As 95-degree temperatures baked a crowd of nearly 100,000 at the 2008 Belmont Stakes—the hottest June 7 on record—the only person who seemed unfazed was Richard Dutrow Jr., the trainer of Big Brown, an undefeated colt just 12 furlongs from the first Triple Crown in three decades. With history against him, Dutrow remained immodest. It was a foregone conclusion, he said. "He cannot be beat."


The spring of Big Brown was a traveling circus, with the horse itself a sideshow. Dutrow, the ringleader, was all of racing's problems bundled into one man. The owners, Michael Iavarone and Richard Schiavo, were portrayed as clever businessmen who proposed to change the game with a new way of investing in horses. But the real decision-maker in International Equine Acquisitions Holdings was behind the scenes—a shadowy money man who ran an illegal investment fund in the Virgin Islands.

Only 11 horses had ever won the Triple Crown, and if Big Brown could do it, both Dutrow and IEAH would be immortalized. It would be the summit of anyone's career, but for both the horse and his connections the fall was swift and severe: a trainer banned for a decade; a stable put out of business, its funding revealed as the spoils of a Ponzi scheme. Big Brown was dead last at Belmont. He didn't even cross the finish line.


The worn sign outside Barn 10 on the Aqueduct backstretch has the feel of a Roman monument to a fallen dynasty. It reads: "2008 Winner of the Kentucky Derby & Preakness." Five years have passed since Big Brown came up empty in the Belmont Stakes; this plaque is what's left of IEAH and the career of Richard Dutrow.

It was supposed to be a revolution. Michael Iavarone had a vision of an equine hedge fund, something untried in the sport. Instead of the traditional syndicate, with investors owning shares in individual horses, they could now own part of IEAH itself. The fund would collect management and performance fees, and allow investors to own a part of all of IEAH's assets—its horses in training, its broodmares, its future stallions, a state-of-the-art equine hospital. Each financial quarter, an independent auditor would assess the fund's value and investors could enter or exit. Iavarone often said he was raising $100 million to take the fund public.


It was Wall Street come to the backstretch, and completely foreign to an old-fashioned and slow-moving game. Unpredictable, too; would daily share price dictate a stable's decision-making? Profits on the track are impossible to time or predict, if they ever come at all. Insiders thought it was ludicrous. Every year, owners put $2 billion into a game that spits out only $1 billion in purses. Were these guys so good at picking out horses, Dutrow so good at training them, that they could guarantee regular profits, month after month, year after year?

The wins and the money rolled in for a while, but none of it was real. Like the worst of Wall Street's excesses, IEAH's fortunes were illusions produced by unscrupulous, occasionally illegal methods. They turned to Rick Dutrow knowing he'd get results, no matter how many suspensions for doping his horses he'd have to serve. They pulled their main funding from an accused Ponzi schemer, since indicted by the federal government, who funneled millions from a host of hapless victims to keep the stables going. Soon enough the cash spigot was cut off, Dutrow committed one too many violations, and the revolution collapsed, leaving only the sign.


Barn 10 used to be Dutrow's. In October 2011, New York regulators revoked his license and barred him from training horses for 10 years, after one final strike in a career of almost 70 violations—from the minor, like showing up late to the paddock, to the serious, such as using banned medications and hiding workouts. After losing in New York's highest appellate court this past January, Dutrow's horses were led away from his barn.

Appropriately, he went out a winner. The day before, his horse Colossal Gift had won the last race of the day at Aqueduct. Dutrow watched from home. His last visit to the track had been that morning, a gloomy day when all of his horses jogged over a sloppy track and a beleaguered Dutrow sat in his black Mercedes and answered questions. His lawyers were considering one final request for an injunction, he said. They didn't file one, and the next day his horses were put in the care of other trainers. Dutrow is no longer allowed on the grounds and per the terms of his suspension, he cannot care for horses or assist with training or even provide advice to his former employees. Long a media fixture, Dutrow hasn't been heard from since.


Just south of Belmont Park, weeds grow around the shuttered Ruffian Equine Medical Center, the gorgeous facility that IEAH built in 2009 and closed two years later. The phones are disconnected. Its website, not updated for over a year, was taken down only weeks ago. It still listed Dutrow as IEAH's trainer in a section called Our People.


IEAH began selling off its assets last year, including all its breeding shares in Big Brown. Its very last horse was Fantasy of Flight, trained by Michelle Nevin, Dutrow's longtime assistant, who sought her training license as soon as his suspension began. Racing in the colors of co-owner Sanford Robbins—not IEAH—Fantasy of Flight finished eighth in the Grade 1 Madison at Keeneland on April 13. IEAH unloaded its final shares in Fantasy of Flight soon after. The stable has no more horses.

Other markers are found in the U.S. District Court, Southern District of New York, and the Securities and Exchange Commission, in indictments of James Tagliaferri on criminal and civil fraud charges. Tagliaferri, 73, was arrested in the Virgin Islands in late February. Beginning in 2007, according to prosecutors, he defrauded his wealthy clients by funneling more than $120 million of their money to IEAH and others, in exchange for at least $4.3 million in ostensible fees, of which $1.6 million came from IEAH.


Tagliaferri put his clients into more than $40 million of notes from IEAH, without telling these clients that IEAH was paying him in return. He moved money from a deadbeat dot-com stock into IEAH to keep his clients at bay, allegedly paying them with other clients' money.

Iavarone and Schiavo haven't been charged with anything. But the majority of their money came from Tagliaferri, and as one bloodstock consultant who worked with IEAH puts it, it's hard to describe the scheme as anything but "a Madoff thing for the racing business."


Rick Dutrow is from a racing family. His late father was a trainer, and his two brothers train as well. And even by racing's Wild West standards, Dutrow, 53, is an outlaw. In the 1980s, he was banned from Maryland tracks for a year then five years from New York for various marijuana offenses (possession, failed drug tests, getting caught with a "concealed apparatus" to provide a fake urine sample). Years later, the mother of his daughter was murdered in a drug-related break-in. By 1998, he was sleeping on a cot next to saddles and bridles and other equipment in a tack room of Barn 1 at Aqueduct, a couple of cheap horses in stalls just outside the door and nothing but a microwave, fridge, and television to keep him company.


He had come back and more by 2001, with the help of wealthy owners like Wall Street trader Sandy Goldfarb, leading New York in wins and, a few years later, winning the Breeders' Cup Classic with Eclipse Award winner Saint Liam. He wagered outrageous sums on his own horses and bragged about it, such as the $160,000 plunge he took on Saint Liam that day, pocketing more than $385,000.

Few people doubted his horsemanship. He made unorthodox decisions and he won races with cast-offs, which made reporters wonder whether he was a genius or a cheater. His runners always looked great on the track, well-groomed, their coats shiny. "He's half-horse," says New York trucking magnate Paul Pompa Jr., the original owner of Big Brown who in 2007 sold 75 percent of the horse to IEAH for $3 million. "He cares more about the horses than himself."


But there was another side to Dutrow's rise that suggested something other than selfless affection for his horses. He habitually disregarded the rules of racing, even to the extent of endangering those under his care.

There were drug positives every year since 2000, some minor and others more serious, like a 60-day suspension for giving his horses painkillers. While serving the ban he remained in contact with his barn, which won him another suspension and a $25,000 fine. In 2005, he conspired to hide the workouts of a horse named Wild Desert leading up to a major victory in Canada.


Workout times are published in racing programs; because of their importance to gamblers, they're supposed to be accurate. Dutrow ostensibly wanted to conceal from the public how well Wild Desert was training in the hopes of finding longer odds for his team on the day of the race. It was an elaborate fraud in which three of his assistants—Rudy Rodriguez, Juan Rodriguez, and Nevin—were fined at least $1,000 for their roles. They reported a false workout for Wild Desert at Monmouth Park, in New Jersey, when in fact the horse had never left Aqueduct. On another occasion, Wild Desert breezed before the official clocker had arrived. New Jersey officials would say that Dutrow and Rudy Rodriguez tried to mislead them in their investigation, and Dutrow was suspended 14 days and fined $5,000, while Rodriguez got a seven-day suspension and a $1,000 fine. The fines paled in comparison to the money the owners won on Wild Desert.

I never heard Dutrow own up to any of his violations, other than a subtle admission to Pat Forde of ESPN.com before the 2008 Derby: "I've had so many different suspensions—half of them I deserved, half of them I didn't."


His record didn't scare away owners; in fact, they were drawn to him by his win-at-all-costs approach. Turfwriters, too. Dutrow was always a colorful quote, seemingly honest and introspective; he called everyone "Babe," so that's what everyone nicknamed him in return. I often heard reporters say outright, "I like Rick."


Dutrow had a thing for fame and the big score, and he finally got it with Big Brown. The late-blooming bay colt was his first Derby starter, and leading up to the race Dutrow crowed that he had the winner, pledging that he would make a huge wager on Big Brown. He didn't bet much in the end, but he was right.

"We did it, babe," Dutrow yelled to Big Brown's owners from across the third floor of the Churchill Downs grandstand. "Did you bet? Did you bet?"


"It is who he is," Michael Iavarone said after Big Brown's cakewalk in the Preakness. "Rick has a quirky confidence. He knows what he says is controversial, but I think he plays off it."

Dutrow's high profile that Triple Crown spring forced a lot of racing's issues into the spotlight. (He admitted that Big Brown was on the anabolic steroid Winstrol—legal and not uncommon for the sport's top horses—but decided he wouldn't get his monthly shot before the Belmont.) Dutrow had all the modesty of a prizefighter, and the IEAH principals were also prone to bouts of noisy confidence. The still-blue-blooded racing establishment cringed. New money.


Reporters liked Dutrow as a person, but it was impossible to cheer for this partnership. No turfwriter I knew wanted to see Big Brown be the one to finally win the Triple Crown. I watched the Belmont on a simulcast feed at a separate racetrack, and everybody nearby—the track's announcer, its publicity director, its official handicapper, and other insiders—whooped and hollered as Big Brown suffered a nightmare trip and was eased up in the stretch. Others in the game confided not so privately that they were happy to see Dutrow eat crow.

The attention Big Brown had brought to the sport quickly turned negative. Congress held a hearing on racing's problems; Dutrow was a no-show. Months later, it came out that one of his horses had tested positive in a stakes race at Churchill Downs the day before Big Brown won the Derby. He received a 15-day suspension.


Eventually, Dutrow's dark clouds had to break. In February 2011, New York suspended him for 90 days after one of his horses had tested positive for a banned painkiller and three unmarked hypodermic needles containing muscle relaxant had been discovered in a search of his office. Ed Martin, the president of the Association of Racing Commissioners International, wrote a letter to the New York State and Racing Wagering Board urging it go further and ban Dutrow.

"At some point, an individual who continues to violate the rules of racing forfeits through his own actions the ability to be in the game," Martin wrote. "At some point, enough is enough."


Even in a sport that has long brushed off this sort of behavior, enough was enough. The board asked Dutrow to make his case at a hearing, but despite a heartfelt statement of how much his horses meant to him, the board suspended his license for 10 years and fined him $50,000. One board member said at the time: "It seems Mr. Dutrow loved his horses, but he loved winning even more, and he broke our rules to win."

Kentucky denied Dutrow a license, forcing other states to reciprocate. But he kept going to the winner's circle even as he appealed his New York ban. No trainer won more races at the premier New York tracks in 2012. His horses won more than $7.2 million that year, of which Dutrow collected his 10 percent share, and he continued to wager.


This bordered on the absurd, except nobody seemed dismayed. Stories about Dutrow's stakes winners rarely mentioned his looming suspension, and his owners faced no censure. Dutrow struck a defiant tone. "I'm going to get out of it one way or another because I didn't do anything wrong," he told the Times in August 2012. "I'm clean." None of his peers would criticize him publicly, such is the racing fraternity. The last thing a trainer wants is an enemy in a nearby barn.

Dutrow's personality wouldn't let him fly under the radar. In February 2012 he and IEAH tried to enter a horse in a small stakes race at Charles Town in West Virginia, but Dutrow was told by track officials that without a license he wouldn't be allowed. The horse was entered, but under the name of Tony Dutrow, his brother. A quick investigation by Charles Town stewards revealed that the horse had never left Rick's barn. They called Tony and he admitted that he wasn't the trainer—he had never even laid eyes on the horse. "It was the kind of thing [Tony] could get fined or even suspended for," says one person who watched the farce unfold, "but it was as if Tony welcomed it" so his brother might learn a lesson.


Later that night, Iavarone called the stewards and, ever smooth, tried to win them over. "What's the problem, guys?" he asked them, saying, "I don't want any trouble. I just want to know what I have to do to play by the rules." Which was funny, since anybody in racing for five minutes knows that correctly listing a horse's trainer is one of the most basic rules.

Michael Iavaraone, the public face of IEAH, was a slick hustler and deal-maker who had claimed to be a high-rolling stockbroker, even though he'd traded only penny stocks. Richard Schiavo, who had actually worked at major Wall Street firms, was the sober, nuts-and-bolts man. Long Island natives, they started IEAH as a traditional syndicate in 2003, bringing together people to own fractions of a few cheap horses. Their first trainer was Greg Martin, the son of Hall of Fame trainer Frank "Pancho" Martin. They were spending peanuts then and claimed a 4-year-old gelding named A One Rocket at Aqueduct for $7,500 on Dec. 13, 2003. Just five days later, A One Rocket ran off the screen, winning by 10 lengths and improving his time by nearly two seconds.


A year later, in an indictment of an illegal gambling ring affiliated with the Gambino crime family, it emerged that A One Rocket's winning race that day was the focus of a federal investigation. Martin was charged with drugging the horse. Several people pleaded guilty, including Martin.

IEAH and its principals weren't subjects of the investigation or charged with any wrongdoing, and they claimed to consider taking legal action against Martin. However, Martin had a suspicious record for anyone who cared to check, having served 60 days for medication violations after 2000. IEAH never followed through on its threatened lawsuit. When Martin had to give up his license in 2005, IEAH moved its six horses to other trainers—and ultimately to Dutrow. He seemed like a good match for IEAH's ambitions. Dutrow could win with cheap horses as often as he won with good horses, which was great if you didn't look too closely at how he did it.


Iavarone and Schiavo dreamed up the Ruffian hospital around this time. There was no surgical equine hospital on Long Island, so trainers sent injured horses to New Jersey or Pennsylvania. It was a good idea, in theory, but they were businessmen, not horsemen. "It was just another angle they had," says James Hunt, who has the largest private veterinary practice in New York racing and was hired to run the hospital.


"Mike could literally sell you the shirt off your back," Hunt says. "And Richard Schiavo was the bean counter. He counted the money. But then some bad guys got involved. And they started calling the shots."

James Tagliaferri punched Iavarone's ticket from nickel-and-dime races to the big time. They met during a social encounter at a Yankees game, according to the Times. Iavarone pitched Tagliaferri on his hospital as a potential investment, and Tagliaferri, who ran a highly regarded fund in Connecticut, was intrigued. Horses are illiquid assets, and the hospital would add a fixed income to IEAH's portfolio. And with Tagliaferri's cash, the quality of the horses they bought would set them apart.


"They did the overpay-for-proven-talent model," says Jamie LaMonica, the president of the Lexington-based Stallion Company, who brokered the recent deal for Three Chimneys to buy out IEAH's shares in Big Brown. "But they were certainly rewarded for it."

Beginning in March 2007, Tagliaferri became IEAH's major backer. The stable started splashing around money, buying up good horses fresh off of impressive wins. This strategy doesn't come cheap, but it worked for a time. They paid $900,000 for Benny the Bull, who then won more than $2 million as the champion sprinter in 2008, and $525,000 for Kip Deville, who won the 2007 Breeders' Cup Mile and returned more than $3 million. There were other successes, like Wonder Lady Anne L, the daughter of Real Quiet, and Court Vision, through Secretariat and Northern Dancer. It was a spend-to-win philosophy that left no room for error; one bad purchase could erase all the gains.


"We were keeping our heads above water putting partnerships together, but we didn't have enough money to keep large pieces for the company," Iavarone told the Times in the spring of 2008. "We exploded when Jim [Tagliaferri] gave us the money to grow."

It was common to hear rumors of decadent parties and runaway expenses. The hospital grew in scope and size, its price tag moving from $6 million to $18 million. "We tried to temper their exuberance," Hunt says. "But at that time, they thought everything they touched turned to gold."


Tagliaferri said he was "betting on Mike's track record." But that record included unpaid taxes and outstanding bills and misrepresentation of his Wall Street experience and a fine for unauthorized trading. Some accounts suggested that Iavarone hooked Tagliaferri, but it seems more likely that it was the other way around. Tagliaferri was a well-known investor for some very wealthy people and successful businessmen, while the younger Iavarone was a product of boiler-room brokerages and the penny-stock game. Did Tagliferri see a mark for his fraud to come? Or an accomplice?

Either way, this "explosion" of money meant a payoff for Tagliaferri. He had usually stuck to blue-chip stocks and municipal bonds, but he now shifted into private, illiquid companies, easier to control. From March 2007 to April 2008, he collected $1.6 million from IEAH for funneling his clients into the stable. But Tagliaferri didn't notify his clients of the arrangement, according to prosecutors, and in the spring of 2008 there was an inquiry by the SEC. Tagliaferri attempted to disguise these kickbacks as "consulting fees" by sending 14 back-dated invoices to IEAH.


Iavarone knew that no such consulting had been provided. He signed off anyway. In a sworn affidavit given a few years later, Iavarone said:

Mr. Tagliaferri threatened me on a regular basis to close IEAH down if his wishes weren't met, and that he would 'pull his investors out' if we objected to anything. Because IEAH was in such precarious financial shape I was afraid to protest further.


Over the course of one year, Tagliaferri placed more than $40 million into IEAH for at least a two-thirds stake in the stable. Tagliaferri would call the shots; he even made two allies directors for IEAH.

But the success on the track—Big Brown's Triple Crown attempt, $11 million in earnings in 2008, runner-up for owner of the year—was backed by unsustainable and ill-gotten funding.


The ride ended with Big Brown. The week after his Derby win, the horse was sold as a stallion prospect to Three Chimneys for $50 million. IEAH excised its one proven commodity from its proposed hedge fund, signaling that it would never get off the ground. How could it go public when that meant shareholders would learn where their money came from?

The following spring, IEAH paid $3.175 million to David Lanzman for a half-interest in I Want Revenge, who'd looked like another Big Brown after winning the Gotham Stakes at Aqueduct, and they put in another $1 million after I Want Revenge won the Wood Memorial. The colt was the morning-line Derby favorite but scratched the day of the race with an ankle injury. He was never quite the same. IEAH ultimately bought out Lanzman, but spending close to $5 million on I Want Revenge—plus the lawsuits and counter-suits—had backfired.


"People have told me that I have a dispute with these guys," Lanzman told the Times in 2010. "Using that word is like saying Bernie Madoff's investors had a dispute with Bernie Madoff." Iavarone, in the same article, called Lanzman "a filthy animal" and said Lanzman would "sell his soul for a dime."

This controversy did not augur well for the Ruffian hospital, even though it was a beautiful facility that spared no expense. There were two surgery rooms, a bone-scan machine, top-of-the line equipment, all of it presided over by one of the country's most respected equine surgeons, Dr. Patty Hogan. Schiavo loved it and was very hands-on, Hunt says, while Iavarone was mostly concerned with whether it was making money. But although it didn't carry the IEAH name when it opened in 2009, Hogan says there were horsemen who refused to support the hospital because of the stable's reputation. IEAH was facing lawsuits for unpaid invoices at the time, which hinted at how stretched its finances already were. Once the economy sank, IEAH was dependent on Tagliaferri and his majority stake. Tagliaferri controlled the flow of money—buying horses, selling horses, keeping the hospital afloat.


Tagliaferri's ruse was nearing its expiration date. In December 2010, Matthew Szulik, the former CEO and chairman of software company Red Hat, filed suit, claiming Tagliaferri had defrauded him of $60 million, of which $20 million had gone to IEAH.

Szulik's suit painted an outlandish picture. Besides the horses, some of his money paid for a strip club in Mexico and the Beverly Hills house of Jason Galanis, listed in Tagliaferri's indictment as "Associate 1." Who was Galanis? Once called "Porn's New King" by Forbes, in 2007 he prepared a false quarterly report for Penthouse, and the SEC fined him $60,000 and barred him from serving as an officer of a public company for five years.


Galanis and Tagliaferri had their hands in a number of shady businesses, all seemingly existing to funnel money to IEAH. Right after Szulik filed his lawsuit, IEAH tried to sell its business to Gerova, a Bermuda-based reinsurance company for which Galanis was in charge of mergers and acquisitions. What possible interest could this company have had in a horse stable? When Szulik inquired about the sale, IEAH called it off. Galanis and Gerova also had close ties to Westmoore Capital, a $53 million Ponzi scheme that the SEC shut down in June 2011. Gerova didn't last long either. Several investment firms asserted that it was fraudulent, citing Galanis's involvement as a red flag, and last August Gerova filed for bankruptcy protection in U.S. court.

When Tagliaferri began feeling the heat, he moved money from deadbeat Fund.com, another Jason Galanis affiliate that traded on the pink sheets, into IEAH. According to prosecutors, Tagliaferri kept victims of his fraud in the dark by paying them with money from other clients. He wrote to Galanis that if he could get $5 or $10 million he could "probably ... stave off disaster."


As this played out, Iavarone and Schiavo continued to utilize Tagliaferri's money. In February 2010, IEAH faced a $237,000 insurance bill in order to keep its policy. Tagliaferri took care of it, prosecutors say, by using proceeds from Fund.com shares.

The IEAH principals maintain that they were at the mercy of Tagliaferri, but they had long known where Tagliaferri got his money from and what trouble he was in. Going back to spring 2008, with the backdated invoices, they knew Tagliaferri was diverting some of his clients' money intended for IEAH into his own personal bank account as a commission, sometimes up to 10 percent, according to court records. Businessmen like Iavarone and Schiavo would have realized this was illegal.


Jamie LaMonica says that one IEAH investor told him, "I got the ride of my life." But, LaMonica says, "He was taken pretty good. When it came time to give financial results, that's when people got disenchanted."

The gig was up for Tagliaferri by the end of 2010, when Szulik's lawsuit was filed, and IEAH's pot began to evaporate. According to court filings, Tagliaferri's fund went from $261 million to $9 million in one year. The recession had owners of all stripes taking money out of racing, and even IEAH's legitimate investors were tapped. Iavarone and Schiavo had to raise cash, and quickly. In early 2011, Jim Hunt asked for more money for the hospital, but he was told there wasn't any. The hospital was closed.


IEAH's horses made only a half-million dollars on the track in 2011. It ran a pinhooking operation, which entails buying unraced horses and selling them for a profit after some schooling. Last year, Iavarone tried unloading this to the American Basketball Association, of all places. Iavarone and ABA commissioner Joe Newman are friends from their time working together at a Long Island brokerage firm. The deal didn't go through. It was too complex, Newman told me, the price too high.

Then, in the greatest of ironies, IEAH sold its interest in Big Brown only five days after Dutrow's license was finally revoked. The only keepsake was that little sign at Aqueduct.


Many trainers and owners still vigorously support Dutrow, in part because they believe there was a double standard at play. Dutrow's punishment was remarkably severe compared with the penalties levied on other big-name trainers, such as Patrick Biancone and Steve Asmussen, who have avoided serious punishment despite similar, if less prolific, violations. The difference was that Dutrow was the most famous and could be held up as an example that the sport was trying to clean itself up.


"I'm a stupid talker," he told the Times last summer. "That's probably part of the reason I'm in this jam. But now I'm in it, and I got to fight."

Paul Pompa, one of Dutrow's owners, believes it was "disgraceful" how Dutrow was treated. "You go into a bar, get drunk, get in a car and run somebody over, and you don't get 10 years," he says. "They took away his livelihood." Pompa pauses to think. "He must have pissed somebody off the along the way, right?"


In February, as a last-ditch effort, Dutrow filed a lawsuit in a Brooklyn federal court seeking to overturn his suspension. His lawyers allege that Dutrow was the victim of a concerted effort by officials, led by John Sabini, then-chairman of the state racing commission, to run him off the track. The investigator for Dutrow's lawyers told me they will provide evidence that the syringes found in Dutrow's barn were the result of a setup. "This is no longer just a racetrack case," he says. "Somebody is going to jail for this."

In the meantime, Dutrow still can't be anywhere near the track or contact his former employees, and his brother Tony says that Rick doesn't know what to do with himself.


"It's just like A-Rod," Rick Dutrow said to the Daily Racing Form the day before his suspension began. "Some people love him, some people hate him, some people don't care. It's been like that all my life.

"A lot of people like me, a lot of people don't. A lot of people don't care. If you would ask my horses, all of them love me, all of them. That's why I'm here—for the horses."


His human friends aren't in better shape. Tagliaferri faces up to 20 years in prison, effectively a life sentence at his age. In a recent interview with The Paulick Report, Iavarone said IEAH was still paying the taxes on and the costs of upkeep for the shuttered Ruffian hospital. After hoping to break even selling it, Iavarone auctioned it off. It fetched $2.6 million for the land, the building, and all the medical equipment, a small fraction of what he had put into it. He has no choice but to take the offer. IEAH is done for. "We've taken $30 million out of our cash flow and it's put us in a position where operating is impossible," Iavarone said.

Few people are mourning that loss. The racing establishment, Hunt says, "revels in the fact that IEAH has basically gone under."


When asked for comment, Iavarone said he was not available, while Schiavo did not return several messages.

About the only winners are Three Chimneys Farm and Big Brown, who is popular enough that he shuttles annually between the Northern and Southern Hemispheres, satisfying his black book twice a day, for a $35,000 fee per foal. But even Big Brown is tainted—as Dutrow and IEAH fell, so did the stallion's stud fees, from a 2009 high of $65,000.


But the beat goes on. Many of Dutrow's owners went to his former employee Rudy Rodriguez, who struck out on his own a few years ago. When Dutrow vacated Barn 10 at Aqueduct, Rodriguez moved in. He's already one of New York's most successful trainers but has dodged familiar allegations along the way. He recently served a 20-day suspension for two drug positives. Then came a third, though his lawyer claims someone got to Rodriguez's horse. A fourth positive was announced a few weeks ago.

Last month, Rodriguez went to the Kentucky Derby for the first time, with a horse named Vyjack. Kentucky officials decided to grant Rodriguez a license, but with an unprecedented condition: Vyjack must have around-the-clock video surveillance. He drew the outside post for the Derby, same as Big Brown had five years earlier, but the outcome was poles apart. Vyjack finished 18th of 19 horses.


Ryan Goldberg is an award-winning freelance journalist and has been following horse racing since ducking security as a teenager to bet the races at Monmouth Park. He lives in Brooklyn and is a sometime presence on Twitter at @goldbergryan.

James Tagliaferri criminal indictment


Tagliaferri SEC report


Michael Iavarone affidavit