Horseman learns an expensive lesson

Trust is a priceless commodity in the equine business. Horse trading doesn't work without confidence in your partners.

Confidence also is essential to a swindle — it's the "con" in con game.

Small-time Lexington horse breeder Bobby Lail learned the expensive way that sometimes confidence in family friends can be misplaced.

Lail, a bridge contractor by trade, dabbled for years in Thoroughbred racing and breeding. He and his wife, Happy, bred and sold mares, raised foals, raced horses and thoroughly enjoyed their pricey hobby.

A few years ago, on the advice of the son of old friend J.T. Lundy, Lail bought some stallion "seasons," the rights to breed mares to particular stallions for a given year. Or he thought he bought them.

Now, the convoluted deals have unraveled, leaving Lail owing thousands, his weanlings worthless. And his trust destroyed.

Robert A. Lundy, son of former Calumet Farm President J.T. Lundy, is facing four felony charges of theft by deception involving stallion seasons. He is scheduled to be arraigned Dec. 1.

Earlier this month, in civil court in Lexington, Robert Lundy was found liable and ordered to pay almost $1.5 million to Lail.

"People say, 'Why would you trust somebody like that?' But your friends are the ones you trust," Lail said in an interview. "Pretty much your friends and your family's about all you've got in life."

According to the lawsuit filed in Fayette Circuit Court, Lundy tricked Lail into paying him for breeding seasons to three stallions — Grand Slam, Johannesburg and Chapel Royal — even bilking Lail out of fake sales tax on the bogus stud fees.

Three of Lail's mares were sent to Coolmore's Ashford Stud in Versailles and mated to the stallions.

But Lundy never paid the stud fees, so the resulting foals can't be registered with The Jockey Club as Thoroughbreds or sold as such.

Coolmore attorney Paul Sullivan said on Friday that the farm had no comment on the lawsuit, which did not involve Ashford Stud. "This is a legal matter, and they don't, typically, comment on things that are legal matters, certainly those that involve two independent parties," Sullivan said.

To hide the fraud, according to the suit, Lundy and an alleged partner named Michael Louis pretended to buy the mares privately to prevent them going into the 2007 Keeneland November sale. Louis was also named, along with Lundy, in the lawsuit; Louis has never come forward and can't be found, according to Lail's attorney.

In the end, Lail was out more than $360,000, including the nearly $65,000 he originally gave Lundy for the breeding rights, according to the suit.

Neither Robert Lundy nor his attorney, Billy Shelton, could be reached for comment, but Lundy admitted to the civil suit allegations in his testimony.

As Fayette Circuit Judge Pamela Goodwine pointed out at the trial, Lundy "conceded that he lied; he conceded that he defrauded, in essence, Mr. Lail; that he knew he didn't have these breeding seasons when he sold them to him; and he knew he didn't have the money when he tried to buy these horses that Mr. Lail put in the sale. It was just one snowball lie after another."

One reason the lies worked for well over a year: Lail's lifelong friendship with J.T. Lundy. The Lundy name was once one of the most prominent in Thoroughbred breeding, but it was tarnished when Calumet Farm descended into bankruptcy in 1991. In 2000, J.T. Lundy was convicted of fraud and bribery, charges stemming from the farm's demise, and sentenced to 41/2 years in federal prison.

He also was implicated in the death of leading sire Alydar, who had to be put down in 1990 after his leg was mysteriously broken twice. His death resulted in a $35 million insurance payment.

No one, including J.T. Lundy, was ever proven to have been involved in the stallion's death, although a watchman was convicted of lying about the circumstances and a federal judge said there was reason to believe Lundy could have been involved.

Both J.T. and Robert Lundy were involved in a failed attempt to pay former President Bill Clinton's brother, Roger Clinton, for help getting a presidential pardon for J.T. Lundy, according to a congressional investigation. The Lundys promised to secretly share profits from a Venezuelan coal deal if Roger Clinton could intervene, congressional documents showed. But no pardon ever came, and J.T. Lundy went to federal prison in Florida.

Lail grew up with J.T. Lundy, and they stayed friends throughout the Calumet ordeal and afterward. Over the years, they took vacations together; Lail moved furniture to Florida for Lundy after a divorce; and Lail helped out the family with money, at one point buying paintings from Lundy.

That history made it almost impossible for Lail to believe he'd been scammed, even when confronted with the evidence.

"I don't think there's any way this happened unless his dad knew about it," he told Judge Goodwine. "I couldn't understand why they (the Lundys) would do something like that to me. But it's easier to cheat, to steal, from somebody who trusts you."

The scheme involving Robert Lundy apparently began in May 2006, when Lail agreed to buy from Lundy a chance to breed a mare to Grand Slam for $20,000. Normally, the stallion's stud fee was $35,000.

But Lail was told that Robert Lundy's father, J.T., had somehow come into the breeding right. "His dad could possibly get this for free, is what I was led to believe," Lail testified.

Robert Lundy was persistent with the offers.

"He'd call me at midnight or at 6 o'clock in the morning. He'd continue to do that all day long until he got through to me, and he'd convey his luck that he had these new seasons available," Lail told the court.

"He'd say, 'They've got another one! They've got another season, and I'm calling you first. I'm going to give you the opportunity to jump in here ... if you want it. Do you need this thing?'" Lail testified. "The price was too good, ... and it proved to be."

Robert Lundy purported to own the breeding rights but apparently never did. In trial testimony, he said he thought he had an arrangement with an agent from Coolmore to get bargain prices but when the bills came they were full price.

Instead of telling Lail that things had fallen through, Lundy signed the agreements with Ashford Stud for the breedings at full price.

Because the fees weren't due until the foals were born, Lundy thought he'd bought himself a year to work things out.

But Lail and his wife decided to put the pregnant mares in the Keeneland November 2007 sale. They called Lundy to ask for the stallion certificates proving the mares had been bred to the proper stallions.

According to Lail, Lundy panicked. For more than a week, he stalled. Then Lundy said he had a private buyer, Michael Louis, who would pay $275,000 for the three mares if he could pay for them and pick them up in January. The Lails agreed, and the mares were taken out of the auction.

But the deal never happened. Come Jan. 15, 2008, Lail said, "no money, no Robert, no 'why.'"

In February, Lail went to Coolmore to ask about the stallion certificates. The mares were beginning to foal, and he wanted answers. "That's why I went to Coolmore, to try to get the truth, because I wasn't getting it from Robert," Lail testified.

There he found out that the fees had never been paid and that he owed $115,000 for seasons Lundy had allegedly sold him for almost $65,000.

"The farm said he didn't own these things. I found out my contract was worthless," Lail said. "Not only had I paid this money and didn't get anything for it, now I'm in debt to these people, owed them twice as much. I felt like I'd been run over by a train."

At trial, Lundy had little to say in his defense. He admitting deceiving Lail for more than a year and a half but said he thought he could negotiate a deal with Coolmore.

"It was my fault; I take full responsibility for my actions," Lundy said on the stand. Lundy did not give a reason why he never told Lail about the bad deals or say what he had done with the money.

Lail hopes he can collect enough to get the stallion certificates for the foals, so he can put his bloodstock in the January sale at Keene land. But he isn't optimistic.

"He doesn't seem to have any remorse at all about what he's done," Lail said last week of Lundy.

Judge Goodwine, in setting the judgment, assessed the maximum punitive damages, more than $1.05 million in this case.

"The idea that someone could take advantage of a family friend to this extent ... . When you do it deliberately with a friend, a family friend, it goes beyond the realm of decency," Goodwine told Lundy from the bench. "Even if this total judgment is paid, Mr. Lundy, I don't know if Mr. Lail will ever see you in the same light. A lifelong friend could have been invaluable. I hope you can see the error of your ways. Otherwise, I don't think you're going to have much of a future in the horse business."