A legal tussle between two investors in IEAH Stables entered round two Jan. 24 with a federal lawsuit filed in Boston.
The suit filed on behalf of consultant Jason Galanis, who was part of a group attempting to purchase IEAH and its equine holdings, outlines a long list of allegations against Matthew Szulik and other defendants.
The suit identifies Galanis as a professional consultant specializing in “identifying and facilitating business combinations and transatcions.”
Szulik, a founder of the RedHat software company, had filed a federal suit in North Carolina contending that James Tagliaferri and other defendants committed fraud in their handling of $60 million of the Szulik family’s money.
Included in the $60 million was a $20 million investment by Tagliaferri in IEAH. The rest of the Szulik investments that were the object of the initial lawsuit were made in other companies, including ventures in which Galanis is involved.
As part of the filings in his suit, Szulik contended that a pending takeover of IEAH by Gerova Financial Group, in which Galanis is a principal, would further damage his (Szulik’s) investment in IEAH.
In his suit, Galanis contends Szulik filed his suit to block the Gerova purchase of IEAH. The Galanis suit states that Szulik wanted to block the buyout as part of a tax evasion scheme designed to show losses that would have a favorable impact on his tax liability.
IEAH, which has been one of the most prominent stables in North America in recent years, campaigned Kentucky Derby Presented by Yum! Brands (gr. I) winner Big Brown .
As part of his filing, Galanis alleges that Szulik also was involved in a tax-evasion scheme in how he reported his interest in Big Brown. The suit states that Szulik received a 10% interest in Big Brown in exchange for a loan Szulik made to IEAH, which purportedly paid $4 million for the eventual Derby winner.
When a $60 million value was placed on Big Brown after Three Chimneys Farm, where the Derby winner went to stud, purchased an equity interest, Szulik improperly declared deductions “of several million dollars based on Big Brown’s increased valuation” of $60 million, according to Galanis’ suit. Instead, Galanis contends, Szulik should have “only taken deductions based on Big Brown’s value at the time of his ($4 million) investment.”
