Loose Threads

Have you ever had a sweater with a small pull in it and when you tried to fix it, the hole just kept getting bigger until it seemed as if the entire sweater was unraveling? That seems to be what is happening to the structure of the Big Brown camp. First the hoof and now the owner.

Yesterdays New York Times carried an article by Joe Drape about Michael Iavarone, a co-owner of Big Brown and one of the masterminds behind International Equine Acquisitions Holdings, the horse hedge fund of which Big Brown is the centerpiece. Apparently in an honor befitting someone of Iavarone's stature, notably "a high profile banker on Wall Street," he was given the honor of ringing the NY Stock Exchange opening bell on Wednesday. However, in the ultimate of ironies, Iavarone let it be known that it was the first time he had set foot in the Exchange.

In fact, Iavarone, who previously told the NY Times that he worked for Goldman Sachs, the world's largest investment bank, had never been employed by the corporation. Indeed, Iavarone conceded he had made his career on Wall Street "selling penny stocks" and was fined in the process. According to Joe Drape, "In 1999, the National Association of Securities Dealers fined Iavarone $7500 and suspended him for 10 days for buying and selling $22,000 in stocks without the permission of his clients."

In addition, Iavarone has been involved in other questionable acts including a dispute over a bad check written to Showboat Hotel and Casino in Atlantic City, a $554,156 judgment brought against him and won by the Keeneland Association of Lexington for not paying for horses he bought at auction and a $130,000 lien by the IRS for unpaid taxes.

Iavarone professes he was young and has mended his ways. But as more and more details come out about his past, the much vaulted horse hedge fund prospectus is undergoing some tinkering in order to fulfill some contractual obligations to Three Chimneys, the most recent information revealing that Big Brown will no longer be "the cornerstone of the fund."

I rest my case. Would you buy anything from a man who lied about his past, made unauthorized trades, didn't pay taxes and reneged on his purchases? Actually, let me rephrase that: would you trust a man like this with the welfare of a horse who has the potential to win the Triple Crown?

I only hope that someone or something can stop this "pull" before there is nothing left but one long, loose thread.