by Joe Drape
By August 2013, Ahmed Zayat, age fifty-one, was no longer unknown in the world of horse racing, which was not necessarily a good thing. In a sport long populated with outsize characters, he had already become a gargantuan one by combining an old-fashioned lust for betting with a new-age mastery of social media. Zayat is a small man with delicate features and a country club wardrobe that is at odds with a nervous energy that makes him vibrate like a ten-year-old boy confined to a classroom. He made no secret that he bet on horses with both hands—up to $200,000 a week—and craved the adrenaline rush that comes when a six-figure first-place check or wager hung in the balance. Zayat was an exuberant talker and racegoer who bantered with fans on Twitter and held contests for them to name his horses. At the racetrack, the Zayat family moved en masse, more often than not in frenetic fashion. His wife, Joanne, was always on his arm with his four children—Ashley, Justin, Benjamin, and Emma—trailing behind. Theirs was a close family, perhaps because they had spent so much time apart when Ahmed was pursuing his fortune in Egypt. Since entering the business, Zayat had earned a reputation as a combative personality who drove hard bargains and was not beyond withholding payments.
Zayat was loud and often profane. He frequently scaled a range of emotions in a single conversation: from tears to red-faced anger to spewing expletives from a frothing mouth.
“I am Middle Eastern—I have a hot temper,” he often offered by way of explanation.
He grew up in Maadi, a suburb of Cairo, Egypt, the son of Alaa Zayat, who taught medicine at Cairo University and was the physician to President Anwar Sadat. The Zayats were a prominent family in Egypt—his grandfather, Ahmed Hassan al-Zayat, was a leading intellectual who founded Al-Risala, a well-known literary magazine. His grandfather was a self-made man who studied at Al-Azhar University before taking up legal studies in Cairo and Paris. Before founding Al-Risala in 1933, al-Zayat taught Arabic literature in Baghdad as well as the American University in Cairo.
Ahmed Zayat got on his first horse at an upscale riding club near his home and learned to ride show jumpers well enough (he says) to capture two national championships in the under-twelve and under-fourteen divisions. When he was eighteen, Zayat moved first to Boston, then to New York to pursue an undergraduate degree from Yeshiva University and eventually a master’s degree in public health administration from Boston University. Until the spring of 2013, Zayat also claimed that he had earned a master’s degree from Harvard, a fact that had appeared in his biography on websites for his company and for entities that he has been affiliated with, including the National Thoroughbred Racing Association. When a New Jersey paper reported that Harvard had no record of Zayat, however, his lawyer, Joseph Vann, told them that “unfortunately, early in his career there was misinformation reported about Zayat’s education” that was erroneously repeated by other outlets.
Whether Zayat was actually Muslim or Jewish was another complicated facet of his life. Most Jews left Egypt in the 1950s, when its ruler, Gamal Abdel Nasser, made it a less hospitable country to them, but some affluent Jews stayed. Zayat alternately had identified as each, even though he gave amply to Jewish causes and was known as Ephraim in the modern Orthodox neighborhood of West Englewood in Teaneck, New Jersey.
What was not in dispute was that Zayat’s horse trading was financed by his proceeds from the sale of Al Ahram Beverages Company, the formerly state-held beer company in Egypt that he had privatized. In 1997, the beer company was one of more than 300 state-owned companies that the government had been hoping to sell as Egypt tried to move toward capitalism. It took his family connections as well as some inventive negotiating and a high-flying stock offering on the London Stock Exchange for Zayat to get control of the company. The government wanted nearly $200 million in exchange for a 75 percent stake in the company because the main plant sat on some of Cairo’s most valuable real estate. Zayat proposed that the government keep the land but lease it to him for five years while he built a $50 million state-of-the-art brewery in the desert on the outskirts of Cairo.
It took him eighteen months and twenty-two negotiating sessions, but he got the deal for $70 million, less than a third of the government’s asking price.
Then Zayat had to take the idea of selling beer to Muslims to international investors in an effort to raise $70 million. It was not even good beer—dilapidated equipment pumped a foamy brew into dirty green bottles, often along with insects, twigs, and clumps of dirt. Its flagship brand varied from one batch to another, and a common joke was that it could power heavy machinery if there was no diesel fuel available. He lined up a public offering of global depository receipts in London and picked off investors from Europe and the United States.
“Half the people in the government are still asking, ‘If he did it, couldn’t we have done it?’” said Daniel C. Kurtzer, the American ambassador to Egypt at the time.
Zayat paid his bankers and lawyers $10 million and came away with $25 million in instant profit for himself and a handful of American backers. After all the financial wizardry, Zayat and his backers wound up with a 12 percent stake in the company.
Zayat brought in consultants from Carlsberg, the Danish brewer, and began producing first-rate beer. He hired a director of marketing from PepsiCo who launched blanket television advertising, an army of sales representatives, and a fleet of trucks to provide home delivery—all new tactics here. Within two years, sales revenue jumped 60 percent and profits rose nearly 30 percent, to $26 million. He then came up with the idea to export nonalcoholic beer to Saudi Arabia and other Middle Eastern, African, and Asian countries, particularly places like Nigeria and Indonesia with big Muslim populations.
In 2003, Zayat sold the company to Heineken for $280 million and stayed on until 2004 running it. He no longer needed to work and no longer wanted to. Every weekend for eight years, Zayat flew home to his family in Teaneck to observe the Sabbath and then returned on Sunday to Cairo. He had already missed too many of his children’s milestone events.
“I didn’t want to live on a plane anymore,” he said.
Zayat was not the retiring type. He needed action and the challenge of building something more than he needed money. He remembered a night spent at the Meadowlands Racetrack in East Rutherford, New Jersey, when he attended a birthday party at Pegasus, the trackside restaurant. It was the birthday of Lenny Jelinsky, a financial planner with Shearson Lehman, and among the guests were Lenny’s two teenage sons, Michael and Jeff.
“That was the first time ever that I have been to a racetrack,” Zayat said. “I knew nothing about horses from the sense of betting, except riding horses as a kid.”
He was having fun listening to Lenny and his boys talk horses, getting a thrill as he followed their betting tips with a few dollars of his own.
“The kid had a photographic memory, he told me, and he loved horses,” Zayat said of Michael Jelinsky. “He was talking to me about horses.”
Lenny Jelinsky thought it would be a good thing if Zayat served as a mentor for his two sons. He did, informally, checking in on them on some of the weekends that he was home.
“I kind of took a liking particularly to Michael,” Zayat said of the younger son. “He was a high school star athlete. The kid was a basketball wizard.”
Eventually, he heard the Jelinsky brothers had moved to Las Vegas to become professional gamblers and that Michael had taken his gift for breaking down and remembering vital information about horses and become one of the biggest horseplayers in Sin City. So it was only natural for Zayat to consult almost daily with Michael on trainers to use, tracks to run at, and the foundation of building a stable. Mostly, however, the two spoke about gambling.
“We used to call sometimes on a daily basis, talk about the race… ‘How do you like the field? How do you like the card?’” Zayat recalled. “It’s two people who love horse racing just talking about their passion.”
By 2008, Zayat Stables had won nearly $6.9 million, leading all American Thoroughbred owners in e
arnings. The next year, he matched that total, and Pioneerof the Nile finished second in the Kentucky Derby. Zayat was also among the most active buyers at horse auctions, paying $24.5 million for 77 horses in 2009, according to BloodHorse.com. As his stable ballooned to 250 horses, Zayat both wowed and wore on people. He fired Bob Baffert, who had just been inducted into the National Museum of Racing’s Hall of Fame in Saratoga Springs. He moved horses from one trainer’s barn to another on what appeared to be a whim.
“I’m kind of a compulsive guy,” Zayat said. “I can’t do things halfway. If I’m in, I’m totally in. I can’t just have two or three horses. Honestly, I’m very competitive in nature like all of these beautiful equine athletes, and I want to be number one.”
One morning on the backside of Del Mar, the track Bing Crosby founded near San Diego, Zayat got into a shouting match with its chief executive officer Joe Harper. They had always been on friendly terms. Zayat had a suite at the racetrack and had requested (and received) a souped-up automatic wagering machine that could process more and bigger bets than the standard betting terminal. Now Zayat was upset with the new synthetic surface the track had installed in the hope of making it safer for the horses—instead Zayat thought the synthetic was inconsistent and made his horses slower. Dissatisfied with Harper’s response, Zayat took the twenty-five horses that he had on the racetrack and shipped them east to race at Saratoga.
Zayat’s zeal to win spilled into public view before the 2009 Preakness Stakes, when he said in a television interview that he was considering helping the owner of that year’s Kentucky Derby winner, Mine That Bird, keep the filly Rachel Alexandra out of the race. Pioneerof the Nile had finished second in the Derby, and both owners would improve their chances to win by entering inferior but eligible horses to fill up the Preakness gate. Instead, other owners persuaded them to abandon the plan, and Rachel Alexandra became the first filly to win the second leg of the Triple Crown in eighty-five years.
Zayat’s bankruptcy illuminated his prodigious gambling habits and raised questions about some of his associations. It unearthed a previous personal bankruptcy under the name Ephraim David Zayat. It showed that he was paying himself a $650,000 salary and had withdrawn more than $2 million from stable accounts before the bankruptcy filing. In his name, the stable also paid $1.2 million to New Jersey Account Wagering, $350,000 to the Las Vegas Sands, $150,000 to the Palms Casino and Resort, and $100,000 to NHPlay.com (an account wagering platform for horse racing). Zayat said that he filed for Chapter 11 reorganization as a legal defense against a bank that had reneged on its promises to his stable. He was unapologetic about his gambling, too. Zayat said he bet a lot because he could afford it.
“I like gambling on horses,” he said. “Everybody has a different wallet size.”
Sometimes he claimed to bet to generate cash flow for the stable.
“It’s called hedging,” he said.
Among the money he says he was owed was $155,000 he lent to Michael Jelinsky and $450,000 he lent to Jeffrey Jelinsky. In May of 2008, the Jelinsky brothers, his former protégés and sometimes advisors, pleaded guilty to illegal bookmaking in Las Vegas. In the federal plea agreement, the brothers said they had operated an illegal gambling business out of Nevada. Michael Jelinsky was sentenced to fifteen months in prison and Jeffrey to twenty-one months; together they forfeited nearly $5 million seized by authorities.
The Jelinskys, according to the plea agreement, accepted wagers from bettors across the nation. They would then either hold the bets themselves or hedge their risk by placing them through offshore accounts or at the sportsbooks at the Palms and Poker Palace casinos in Las Vegas. Among the money confiscated by federal authorities from casino safe-deposit boxes and banking accounts held by the Jelinskys was $1.5 million found in accounts of the International Racing Group (IRG), a Netherlands Antilles-based betting shop that caters to high rollers. In January 2005, IRG was named in an indictment brought by the Justice Department. Fourteen people, including three alleged associates of New York organized crime families, pleaded guilty to running an illegal gambling operation.
Zayat maintained that the $605,000 the Jelinskys owed him was not from wagering. He said he had lent money to them because one brother needed the money, as he was going through a divorce and the other was having financial problems.
“I was trying to help them out,” Zayat said.
None of it played well in the Bluegrass, especially when farms like Tom VanMeter’s Stockplace and Taylor Made Farm were getting slow-paid and then no-paid before finally refusing to do business with Zayat altogether. There were trainers who quit training his horses after being stiffed on their bills—among them the nation’s most successful trainer, Todd Pletcher. There were vendors who demanded cash up front from Zayat Stables—the most prominent being Keeneland, the prestigious auction company where anyone and everyone in horse racing had to do some business.
Shortly after a horse Zayat owned finished second by two and three-quarter lengths in the 2011 Kentucky Derby, the colt’s trainer, Steve Asmussen, stretched his arms out wide to both sides when he passed Baffert one day.
“I came that close to getting paid,” Asmussen said, eliciting a knowing laugh from Baffert, who had taken to calling a Zayat colt in his barn Prayer for Payment rather than his name Prayer for Relief.
Sometimes his gambling brought unintended scrutiny. A suit filed by the owners of Freehold Raceway against the New Jersey Sports and Exposition Authority claimed that Zayat was improperly granted credit in the state’s online betting system. New Jersey law prohibits betting more money than is in the account, but court papers showed he was allowed not to pay $286,000 for several months as a courtesy because he was betting $200,000 a week and had put more than $9 million in play through its pools. The court filings also show that one check for $100,000 from Zayat to the sports authority was returned for insufficient funds and that he had stopped payment on another check for the same amount.
“I was a client betting legally and proud to support the pools of New Jersey in the state that I live,” he said. “I was getting VIP treatment and I appreciated it.”
It was this ability to put lipstick on whatever pig he produced by either denying his transgressions or blaming someone else or shouting someone down or simply choosing to forget the trouble that he had caused people that kept Zayat in the semi-good graces of an industry that sometimes he beat, and more often than not evaded.
Asmussen still trained for him. Baffert welcomed his horses back to his barn. Two summers after Zayat had taken his horses and headed east, Harper ran into Zayat at Del Mar.
“Joe, it never happened, it never happened,” Zayat told him.
Zayat could be as charming as he was outrageous and as passionate about the sport as he was cold-blooded in his business practices. For Harper, some of it was explained by Zayat’s Egyptian temperament. Harper had lived in Zayat’s country as a young man and had many friends from there. His sister had married an Egyptian.
“They have a certain passion,” Harper said. “The first day I was in Cairo, we were driving, and there were two men on the street screaming at each other. I asked the Egyptian driver what they were arguing about, and he said, ‘They’re not fighting. They’re just talking.’”
Mostly, putting up with the emotional Egyptian was good for business.
“He’s a real treat for a racetrack, because he loves to bet, and he bets pretty good,” Harper said. “We want to make him as comfortable as possible.”
It also wasn’t like the horse business was comprised of a heavenly body of celestial angels. It has long been a rough game where chicanery was not only institutionalized but also celebrated. As far back as 1969, a horse trader in Kentucky with a sense of humor and wishing for secrecy signed a sales ticket in the name of Neil Armstrong, the astronaut who was still in space and returning to earth from his walk on the moon. The bigger the sales like this one, the eighty-seventh annual Fasig-Tipton Saratoga Selected Yearling Sal
e, the bigger potential for chicanery. The Saratoga Sale was a tony gathering, usually in the first week of August, of horse aficionados and jet setters who over the years have bought iconic horses, from Man o’ War to Raise a Native to Danzig. Zayat was here to sell Hip No. 85, the Pioneerof the Nile colt out of Littleprincessemma, and there were plenty of potential buyers drifting barn to barn at the sales grounds eyeballing colts with the same intensity with which jewelers scrutinize diamonds. Instead of cut, color, and clarity, however, they were looking for conformation, balance, and fluid movement. Before them were one-year-old horses that had feasted on the finest feed, taken untold protein supplements, and exercised until their muscles were rippling. Their coats had been combed incessantly, and in some cases rubbed with corn oil to bring out the sheen of a champion.
Buyers needed to worry what nips and tucks these young Thoroughbreds had undergone that were undetectable to the eye of the keenest horsemen.
What were they missing? Was an invasive surgery—perhaps a periosteal elevation—performed to straighten a colt’s ankle? How much of a filly’s puffed-up chest and powerful hind quarters was steroid-induced rather than genetic? Which yearling might have undergone electrostimulation to make its throat look larger and cleaner? There was a fine line between showmanship and fraud. They clutched catalogues detailing the yearling’s pedigree and scoured a repository of X-rays and medical records.
They worked in squadrons with systems of their own devising. Mike Repole, cofounder of Glacéau, which was bought by Coca-Cola for $4.1 billion, employed a three-man team to spend his money. J. J. Crupi, a bear of a man, judged the horse. Eddie Rosen, a lawyer by trade, was the pedigree guy. Dr. Randy Brandon was the veterinarian who made sure that the horse Crupi was enamored with—the one with the regal bloodlines Rosen vouched for—was a healthy yearling worth the hundreds of thousands Repole might spend on him.