care of all his creditors as quickly as possible."

Reynolds said that he also hopes to work out an arrangement with the Internal Revenue Service regarding the back taxes that Lake owes.