Thoroughbred owner tried to pay big money for a stake in a dead stallion. Here's why.

Months after the stallion Laoban drew his last breath, thoroughbred owner Jerry Jamgotchian made a series of seven-figure offers for a stake in the dead horse.

Yes, Jamgotchian was prepared to pay hundreds of thousands of dollars for an interest in a deceased stud.

He couldn't find a seller.

Though Laoban’s breeding rights became worthless and contractually “null and void” a year ago when he suffered a fatal reaction to an injection on May 24, 2021, Jamgotchian saw an opportunity in the circumstances surrounding the stallion’s death.

If he could obtain an ownership share or breeding rights in Laoban, he might gain the legal standing necessary to sue WinStar Farm over alleged negligence and/or privileged access to the stallion syndicate’s books.

Jamgotchian approached at least three investors with offers to buy their interest in Laoban — $250,000 for an ownership share; $160,000 for a lifetime breeding right — but found no takers.

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That prevented Jamgotchian from getting an interest that would allow him to sue.

"WinStar amicably discussed, addressed and resolved all issues with the Laoban stakeholders," WinStar attorney Craig Robertson said.

The California horseman is famously litigious, openly suspicious of the integrity of the thoroughbred breeding business and has not hesitated to put his cash behind peculiar pursuits.

Last year, in the wake of Medina Spirit’s Kentucky Derby drug positive, Jamgotchian lawyered up in an attempt to tweak trainer Bob Baffert with a horse he wanted to name "Bad Test Bob."

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And though that fight has so far been futile – Jockey Club rules prohibit names "designed to harass, humiliate or disparage a specific individual" – Jamgotchian hasn't abandoned his crusade.

His pursuit of a piece of Laoban echoes an effort he made more than a decade ago in attempting to acquire an interest in a retired Lane’s End stallion called Kingmambo, the main difference being Kingmambo was still alive at the time.

"I wasn’t buying rights to the dead horse," Jamgotchian said of Laoban. "I was buying the right to litigate against a company that committed gross negligence."

Louisiana-based Cypress Creek Equine is already suing North America Specialty Insurance Co. over mortality claims the company has denied, based on "numerous acts, errors and omissions" by veterinarian Dr. Heather Wharton that allegedly "constituted a failure to provide proper care to Laoban, and caused or resulted in this stallion’s death."

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To the extent the insurance company’s position reflects poorly on WinStar’s stewardship, investors in Laoban may have seen grounds to sue the farm. WinStar settled with investors rather than relying on contracts declaring agreements null and void "should the stallion die or become unfit for service," suggesting the farm held lingering concerns about its legal exposure.

Equine attorney William Gotimer said he had not heard of another case of an individual seeking to purchase an interest in a dead horse but added the sale of a right to litigation was "not at all uncommon."

"Just because the horse died doesn’t mean that any negligence is absolved," Gotimer said.

The insurance investigation of attorney Harvey Feintuch found Wharton had administered a cocktail of four vitamins and minerals contrary to label instructions in an effort to stimulate Laoban’s interest in breeding.

Three of the four ingredients were past their expiration date – one of them by nearly nine years – and two of them were intended for intramuscular injection rather than the intravenous method Wharton used.

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One of the ingredients, iron hydrogenated dextran, was indicated only for iron deficiency anemia in baby pigs and had been linked to anaphylactic reactions in horses. Wharton’s diagnosis was that Laoban died of anaphylactic shock.

Following an April Courier Journal story detailing Laoban’s death, Animal Wellness Action and People for the Ethical Treatment of Animals filed formal grievances with the Kentucky Board of Veterinary Examiners, which has asked for a response from Wharton before determining whether an investigation is warranted.

PETA also asked for an investigation by Woodford County Sheriff John Wilhoit, who has referred the matter to the county’s animal control supervisor, Susan Jones.

Jamgotchian knew enough about Laoban’s death to be looking for leverage last August, shortly after the mortality claims of Cypress Creek Equine and Southern Equine Stables were denied. He approached investors Tony Pettograsso, JR and Rita Young and Lexington-based Hengst Funding in pursuit of a share or breeding rights to Laoban, but came up empty.

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Jamgotchian said his proposals to acquire Laoban’s breeding rights far exceeded WinStar’s initial settlement offers. But the right of first refusal, written into the breeding rights agreement, afforded WinStar the opportunity to match outside offers and, for a time, to control the narrative.

Pettograsso and JR Young have declined comment on the disposition of their interests in Laoban, citing non-disclosure agreements. In an Aug. 31 e-mail Pettograsso sent Jamgotchian, the investor said WinStar had "reached out saying they are going to fight the right of sale without even disclosing it to them that we had talked."

"There’s no farm in Kentucky that would allow me to get in," Jamgotchian said. "Everybody matches everything that I ever submit. If the market is $150,000, I can (bid) $300,000 and they’re going to match it because they don’t want me anywhere close to the books. They don't want me in because they don't want me to disclose the dirty (stuff)."

Though Jamgotchian claims his previous court battle with Lane’s End led to reforms throughout the breeding business, he continues to identify ethical issues such as stallion farms giving mating priority to their own mares at the expense of outside investors.

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"I’m not a troublemaker," he said. "My (driving) force is to clean up and improve the stallion syndicate business through improved financial disclosures, transparency and fairness to all syndicate members."

His efforts are not entirely altruistic. Jamgotchian’s offers for an interest in Laoban were contingent on him receiving large commissions: $50,000 for an ownership share; $35,000 for a breeding right.

"It sounds like this person’s willingness to step in is helping the owners drive a better settlement with WinStar," Gotimer said. "In the corporate world, this is referred to as a stalking horse bid. The person who makes the bid, even if it’s the highest bid, has no outright ability to get what he’s bidding on. In the corporate world, they protect themselves at this by making this stalking horse bid that requires the existing owners to pay them something if their bid is unsuccessful."

Jamgotchian said he received no compensation for bidding on Laoban. Robertson did not respond to an e-mail question of how much Jamgotchian's offers had impacted WinStar's costs.

Robertson did say WinStar is unaware of any clients who lost as a direct result of Laoban's death and Dr. Wharton remains employed by the Versailles farm.

"Laoban’s death was tragic and difficult for all involved," Robertson said. "The stakeholder matter was addressed months ago, resolved amicably and WinStar remains focused on its mission of caring deeply about its horses, employees and clients." 

Tim Sullivan: 502-582-4650, tsullivan@courier-journal.com; Twitter: @TimSullivan714