Ahmed Zayat

Ahmed Zayat

Anne M. Eberhardt

California Clears Zayat on Jelinsky Loans

Regulatory body says investigation showed loans made before bookmakers' convictions.

The California Horse Racing Board has looked into ties between Ahmed Zayat and two convicted bookmakers and determined there is nothing to indicate the prominent horse owner has violated terms of his license in the state.

Documents filed in connection with a Chapter 11 bankruptcy petition by Zayat Stables showed Jeffrey and Michael Jelinsky owed Zayat more than $605,000. Zayat said the Jelinsky brothers owed him for loans he made to them in 2006 and 2007. Zayat said he knew the Jelinsky brothers’ late father, who was a broker on Wall Street.

Michael and Jeffrey Jelinsky are serving prison sentences of 15 months and 21 months, respectively, after pleading guilty to illegal bookmaking in 2009.

The brothers pleaded guilty in connection with their illegal gambling business that operated out of Nevada, according to published reports leading up to their convictions. Among the assets confiscated by federal authorities from the Jelinsky brothers was $1.5 million traced to International Racing Group, an offshore betting operation that was hit with federal charges in 2005.

California, like most states, has regulations prohibiting licensees, including owners, from associating with illegal or convicted bookmakers. The debt from the Jelinsky brothers to Zayat was first reported by the New York Times.

"Our chief of investigations has gone over all the court documents and based on what we can find, Mr. Zayat made the loans (according to the New York Times article) long before these two individuals were convicted of a crime – bookmaking," CHRB executive director Kirk Breed said in a statement. "Therefore, we can’t see any reason to pull the license of Mr. Zayat. As more information becomes available, we will certainly look into it."

Regulators in Kentucky and New York have said they are also looking into the arrangement between Zayat and the convicted bookmakers.

Under the category of "other liquidated debts owed to debtor," the bankruptcy filing for Zayat Stables shows 12 outstanding loans. Included were a $450,000 loan to Jeffrey Jelinsky Sept. 27, 2007, and a $155,000 loan made to Michael Jelinsky Sept. 27, 2006. Additional loans included $50,000 to B. Jelinsky (Oct. 2, 2007) and $2,500 to L.A. Jelinsky (Feb. 1, 2008).

Zayat Stables filed for Chapter 11 bankruptcy after the leading racing stable was sued by Fifth Third Bank to recover more than $34 million in outstanding loans. Zayat, who races Eskendereya, a leading contender for this year’s Kentucky Derby Presented by Yum! Brands (gr. I), contends the bank’s loan officers misled him into believing his loans would be renewed.