05/29/2005 11:00PM

Tanaka held in fraud case

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Owner Gary Tanaka, whose stable of successful racehorses includes Grade 1-winning sprinter Pico Central, has been arrested and charged with illegally using money from investors in an advisory firm to purchase racehorses, according to reports from Bloomberg News and the Los Angeles Times.

The arrest, which took place Friday, did not immediately appear to disrupt Tanaka's bloodstock and racing operations. Paulo Lobo, who trains Pico Central, said Monday that there was no change in the training of the horse. A deal to sell a half-interest in Pico Central to Three Chimneys and Padua Stables was concluded last week, and that is expected to remain firm, according to Tanaka's bloodstock and racing manager, Lincoln Collins.

Tanaka, who lives in London, co-founded Amerindo Investment Advisors with Alberto Vilar, a prominent philanthropist and patron of the arts. Vilar also has been arrested in New York. Authorities have charged him with stealing $5 million in investors' funds, and they allege he used those funds to cover philanthropic pledges and pay bills.

On Friday, U.S. Magistrate Judge Henry Pittman ordered Vilar held without bail until a hearing in New York on Tuesday. Bloomberg News reported that Tanaka also is being held without bail and is scheduled to make a court appearance on Friday.

Tanaka has owned Thoroughbreds since 1993 and has campaigned such Grade 1 winners as Golden Apples, Donna Viola, Millkom, Dreams Gallore, and Snow Polina, as well as numerous stakes winners overseas.

Collins said Tanaka's arrest was "a shock" and that he had last spoken to Tanaka last Thursday before announcing the Pico Central stud deal.