Big Brown owner Mike Iavarone: A certifiable douchebag.
RonBurgundy
Posts: 5,491 ✭✭✭
in Sports Talk
Saw the guy interviewed after the race. A complete and utter douche. Has his posse with him, the slicked back hair, blowhard attitude, man he's got it all going on. I hate that Big Brown lost, but I am totally happy that this clown didn't get a Triple Crown trophy and even more money than he's already getting off this horse. When you compare him to old school owners like the older couple who owned Barbaro, the guy's a joke.
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i agree seems like a guy with too much money, i would have liked to see that trainer win though.
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May 28 (Bloomberg) -- Michael Iavarone, owner of Triple Crown contender Big Brown, was fined, censured and suspended by securities regulators for unauthorized trades in 1999.
Iavarone, 37, a former stockbroker, hasn't disclosed the regulatory actions as he plans to raise $100 million for a hedge fund that will invest in racehorses. Big Brown, a three-year old colt, would be the first horse to win the Triple Crown in 30 years, if it finishes first in the Belmont Stakes on June 7.
Iavarone, who rang the opening bell at the New York Stock Exchange this morning, is co-chief executive officer of International Equine Acquisitions Holdings Inc., a privately held Garden City, New York, company that owns Big Brown and about 80 other racehorses. IEAH, which will manage the fund, describes Iavarone on its Web site as a ``high-profile investment banker on Wall Street'' who became a horseracing executive. The site, www.ieah.com, doesn't mention his regulatory history.
``To me as a prospective investor in his hedge fund, that's clearly material information I'd want to know,'' said Alan Bromberg, who teaches securities law at Southern Methodist Law School in Dallas.
Iavarone, in an interview yesterday, said his seven-year Wall Street career consisted of selling penny stocks at four different brokerage firms, including A. R. Baron & Co. They are Lloyd Wade Securities Inc., Maidstone Financial Inc., both in New York City, and Joseph Dillon & Co., in Great Neck, New York.
Regulators Shut Down Firm
New York-based A.R. Baron pleaded guilty in 1997 to one count of enterprise corruption, a felony. Regulators shut the firm down. Iavarone was not charged with any crimes.
While Iavarone initially denied having had any sanctions in his career in the securities industry, he next said he had been fined, censured and suspended from trading by the NASD for 10 days in 1999.
The NASD, or National Association of Securities Dealers, a self-regulatory group, merged into the Financial Industry Regulatory Authority in 2007.
There were other complaints against Iavarone after he left A.R. Baron.
Keeneland Association of Lexington, Kentucky won a $554,156 judgment against Iavarone for failing to pay for five horses he bought at auction in 2003. The Internal Revenue Service obtained a $130,000 lien against him in 2004 for unpaid 2002 income taxes.
Paid the Judgments
``Back in 2003, I wasn't in good financial shape,'' Iavarone said. He said he paid all the judgments.
Iavarone was sued by the Showboat Hotel and Casino in Atlantic City in January 1999 for writing a bad check for $20,000, Superior Court of New Jersey court records show.
In the lawsuit, the casino alleged that it ``repeatedly made demands upon the Defendant for the aforesaid amount, but to no avail.'' In January 2000, the Superior Court of New Jersey entered a judgment against Iavarone when he failed to respond, for $14,090 plus costs. Iavarone paid the casino in July 2000, court records show.
Iavarone said an imposter was responsible. ``There was no bad check ever written,'' he said. ``Somebody took out a marker in my name, illegally.''
Big Brown won the Kentucky Derby on May 3 and the Preakness Stakes on May 17 by a combined 10 lengths. If he wins the Belmont Stakes, he would join Affirmed, Seattle Slew and Secretariat as the only horses to sweep the Triple Crown in the past 60 years.
Crack in Hoof
The Triple Crown is a demanding feat because it requires a horse to win at three different distances and on three different tracks over a five-week period.
Big Brown developed a crack in a hoof in recent days that has forced his trainer, Rick Dutrow Jr., to scale back his training ahead of the Belmont. Hoof injuries sidelined Big Brown for months last year and early this year.
The undefeated brown colt has produced a windfall for Iavarone and IEAH's investors. IEAH sold Big Brown's breeding rights for more than $60 million to Midway, Kentucky-based Three Chimneys Farm on May 17 just before the horse romped to victory in the Preakness, Iavarone said.
IEAH had bought a 75 percent stake in Big Brown for $2.5 million eight months earlier.
Iavarone, who was raised in Bethpage, Long Island, graduated from St. Joseph's College of Patchogue, New York, where he earned a bachelor's degree in business in 1993.
`That's a Mistake'
His IEAH's Web site includes an article about him from the Thoroughbred Daily News that says Iavarone has a bachelor's degree from the University of California at Los Angeles. ``That's a mistake,'' Iavarone says.
Iavarone has come a long way from his past as a stockbroker. In 1995, while working at A.R. Baron, Iavarone made unauthorized trades on three occasions, the NASD found.
He bought and sold more than $20,000 of stock without the permission of his clients, the NASD said. Iavarone, who wasn't charged criminally, was fined $7,500 and suspended for 10 days in 1999.
``I needed to make it go away as fast as possible,'' said Iavarone, adding that he neither admitted nor denied guilt. The records show he did consent to the findings of fact and violations by the NASD.
A.R. Baron defrauded investors out of more than $75 million before filing for bankruptcy protection in 1996, according to the New York District Attorney's office.
`Ran Up Prices'
One of Iavarone's customers at A.R. Baron was Vernon Bell, now a 65-year-old partner in a Huntington, West Virginia, heating and air-conditioning company.
``They invested your money in these supposedly up-and- coming stocks,'' said Bell, who filed a complaint with the NASD in 1997 stating he lost $62,000. He said in the complaint that Iavorone made unauthorized trades in penny stocks.
``They ran the prices up and then the bottom dropped out after they sold their shares,'' Bell said. ``I learned a lesson.'' He says he accepted a $10,000 settlement from Iavarone.
``That doesn't mean I did something wrong,'' says Iavarone, who recalls paying settlements to customers, but said he doesn't remember Bell.
Iavarone worked for A. R. Baron from 1993 until just before it closed in 1996. After that, he went to Lloyd Wade Securities for five months. Then he worked at Maidstone Financial for 10 months.
`I Did Very Poorly'
He ended his brokerage career at Joseph Dillon, where he worked for three years until December 2000.
Iavarone says he spent the next two years as a self- employed day-trader after the Internet stock bubble collapsed.
``Like everyone else, I did very poorly,'' he said.
In February 2003, he incorporated IEAH at his home in Holbrook, New York and entered the horseracing business, which he says has intrigued him since childhood.
After a rough start, he says he's raised more than $40 million, with plans to raise another $100 million for the hedge fund.
``Obviously Big Brown has become a big promotion for us and will really help us going forward in the advertising and promotion of the fund,'' Iavarone says in a video on IEAH's Web site. The video is from an interview by CNBC. He said in the interview yesterday the hedge fund would not own any interest in Big Brown.
As Iavarone uses the excitement surrounding Big Brown to drum up interest in his racehorse hedge fund, Bell, his former customer at A. R. Baron, urges prospective investors to be cautious.
``I know his past history,'' Bell said. ``I don't know if he's mended his ways. I wouldn't give him a second chance.''
May 30 (Bloomberg) -- Michael Iavarone's Wednesday began so well. He rang the opening bell at the New York Stock Exchange, just like the Wall Street titan he claimed to be. The co-leader of the group owning 75 percent of Big Brown was the beaming face of horseracing.
By the NYSE closing bell, Iavarone's story and standing were in shambles. My colleague David Evans had disclosed Iavarone wasn't the former ``high-profile investment banker'' of his bio but a onetime stockbroker at four now-defunct ``bucket shops.'' In 1999, he was disciplined for unauthorized trading at one of them.
``Big Brown'' has taken on a whole new meaning. It describes the stable-sized dung piles littering Iavarone's past. He's also had judgments against him for a federal tax lien and for casino debt.
Say this for the co-chief executive officer of International Equine Acquisitions Holdings Inc. He's even more brazen than you might expect of a man with his past. He went from hustling penny stocks to pitching high-rollers on his firm's proposed $100 million horse-ownership hedge fund.
On the strength of Big Brown's returns -- $60 million-plus for the sale of breeding rights, according to Iavarone, on a $2.5 million investment -- IEAH could maybe have raised that kind of money. Now, Iavarone may be lucky to raise bus fare to the firm's office in Garden City, New York.
Triple Crown
There was a feel-good sparkle attached to Big Brown as the colt tries to become the first Triple Crown winner in 30 years. Now, even if he does, consider the Belmont Stakes winner's circle on June 7: Big Brown and a lead owner whom everyone knows worked the boiler rooms before the stables. Just how feel-good is that?
Since the Kentucky Derby death of Eight Belles, critics have decried the sport's standards for horse safety. Well, here's another serious regulatory issue: the standards for owners. The man who misrepresented himself to the horseracing world does represent something that's wrong with the horseracing world.
Other major American sports carefully screen admission to their ownership ranks. Dan Snyder owns the Washington Redskins today because the National Football League nixed a previous bidder, real-estate mogul Howard Milstein, after considering his litigious history and his contentious part-ownership of hockey's New York Islanders.
Write the Check
In horseracing, if you can write the check, you're in. Heck, even if you're taken to court and forced to write the check, you're in. Iavarone had barely entered the game in 2003 when he purchased five horses at a Keeneland auction, then stiffed the Lexington, Kentucky, concern. Iavarone finally paid up --$554,146 -- by court order in 2004. By then, he was on his way to being an industry player, even with his inauspicious debut and suspicious past.
We think of horse owners at this level as bluebloods with names like Ogden Mills Phipps (who happens to be chairman of the Jockey Club thoroughbred registry). Not all are, of course, but this is the sport of kings, for heaven's sake, not jai-alai. It is a failure of the sport's regulators that Iavarone could so quickly accumulate investor capital (some $40 million) and become an industry power.
How could this happen? Consider:
1) When there are dozens of state authorities overseeing horseracing, there's no real authority. Crucially, there also is no central self-governance either. That's why the sport was slow as Old Dobbin to react to the post-Derby outcry over Eight Belles. (The Jockey Club finally appointed a blue-ribbon safety committee to study the issue.) That's why it also can't develop a business strategy. There's no true industry leadership, just Balkanized factions of breeders, tracks and others.
Quality Control
The lack of ownership quality control is of a piece with this. Nobody argues that every last person who plunks down $10,000 for a claims-race also-ran should be screened. Nobody argues sainthood is required. The last Triple Crown horse, Affirmed, had an owner, Louis Wolfson, who was convicted of illegal stock sales. But as the sport is trying to attract new fans and rebut its critics, sleazy plays particularly poorly. There could be much stricter standards for owners, and their associates, at the elite level.
2) When your sport is anemic and your vital signs are declining, you don't get picky about the infusion of new blood; you take 'em.
Slick Look
The traditionalist hardboot crowd in Kentucky never cared for the arrivistes from IEAH. It wasn't just the usual offputting New York thing. Something was a little off about the whole operation. Its Web site was slick as Iavarone's hair, but some of its personnel were curious. Michael Sherack, a self- styled ``successful handicapper and gambler,'' was working at the Daily Racing Form prior to becoming vice president of investor relations.
The firm was drawn to trainers who were less than pristine. An early one, Greg Martin, pleaded guilty to conspiracy to commit wire fraud, following a federal investigation into illegal gambling on a December 2003 race won by an IEAH horse. The firm wasn't implicated, but it galloped back to the sketchy side in hiring Big Brown's trainer, Rick Dutrow, who's had multiple suspensions for doping -- both of himself and his horses.
The thing is that racing lifers may not have liked the IEAH crowd, but they sure liked and took their money. Iavarone believed in buying proven horses, as opposed to yearlings, which meant paying premium prices.
Sometimes this has worked beautifully for IEAH, as with the $2.5 million purchase of Big Brown following his first race last September. Sometimes it has not, as with the purchase of 50 percent of Court Vision in January for, by one analyst's estimate, about $5 million. The colt went from Derby contender to also-ran to, most likely, a low-rent stud.
Sellers' Market
On the other hand, it's always worked out splendidly for the sellers -- Paul Pompa Jr. and WinStar Farm, respectively, in the above cases. They get big checks, which help keep this wobbly industry on its feet. Now, Iavarone is no Sheikh Mohammed of Dubai, who's singlehandedly driven the price of top breeding stallions sky-high with aggressive bidding. But he represents the same principle -- the power of he who spends liberally in a troubled industry.
That is why even the Kentucky hardboots held their noses and looked the other way -- or at least not too closely -- until the news about Iavarone. Even if they're smirking in bluegrass country at this bad turn for Iavarone, they must know at some level it's bad news for them, too.
<< <i>Didn't feel like reading the essays already posted so it may have already been said BUT, atleast one of his horses has been tested positive for 'roids each year since '01, I believe. >>
Young people should take more time to read.
The "essays" are recent articles about the owner and clearly state that he entered the horse racing business in 2003.
You may be referring to the trainer.
<< <i>
<< <i>Didn't feel like reading the essays already posted so it may have already been said BUT, atleast one of his horses has been tested positive for 'roids each year since '01, I believe. >>
Young people should take more time to read.
The "essays" are recent articles about the owner and clearly state that he entered the horse racing business in 2003.
You may be referring to the trainer. >>
Don't tell me I need to read, I just got out of school and that's the last thing I want to do, especially about horse racing...
EDIT: It was Dutrow....my bad.
<< <i>
<< <i>
<< <i>Didn't feel like reading the essays already posted so it may have already been said BUT, atleast one of his horses has been tested positive for 'roids each year since '01, I believe. >>
Young people should take more time to read.
The "essays" are recent articles about the owner and clearly state that he entered the horse racing business in 2003.
You may be referring to the trainer. >>
Don't tell me I need to read, I just got out of school and that's the last thing I want to do, especially about horse racing...
EDIT: It was Dutrow....my bad. >>
I rest my case.
<< <i>
I rest my case. >>
Changed it to a pm...now excuse me while I go catch up on my reading rather than enjoy my summer.