Documents filed in connection with Ahmed Zayat's Chapter 11 bankruptcy petition show the prominent horse owner made loans totaling more than $600,000 to two brothers who have been convicted in connection with illegal bookmaking.
Under the category of "other liquidated debts owed to debtor," the bankruptcy filing for Zayat’s 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.
Otherwise, he would have sold some of the 200-plus horses he owns to pay off part of the debt. Zayat has said he is in the process of drafting a reorganization plan that will enable him to continue his horse-racing enterprise and be able to pay off Fifth Third.
Michael and Jeffrey Jelinsky are both 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 off-shore betting operation that was hit with federal charges in 2005.
The New York Times, which first reported the Zayat loans to the Jelinsky brothers, reported the stable operator acknowledged being a bettor but said the loans were not owed to him from wagering.
The Times also reported that some states–including New York and California–prohibit horse owners and trainers from associating with convicted felons or known bookmakers. However, neither of those two states are conducting an investigation into the ties between Zayat and the Jelinsky brothers, according to the newspaper.
