05/03/2007 11:00PM

McIngvale settles McKathan lawsuit


LEXINGTON, Ky. - According to court documents filed on Thursday in Galveston, Texas, Thoroughbred owner James McIngvale has reached a settlement in a lawsuit he brought against his former bloodstock advisers J.B. and Kevin McKathan.

McIngvale's suit, filed on the eve of the 2006 Keeneland September yearling sale, alleged that they had accepted kickbacks from sellers for horses he purchased. The McKathans denied those allegations, as did McIngvale's former trainer Bob Baffert, who was named in the suit as an associate of the McKathans. McIngvale later added seven sellers to the list of defendants, but at least three of those - Eaton Sales, Hill 'n' Dale Farms, and Hill 'n' Dale employee Donato Lanni - sought dismissal from the suit. Eaton Sales was dropped from the suit; requests by Hill 'n' Dale and Lanni were pending when the settlement occurred.

According to an order signed by U.S. District Judge Samuel Kent, on April 30 "the parties announced a complete settlement of all controversies herein existing," causing Kent to close the case for 30 days, during which time the parties are expected to conduct any financial transactions required under their undisclosed settlement terms.

Neither McIngvale or his attorney, Hank Stout, nor the McKathans could be reached for comment Friday.

Sales task force gets organized

The revived Sales Integrity Task Force has its first meeting Monday at Keeneland, a closed session that will largely be administrative, according to some of the panelists. Once members have set an agenda, formed committees, and determined a meeting schedule, they will tackle some of the thorny issues that have bedeviled the industry since the original, smaller task force issued its nonbinding code of ethics in 2004.

That code encouraged disclosure of auction horses' ownership and veterinary procedures but did not require it, which prompted Thoroughbred owner Jess Jackson to support Kentucky legislation earlier this year that would demand disclosure. The threat of a law specifically mandating these disclosures brought the task force together again under the auspices of the Thoroughbred Owners and Breeders Association. In return for an expanded, all-breeds panel to examine the disclosure issue again, Jackson agreed to support tabling the legislation.

But can the 36-member group resolve the sticky disclosure issue, which pits a buyer's right to know with a seller's right to privacy? And will they add teeth to the 2004 code by developing penalties for infractions? Kevin McGee, who heads up a group Jackson formed, the Horse Owners' Protective Association, hopes so.

"One of the things we're most concerned about is that we want to do something that the industry can get behind, that improves the industry and strengthens the market for everyone involved," said McGee, who is on the task force along with Jackson. "To do that, we need to make sure that what the task force does is both effective and enforceable. We would like to arrive at the end of the day with something that comes out of the Sales Integrity Task Force that doesn't look like lip service to the issues without any real effect.

"Last time, the biggest criticism after the efforts of the task force was that there wasn't any enforceability or accountability for people who violated the code of ethics. We've heard from a lot of different people in different segments of the industry, and what we've heard is that needs to be corrected."

McGee said his other top agenda items are the transparency of ownership and medical histories for horses at sale, as well as prospective licensing of bloodstock agents - proposals that have generated controversy in the past.

"Everyone we've talked to is in fundamental agreement that something needs to be done," McGee said. "Any disagreement seems to be about how to make sure that we are improving the industry and not creating unexpected problems."

TOBA executive director Dan Metzger agreed.

"Essentially, we want to do what's right by the industry," he said. "We want to build industry consensus and have what everyone recognizes is a policy that was driven by well-thought-out, deliberate discussion about the issues.

"We want to create a cornerstone of industry policy with the support of the stakeholders in the industry, one that's effective and that levels the playing field in the industry," Metzger added. "And we want to make sure that it has the strength and commitment of the industry behind it so that we're not revisiting these issues several years down the road."

* The Tattersalls auction house in England conducted its inaugural Guineas breeze-up sale, a 2-year-old auction, on May 4 in Newmarket, selling 76 horses for about $4,448,546 in a single session. The top price was about $188,055, which trainer Ed Dunlop paid for a Clodovil-Tropical Paradise filly and Anthony Stroud paid for an Invincible Spirit-Shabarana colt. The average price was about $58,534, and median was approximately $48,059.

* Goffs managing director Matt Mitchell has resigned, the Irish-based auction house announced. Mitchell had been with Goffs since 2000 and departs as the company is considering a merger with England's Doncaster Bloodstock Sales, which would make the combination Europe's largest sales firm.