In Ky., a new run for the roses

SUN JOURNAL

Rebound: Storied Calumet Farm in Lexington is making a comeback from its 1991 bankruptcy and the mysterious injury that led the the death of champion Alydar.

April 25, 1999|By Jon Morgan | Jon Morgan,SUN STAFF

LEXINGTON, Ky. -- Towering sycamores line the approach, pregnant with buds. Gangly yearlings graze on the bluegrass, close by their mares. Business is brisk in the breeding sheds.

Spring has come to Calumet Farm, 800 of the most troubled yet sacred acres in thoroughbred racing. A new farm manager, who has visions of silver trophies and blankets of roses, has been hired. A few promising 2-year-olds are in training, raising hopes that the long fall from the sport's pinnacle has ended.

"We're not looking back; we're looking forward," boasts Hershel Lathery, the farm's grounds supervisor.

But the past never stays out of sight for long at the storied Calumet. FBI agents stop by from time to time to snoop. They are investigating the death in November 1990 of the champion stallion Alydar, who some believe was killed for $36.5 million in insurance.

Two months ago, agents took away the varnished oak door from the stall where Alydar was found in the dead of night, drenched in sweat, his broken right hind foot dangling by skin and sinew. Veterinarians euthanized the horse after surgery failed.

Now there is talk of disinterring Alydar. A couple of engineers from the Massachusetts Institute of Technology, hired by the FBI, visited the stall not long ago, taking measurements. The door has been sent to an evidence room in Houston, where it awaits use in a couple of trials that could take place this year.

The farm's former president, J. T. Lundy, and the chief financial officer were arrested last month and charged with bank fraud, bank bribery, conspiracy and making false statements. Prosecutors allege that, without collateral, Calumet obtained $65 million in credit lines and other loans from First City Bancorp of Houston by bribing a director.

When he was hired by the family to run the farm in 1982, Lundy was married to a granddaughter of the farm's founder. Calumet was debt-free, but that quickly changed. Lundy bought race cars, private jets and other luxuries.

The farm declared bankruptcy in 1991, six months after Alydar's death. Debts totaled $118 million, and a family's once-vast financial empire -- which traced its roots to the Calumet Baking Powder Co. -- lay in ruins.

If convicted, Lundy could face up to 50 years in prison. He has pleaded not guilty and is free on $1.2 million bond.

Previous inquiries concluded that Alydar broke his own leg when he kicked the door so hard he broke the rusty bracket holding it to the wall. A respected insurance adjuster and several vets on the scene that night testified that's what they believed.

But there are tantalizing clues otherwise.

Before the horse's death, the Houston bank had threatened to foreclose if a $15 million loan payment was not made in a few months. The payment was made, with Alydar's insurance payoff.

The famously reliable night watchman has testified that he was asked by a Lundy associate to take that night off, contradicting testimony by the groom who filled in for him that night. The groom told a grand jury that it was the watchman who wanted the time off and who asked him to cover the shift.

The groom also told the grand jury that he was dining with another employee in the farm cafeteria at the time Alydar's leg was broken -- an account the other employee rebutted from the witness stand. A jury convicted the groom last summer on two counts of perjury.

A 1992 bankruptcy auction eventually settled some of Calumet's debts. Polish-born horseman Henryk de Kwiatkowski bought the farm for $17 million.

But creditors and family heirs are still looking for their money. A year and a half ago, they came after the farm's Tiffany trophies, silver bowls and other treasures of its dynastic reign. An auction house was hired to sell the 524-piece collection to souvenir hunters.

This was too much for many in Bluegrass country who venerate tradition as much as they do their locally distilled bourbons. Rich donors sent in six-figure checks, schoolchildren collected pennies and state lawmakers appropriated $1 million.

The auction was halted in September, days before the gavel was to fall. Creditors accepted a negotiated bid of $2.7 million, and the precious keepsakes were given to the state-run Kentucky Horse Park museum.

"We had some glory days and some difficult days," says Lathery, Calumet's grounds supervisor, ducking behind a toolshed to escape a strong wind blowing across the pasture.

The 67-year-old was hired by Calumet 51 years ago to mow the grass. He was there for the heydays of the 1940s and 1950s when John Wayne and other Hollywood glitterati used to drop by. Lathery can rattle off the Kentucky Derby winners like a retired ballplayer recalling his World Series.

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