The death of Calumet Farm's leading sire from the 1980s wound up in court as part of Lundy's sentencing hearing on fraud, conspiracy, and bribery convictions handed down in February. Federal prosecutors argued that Lundy deserved a stiffer penalty for defrauding the First City National Bank of Houston out of $65 million in loans because he also was responsible for destroying the asset securing the loans, which was Alydar.In the end, Sims sentenced Lundy to four and half years in jail and ordered him to pay restitution on more than $20.4 million that First City lost when Calumet defaulted on its loans. Lundy does not have the money to repay that kind of restitution, but he was ordered to make payments while working in prison and, once released, to pay $200 per month. Lundy will serve his jail sentence in a medium security prison in Coleman, Fla. Lake gave him three months before he is required to voluntarily surrender himself to prison because Lundy's mother is sick.
Earlier in the day, Lake sentenced Gary Matthews to 21 months in prison for his role in defrauding First City. Matthews was former chief financial officer of Calumet Farm during Lundy's reign. Matthews also is responsible for repaying the $20.4 million in restitution. Once he is released from prison, he must also pay $200 per month. Matthews was given six months to complete on-going estate work he is performing before he must turn himself in to a medium security prison in Manchester, Ky. Attorneys for both Lundy and Matthews said they will appeal the convictions.