Owner of American Pharoah named in gambling debt lawsuit

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NEWARK, N.J. (AP) -- Ahmed Zayat, owner of Triple Crown hopeful American Pharoah, asked a federal judge to dismiss a lawsuit that accuses him of owing $1.65 million to a man who says he fronted Zayat money for gambling bets placed at offshore casinos.

The federal breach of contract lawsuit was filed in March 2014 by Howard Rubinsky of Florida. It said that in 2003, Rubinsky and Zayat entered into a personal services contract. Rubinsky said he advanced Zayat credit at a couple of casinos and that the agreement was that he'd be paid back.

He said by the end of 2005, Zayat owed him $2 million. Some has since been repaid, but Rubinsky says Zayat still owes him $1.65 million, something Zayat vehemently denied early Thursday.

"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."

He said it is a case of blackmail by a criminal. Rubinsky has been convicted of gambling offenses and money laundering, according to the motion to dismiss.

The motion said the breach of contract complaint should be thrown out because it was filed beyond the six-year statute of limitations and because the plaintiff can't produce an actual contract between him and Zayat.

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Owner of American Pharoah named in gambling debt lawsuit
LOUISVILLE, KY - MAY 02: American Pharoah #18, ridden by Victor Espinoza, leads the field to the finish line ahead of Firing Line #10, ridden by Gary Stevens, and Dortmund #8, ridden by Martin Garcia, during the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)
LOUISVILLE, KY - MAY 02: American Pharoah #18, ridden by Victor Espinoza, leads the field to the finish line ahead of Firing Line #10, ridden by Gary Stevens, and Dortmund #8, ridden by Martin Garcia, during the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)
LOUISVILLE, KY - MAY 02: American Pharoah #18, ridden by Victor Espinoza, leads the field during the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)
LOUISVILLE, KY - MAY 02: Jockey Victor Espinoza celebrates as he guides American Pharoah #18 after crossing the finish line to win the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)
LOUISVILLE, KY - MAY 02: American Pharoah #18, ridden by Victor Espinoza, comes out of turn 4 during the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Andy Lyons/Getty Images)
LOUISVILLE, KY - MAY 02: Jockey Victor Espinoza celebrates as he guides American Pharoah #18 after crossing the finish line to win the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)
LOUISVILLE, KY - MAY 02: Jockey Victor Espinoza guides American Pharoah #18 on track prior to the start of the 141st running of the Kentucky Derby at Churchill Downs on May 2, 2015 in Louisville, Kentucky. (Photo by Chris Graythen/Getty Images)
Victor Espinoza rides American Pharoah to victory in the 141st running of the Kentucky Derby horse race at Churchill Downs Saturday, May 2, 2015, in Louisville, Ky. (AP Photo/Morry Gash)
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Rubinsky's lawyer, J. Joseph Bainton, said "the action has merit for the reasons stated in the papers filed with the court."

"While I respect Mr. Zayat's right to dispute the allegations of the complaint," he added in a statement Thursday, "I am deeply offended by his defamatory charge that I am a party to `a scam and blackmail.'"

American Pharoah has won the Kentucky Derby and Preakness and will try for the first Triple Crown in 37 years at the Belmont Stakes next month.

Zayat, 52, who is from Egypt, came to the U.S. when he was 16 and lives in New Jersey. He ran a beer distributorship in Egypt, and in 2005, he founded Zayat Stables, which breeds thoroughbred horses in the U.S.

After three disappointing runner-up finishes, the owner won his first Derby when American Pharoah took the Run for the Roses earlier this month. A few weeks later, the colt won the Preakness and will be a heavy favorite for the Belmont.

Zayat said the news of the lawsuit coming out now is part of a character assassination against him.

"Every time something good happens, someone brings you down," he said.

According to Rubinsky's lawsuit filed in U.S. District Court in Newark, after Zayat Stables started having financial troubles in 2008, Zayat couldn't pay what he owned to the casinos, but continued to promise to pay Rubinsky his gambling debt.

Zayat Stables had filed for bankruptcy in 2010 and the owner was involved in a lawsuit with his bank over his credit line.

Also, Zayat was investigated for his ties to a pair of brothers convicted of running an illegal gambling operation - the debts of which were listed in the bankruptcy filing.

It was through those brothers - Jeffrey and Michael Jelinsky - that Zayat says he met Rubinsky at a breakfast sometime between 2001 and 2003. The men asked him if he was interested in investing in an inventor who had developed a machine for certain casino games. He said he wasn't and they just ate breakfast, the court filing said.

He denied Rubinsky's assertions that he placed sports bets online or by telephone at Tradewinds in Costa Rica and Pinnacle in Curacao. He also denied that he had made an agreement with Rubinsky to pay the debt back in installments of about $50,000 each.

"I did not have a debt to Tradewinds, I never paid any money to Tradewinds," Zayat said in the court filing.

In 2007 or early 2008, Rubinsky met with Zayat and said he was sick and had no money and that he had been cheated by the Jelinskys. He said he agreed to give Rubinsky $25,000 and then another $25,000 from the Zayat Foundation made payable to his sister, Donna Rubinsky.

"I do not deny that I gave him that first check - 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," Zayat's statement reads.

Afterward, he said Rubinsky continued to call but he severed ties with him.

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