Zayat disputes lawsuit's claims that he reneged on debt

Ahmed Zayat, the owner of Triple Crown candidate American Pharoah, has denied charges contained in a lawsuit accusing him of reneging on a gambling debt from 2004.

The suit was filed in March 2014 in the U.S. District Court of New Jersey by Howard Rubinsky, who claims that Zayat owes him $1,650,000 “with interest accrued thereon” from a line of credit Rubinsky opened for Zayat at an offshore bookmaker. In the suit, Rubinsky states that the original debt was $2 million, and that Zayat stopped making payments to pay down the debt in 2008.

In a statement and in papers filed in response to the lawsuit, Zayat denied the charges, claiming that the lawsuit contained “fictitious stories from 11 years ago.” The judge in the case is expected to rule on a motion by Zayat to dismiss the suit later this year.

“The rhetoric accusing me of owing monies over gambling debts is a pathetic attempt to extort me, and we are expecting this meritless lawsuit from a convicted felon to be dismissed,” Zayat said in his statement.

Rubinsky, 58, pleaded guilty in 2008 to assisting two New Jersey brothers, Jeffrey and Michael Jelinsky, in the operation of an illegal bookmaking business. The Jelinsky brothers, who pleaded guilty on gambling charges in 2008, have been linked to Zayat through a 2010 bankruptcy filing of Zayat’s racing stable, which listed outstanding loans of $600,000 to the Jelinsky brothers as debt.

Zayat, who sold his beer distributorship in 2002 for $280 million to Heineken, has denied knowing that the Jelinsky brothers were involved in illegal gambling, and he has said the loans were provided as a favor. Zayat has acknowledged gambling large sums of money on racing but has said he has done so legally.

In the suit, Rubinsky says he recruited Zayat for the offshore bookmaking company Tradewinds, now defunct, and opened a $3 million line of credit in his name. Subsequent filings in the suit provide evidence that Zayat provided a check to Rubinsky for $25,000 in 2008, and while Rubinsky states that it was the last payment he received to pay down the debt, Zayat states that the money was a gift.

“Mr. Rubinsky told me he needed help because he could not afford to live or even buy food and could not afford to attend to his health issues,” Zayat wrote in a response to the suit. “It was, and is, not at all uncommon for people to request that I assist them financially, and I was always willing to help a person in need. I agreed to give Mr. Rubinsky some money to help him get back on his feet.”

Zayat then wrote that he later “realized Mr. Rubinsky was trying to take advantage of me, and I decided to sever ties with him.”

While one of the most successful owners in the sport over the past 10 years, Zayat has been dogged by financial controversy. In addition to his bankruptcy filing – which Zayat claimed was a means to protect his family’s stable from a bank’s “predatory lending practices” – Zayat has been investigated by state racing commissions over his links to the Jelinsky brothers. The commissions ultimately cleared Zayat to race.

Zayat has said he paid all of his creditors “in full” out of the bankruptcy filing, and that the bank that sued him, Fifth Third, has renewed a line of credit.

American Pharoah, a homebred of Zayat Stables, has won the Kentucky Derby and Preakness Stakes and is expected to run in the Belmont Stakes on June 6. Earlier this week, Zayat said the horse’s breeding rights had been sold to Coolmore, the international breeding operation.