Zayat Calls Gambling Debt Lawsuit Extortion

Ahmed Zayat, owner of dual classic winner and Triple Crown hopeful American Pharoah, said a lawsuit seeking to collect from him $1.65 million in gambling debts amounts to extortion.

Zayat said allegations brought in a lawsuit by Howard Rubinsky claiming Zayat owes him $1.65 million plus interest for money wagered at offshore gambling sites are without merit. The lawsuit was first reported by NJ.com and later May 20 by the New York Times.

"The rhetoric accusing me of owing monies over gambling debts is a pathetic attempt to extort me and we are expecting this meritless lawsuit from a convicted felon to be dismissed," Zayat said in a statement sent to Blood-Horse.

Rubinsky filed a breach of contract lawsuit in March 2014 in which he said Zayat did not repay him in full for gambling debts that built from 2003-2005. Zayat has attempted to have the case dismissed and in a filing of March of this year said Rubinsky does not have any "documentation, first-hand knowledge, or witness with first-hand knowledge that Zayat actually placed bets through (the offshore gambling site) Tradewinds." 

The filing also points out that Zayat's attorneys also contend that the lawsuit was filed after the six-year statute of limitations on such cases.

Zayat said in late 2007 or early 2008 he met with Rubinsky and because he appeared to be sick and in need of money, he wrote a $25,000 check from the Zayat Foundation to his sister Donna Rubinsky. Zayat said he did not have a clear recollection of giving Rubinsky another $25,000 check that Rubinsky says he was given.

"That being said, I do not deny that I gave him that first check," Zayat said in the court filing. "I know that I was willing to help him and I may have given him two checks.

"But I can say unequivocally that I did not give Mr. Rubinsky any money as payment on any debt. I did not, and do not, owe Mr. Rubinsky any money. I agreed to give him money because he told me he was ill and broke and needed help and I told him that I would help him."

The filing calling for the dismissal also notes that Rubinsky has two gambling-related felony convictions from 1993 for aiding and abetting a bookmaker in Nevada and from 2008 to interstate transmission of wagering information and money laundering.

Rubinsky claims he had a personal services contract with Zayat in which he would sometimes advance funds for Zayat and from time to time collect from Zayat, a position commonly referred to as a runner. He said by the end of 2005 Zayat owed him $2 million and paid some of it back, but still owes $1.65 million plus interest for losing wagers at offshore sites Tradewinds or Pinnacle.

''It's a fraud. It's a scam from A to Z,'' Zayat told The Associated Press by phone. ''It's total fiction. It's a total lie.''

The stories also noted Zayat Stables' 2010 bankruptcy filing and Zayat's ties to a pair of brothers—Jeffrey and Michael Jelinsky—convicted of running an illegal gambling operation. Debts to the Jelinskys were listed in the bankruptcy filing. Zayat said he met Rubinsky through the two brothers.

"Some media outlets conveniently fail to report that when Zayat Stables filed for bankruptcy protection, it was a defense against predatory lending practices and broken promises made by a bank," Zayat said in a statement to Blood-Horse. "These same members of the media also fail to recognize that Zayat Stables paid 100 percent of its creditors in full and that the bankruptcy had nothing to do with me personally."

While Zayat maintains he does not owe Rubinsky money for any gambling losses, even if he did owe money for offshore wagers, Rubinsky could face an uphill climb in collecting such debts through U.S. District Court. According to the Journal of Legal Issues and Cases in Business, debts incurred at online casinos are subject to the provisions of the Unlawful Internet Gambling Enforcement Act, which essentially views internet gambling as illegal. Courts generally refuse to enforce contracts that are based on an illegal subject matter.