Handicapping for karma: It takes money to own a Derby horse. Not all owners are created equal
Got your Derby on and ready to muddle through stacks of speed ratings, dosage numbers, databases and diatribes? Again with the mundane search for prescient visions of lucky numbers, memorable monikers or catchy-colored saddle clothes?What if you’re a bettor with a social conscience? Can you carry the weight of knowing where the cash came from that helped your favorite high-dollar horse make it to the starting gate for the biggest race on this first Saturday in May?This year’s owners contingent includes the usuals — millionaire car dealers (Hard Spun’s Richard Porter), fast food vendors (Zanjero’s Winchell family) and entertainment moguls (Cobalt Blue’s Merv Griffin and Tiago owner Jerry Moss). But don’t look too hard for a busload of Sackatoga Stable-wannabes trying to pull together ticket money for family and friends, like we saw with Funny Cide in 2003. This is not that year.In fact, 2007’s biggest collective of owners, those backing likely favorite Curlin, includes two tainted Kentucky attorneys, a billionaire winemaker, an international money manager and a specialist at outsourcing jobs to India.Here are some owners who may present a real karmic challenge:CURLINStonestreet Farm, Padua Stable, George Bolton and Midnight Cry StableGeorge Bolton manages millionaires’ monies for Deutsche Bank offices in San Francisco. Stonestreet Farm is Cali billionaire attorney Jess Jackson’s new Lexington farm. Jackson, of Kendall-Jackson wine fame, is suing a bunch of people he says charged him too much for land and horses in the Bluegrass.It’s all part of the alleged commissions and kickbacks business philosophy that again reared its ugly head when Texas horseplayer James McIngvale recently sued trainer Bob Baffert and some horse sales consignors over similar goings-on.Midnight Cry Stable sold off most of Curlin to the others, and that stable is owned by William Gallion and Shirley Cunningham Jr., suspended Kentucky attorneys who allegedly bilked hundreds of clients out of millions of dollars after earning a $200 million settlement against the makers of the sketchy diet drug fen-phen.Finish off this bunch of strange bedfellows off with Padua owner Satish Sanan, who seems determined to have every elective surgery in the U.S. healthcare system managed, performed and billed by overseas-operated telecommunications systems. Sanan’s forte is outsourcing end-to-end business systems (Hindu Business Line has said Sanan wants 70 percent of his operations in India) for the biggest managed healthcare companies. He has admitted he is chomping at the bit to get to the Derby winner’s circle, and he thinks he improved his chances earlier this year by buying a chunk of another Derby contender, Any Given Saturday. With U.S. healthcare worth about $2 trillion (and with more than half of that spending coming from the U.S. government), Sanan may soon be able to guarantee a trip to the winner’s circle by simply buying an interest in every starter.In case you’re curious about the dirty world of cash kickbacks in horseracing, here’s what Sanan told the Lexington Herald-Leader after learning of the lawsuit against Baffert and the horse-dealing brothers J. B. and Kevin McKathan: “This is a problem that has existed for a long period of time.”DOMINICAN and SEDGEFIELDTommy and Bonnie HamiltonThe coal business has been good to Tommy and Bonnie Hamilton of Springfield, Ky., helping them upgrade their hobby dollar from show horses at the Kentucky State Fair in August to thoroughbreds at Churchill Downs in May. Tommy Hamilton’s companies have been bulldozing and blowing up mountains in Kentucky and Virginia, filling creeks with leftover rock, discharging wastewater into streams and turning a profit on the spoils for almost 30 years as a partner in Nally & Hamilton Enterprises of Bardstown.A few years back, Nally & Hamilton was the company trying to dig out thousands of tons of coal about a half-mile from Pine Mountain Settlement School, a National Historic Landmark, in one of Kentucky’s and the nation’s poorest places, Harlan County. Thousands rallied against the project and the state stepped in to protect the school. Appeals from Hamilton’s company and several other coal companies to continue mining around the historic site eventually failed.With mining operations active in Bell, Leslie, Harlan, Knox and Letcher counties, among others, Hamilton’s name may be the most recognized of Derby owners by folks in Eastern Kentucky, but for all the wrong reasons. The Hamiltons began buying thoroughbreds about eight years ago. They’ve tastefully named one of their Derby hopefuls Dominican, after the order of nuns near Springfield that operates St. Catharine College, where Tommy Hamilton was on the board for years. In 1924, Black Gold won the Derby; maybe the Hamiltons can re-anoint King Coal in the winner’s circle. Wouldn’t a moniker like “Black Lung” or “Valley Fill” have been more appropriate?NOBIZ LIKE SHOBIZElizabeth ValandoImagine the collective scream of however many furry critters were skinned to make the full-length fur coat Elizabeth Valando wore in the winner’s circle after Nobiz Like Shobiz won the Wood Memorial in New York. Then listen to that karma cloud over your head before you bet. It will likely be screaming: “Don’t do it! Don’t do it!”Valando, of Greenwich, N.Y., has also contributed to Mitch McConnell’s re-election campaign, but we don’t expect that to limit the size of Nobiz’s win pool. In fairness, though, Valando doesn’t fall so heavily on the scales of darkness compared to many of her cohorts. One mitigating factor: She’s old-school, having attended nearly 20 Derbies, including one as the owner of Fly So Free, with her late husband and renowned Broadway music publisher Tommy Valando.Another positive balance: She’ll be joined on Derby Day by Lexington’s Tracy Farmer, as has been the case for almost a decade now. Farmer made millions selling way too many people way too many cars, but he’s attempted a karmic cleansing by donating more than $2 million to start an environmental center at the University of Kentucky. He’s also come out publicly against coal mining on public lands.GREAT HUNTER and LIQUIDITYPaul ReddamTechnically, you can’t call this multi-millionaire a predatory lender. Although he charges 59 percent interest on some of the $5,000 loans that are the calling card of his Orange County-based CashCall (you know, the place Gary Coleman turned to, and produced commercials for, after he needed $10,000), that high rate is not illegal as long as the customer knows about it before signing the paperwork. Reddam first made bank in the mid-’90s by perfecting the art of issuing second home mortgages worth 125 percent of the home value. Although he wasn’t charged with wrongdoing, he resigned from that company after the FBI raided its offices and arrested three executives on extortion charges. GMAC bought the company — DiTech — and Reddam got well twice, suing GMAC over the deal and then receiving an out-of-court settlement believed to be worth many more millions.His name popped up again with Golden State Warriors owner Chris Cohan and former U.S. ambassador to Ireland Richard Egan as those who had used illegal tax shelters offered by the nation’s fourth-largest accounting firm, KMPG. Reddam is among the rich who chose not to take part of KMPG’s $225 million settlement offer and instead is suing the company on his own.KMPG apparently sold the wealthy shelters that gave clients fake tax losses worth tens of millions of dollars. Since the IRS uncovered the play, KMPG’s affected clients have paid the government more than $3.7 billion, and KMPG itself got hit with a $456 million fine plus other penalties that include a number of former employees under indictment.Take note of what former SEC chief accountant Lynn Turner told The Houston Chronicle earlier this year about Reddam and that ilk: “While I certainly don’t have sympathy for the auditors and accountants who sold the shelters, I have perhaps even less sympathy for those who were rolling the dice just to see if they could avoid paying their share of taxes.An added karma note: Great Hunter is named for L. Eric Whetstone of Lexington, husband of the colt’s previous owner. Mr. Whetstone has been convicted of bilking money from people in four states and of lying on federal forms to purchase guns. He apparently enjoys going after both people and critters.SAM P.Jack and Laurie Wolf and Donald LucarelliSix days after Home Depot came to town, the kids in upstate New York sold papa Joe Lucarelli’s 70-year-old hardware store company to Wolseley, the world’s largest building supplier. Son Don Lucarelli has been buying racehorses ever since that $100 million-a-year company changed hands in 2004.Before that deal, Wolseley had gobbled up another homegrown hardware company that ended up with 25 percent of its stores and staff canned. With Wolseley now eyeing a purchase of Home Depot, the Lucarellis’ Derby view is surely more comforting than the couch-and-T.V. setting for hundreds of hardware store employees around Albany.Now invested in about 30 thoroughbreds, Lucarelli got his feet wet in the Kentucky Derby paddock last year on the coattails of Sam P. co-owner Jack Wolf, as their partnership sent out flash-in-the-pan Keyed Entry, who was dead last.You might recall Wolf as the retired hedge fund manager who rudely dumped trainer Ken McPeek after their lukewarm favorite Harlan’s Holiday finished seventh in the 2002 Derby. McPeek promptly returned the favor, winning the Belmont Stakes for a different owner the following month with record-setting longshot Sarava.