The former president and chief financial officer of the bankrupt Calumet Farm thoroughbred racing operation were convicted Monday of conspiracy, fraud and bribery charges.
J.T. Lundy, the famed stables former president, and Gary Matthews were convicted on four counts by a jury that deliberated less than three hours. Sentencing is set for late April.
Lundy and Matthews once ran one of the most celebrated thoroughbred stables in the world. Prosecutors painted a picture of the men's life in the late 1980s as one of prime seats at the Kentucky Derby, forays to France, priceless art and fast money.
The good times came ended in 1991, when the Lexington, Ky., stables declared bankruptcy. It later was sold at auction.
The U.S. government has spent the past three weeks describing financial schemes they say were carried out behind the scenes during the years leading to the collapse.
While Calumet's fortunes secretly evaporated, prosecutors say, Lundy and Matthews paid First City Bancorporation vice chairman Frank Cihak a $1 million bribe.
The Calumet officials also presented the Houston banker with a pair of mares and breeding rights to Alydar, the stable's most esteemed stud, the government alleged.
In exchange, First City loaned the stables $65 million without checking the farm's credit or value, prosecutors said.
During closing arguments Monday, defense lawyers told the panel the government failed to demonstrate the men's guilt.
"If time has distorted the evidence to the point where (proving guilt) can't be done, that is their problem," said Lundy's attorney, Dave McGee. "Not ours."
First City struggled after Calumet, one of the bank's biggest loan clients, folded. Shortly after the stables declared bankruptcy, the Houston bank failed.
"Mr. Cihak was the meal ticket. Mr. Cihak was the piggy bank. They kept him going and he kept them going," prosecutor Jim Powers said.
Cihak and four associates were convicted on fraud and money laundering charges. Cihak was sentenced to more than 12 years in federal prison in 1994.
Even the fate of the stallion Alydar took a tragic turn. Calumet gave Alydar a lethal injection after the prized stud's leg was broken inexplicably.
Calumet cashed in a $35 million insurance policy on the stallion. The FBI is investigating the horse's mysterious death.
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