12/02/2008 12:00AM

Small stake in Curlin remains unsold


Curlin, the 2007 Horse of the Year, will enter stud in 2009 as the property of both Stonestreet Stables and two disbarred lawyers from Lexington after a Kentucky Circuit Court judge denied the sale of the lawyers' stake to Stonestreet at a hearing on Monday in Frankfort, Ky.

The decision by Judge Roger Crittenden of Franklin County Circuit Court will effectively end any negotiations over the sale of the 20 percent stake held by Tandy LLC, a partnership between William Gallion and Shirley Cunningham Jr., according to attorneys for both Tandy and Stonestreet.

Curlin will stand next year at Lane's End Farm in Kentucky for a stud fee of $75,000. The horse made his final start in the Breeders' Cup Classic this year, finishing fourth.

"We look forward to Curlin standing at Lane's End and doing whatever we can to help him at stud," said Andre Regard, an attorney representing Gallion and Cunningham in the complex dispute centering on the colt, after the hearing.

Last year, Cunningham and Gallion, along with a third lawyer, lost a $42 million judgment contending that they defrauded their former clients in a 2002 lawsuit against the manufacturer of the diet-drug combination fen-phen. As a result of that ruling, the lawyers' assets, including the 20 percent stake in Curlin, have been assigned to a court-appointed receiver.

Two weeks ago, the receiver asked Crittenden to approve the sale of the 20 percent stake to Stonestreet for $4 million, based on a total value of $20 million. Stonestreet, which is owned by Jess Jackson and his wife, Barbara Banke, already own 80 percent of Curlin.

Regard objected to the motion, contending that Gallion and Cunningham believed that Curlin was worth far more than $20 million at stud.

Tom Clark, an expert witness brought to the proceedings by Regard, was prepared to testify at the Monday hearing that he believed that Curlin's value was $37.5 million as of Nov. 24, according to Regard. In addition, an attorney for the plaintiffs in the civil court suit, Angela Ford, objected to the motion based on her belief that the 20 percent stake was also worth more than $4 million.

Crittenden cited those objections for denying the motion to sell the 20 percent stake, but he stressed that his decision was not based on valuations made by either side. He also said that any further negotiations on the stake should be "between Tandy Corp. and Stonestreet," without the involvement of the court.

"They're in business together, so they should work it out," Crittenden said.

An attorney for Stonestreet, Richard Getty, said after the hearing that he doubted Gallion and Cunningham would receive any offers for the 20 percent share.

"We're done," Getty said. "I can assure you that they will not get a better offer than the $4 million. In fact, they will not get another offer at all."

Curlin is a 4-year-old son of Smart Strike out of the Deputy Minister mare Sherriff's Deputy. Smart Strike also stands at Lane's End.

At the hearing two weeks ago, Ric Waldman, the expert witness for the receiver, said the colt likely had a value of $30 million in August. However, Waldman testified, the deteriorating U.S. economy, a significant downturn in the bloodstock industry, and the late start in marketing Curlin's services had depressed the value to $20 million by mid-November.

As a result of the ruling on Monday, any revenue earned by the 20 percent stake held by Tandy will go to the receiver. Crittenden has yet to rule on when any of the earnings from the lawyers will go to their former clients in the fen-phen case. Gallion and Cunningham are facing a February retrial on criminal charges that they defrauded the clients after an earlier case this year ended in a mistrial.

Correction: An earlier version of this article incorrectly characterized the circumstances in which an expert witness assessed Curlin's value as a stallion. Tom Clark made the assessment privately - not in open court. The judge ruled before Clark was called to testify.