Curlin, working at Fair Grounds this past Sunday.<br><a target="blank" href="">Order This Photo</a>

Curlin, working at Fair Grounds this past Sunday.
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Alexander Barkoff

Curlin Interest May Be Auctioned

A motion asks for Midnight Cry Stable's 20% interest in Curlin to be sold at auction.

More than 400 people want to cash in on Curlin in a move that could put partial ownership of the leading Horse of the Year candidate on the sheriff's auction block.

An attorney for 418 people, plaintiffs in a lawsuit against two of Curlin's minority owners, want a judge to order foreclosure on Curlin, the stable that officially owns him, and its parent company. A foreclosure could put 20% ownership in the horse up for bid by the Boone County, Ky., sheriff, with any money made from the public sale going to settle a $42-million judgment.

The plaintiffs effectively have held a lien against Curlin since November, when a state judge granted them rights to Tandy LLC, the parent company of the stable with an ownership stake in the horse.

The award was made to settle the judgment, which stemmed from a lawsuit accusing Curlin's co-owners, William Gallion and Shirley Cunningham Jr., of defrauding clients in a $200 million settlement over the diet drug fen-phen. A hearing on the foreclosure request was set for Jan. 22 in Frankfort.

The foreclosure motion is the latest twist in the lawsuit and a criminal case that have tied up partial ownership of the horse in a myriad of court proceedings.

Angela Ford, a Lexington attorney representing the 418 plaintiffs, requested the foreclosure, saying Gallion and Cunningham have refused to make any attempt to settle the $42-million debt, and even tried to sell their 20% ownership to keep the money away from the plaintiffs.

Gallion, Cunningham, and a third attorney, Melbourne Mills Jr., are charged with mail fraud related to the fen-phen settlement. Gallion and Cunningham, in court filings, have maintained that any money earned by Tandy was the company's, and they were entitled to it. The two men have declined to allow a receiver to handle any proceeds from a sale of Curlin or his breeding rights.

Until the issue was settled, state Judge Roger Crittenden appointed a receiver to oversee Curlin as well as Midnight Cry Stables and other assets on which the plaintiffs held a lien. The receiver has taken in more than $445,000 in winnings — Midnight Cry's share of the Breeders' Cup Classic - Powered by Dodge (gr. I) and Churchill Downs purses.

An attorney for Jess Jackson, the founder of Kendall-Jackson Winery and owner of Stonestreet Stables, and his wife, Barbara Banke, who own 80% of Curlin, said in court documents that until the issue is resolved, it is impossible to sell the horse or the breeding rights.

"Some of the best and most viable purchasers will not consider such a transaction while this problem exists," attorney Richard Getty wrote, declining to name the potential buyers or price.

Jackson last year bought out several partners in acquiring an 80% interest in Curlin, a candidate for Horse of the Year.

In the criminal case against Gallion, Cunningham, and Mills, a federal judge in a closed hearing Jan. 7 heard two hours of testimony on whether they should be released from jail pending their trial, the Louisville Courier-Journal reported. They were jailed in August.

U.S. District Judge William O. Bertelsman ordered them to remain in jail pending the completion of the hearing Jan. 11, according to the newspaper, which objected to closing the hearing. Also Jan. 7, a federal magistrate judge said the three lawyers cannot subpoena records of contacts between the FBI and potential witnesses in the wire fraud case against them.

U.S. Magistrate Judge J. Gregory Wehrman dismissed a series of subpoenas by the men's attorneys. Wehrman did rule that the three men can probe how the FBI and federal prosecutors put together their case.

Wehrman set a hearing on that issue for Jan. 23.

Wehrman also ruled that the hearing will be open, unless attorneys can show reasons why specific evidence or testimony should not be aired publicly. Wehrman said some evidence may deal with secret attorney-client information, which can be withheld from the public.

Gallion's attorneys sought to have the hearing, as well as the hearing on Jan. 23, closed. An attorney for the Lexington Herald-Leader opposed the motion, saying there was no reason to close the entire hearing.