Through TD Thornton
In an effort to recoup at least $ 200,000 from transfers by Ahmed Zayat that would allegedly constitute a “fraudulent transfer” because they occurred just before Zayat filed for Chapter 7 bankruptcy protection, the trustee charged with verifying Zayat’s case filed two lawsuits in federal court on Wednesday aimed at recovering this money so that it can instead be used to pay creditors.
Zayat claims to have $ 19 million in debt, and much of that money is owed to thoroughbred people and entities.
According to documentation filed April 21 in United States Bankruptcy Court (District of New Jersey) by Trustee Donald Biase, “The Transfer[s] were made with the actual intention of hindering, delaying or defrauding the debtor’s creditors. “
As an exhibit, Biase has attached a copy of a September 3, 2020 national bank transfer for $ 175,000 between two law firms.
Zayat’s name does not appear on this TD Bank document. But the trustee, presumably through forensic accounting practices, alleges that “the debtor’s books and records reveal” that Zayat orchestrated the transaction, which was allegedly carried out “without the debtor receiving a reasonably equivalent value in exchange.”
The recipient of the money was listed as Cohen Tauber Spievack & Wagener, a New York-based law firm. According to a 2015 post on that company’s website, the company has represented Zayat in court and “advises Zayat Stables on transactional matters and sponsorship deals related to American Pharoah. “
The timing of this $ 175,000 transaction is remarkable as five days later Zayat filed for bankruptcy protection, signing documents that claimed he only had $ 314.22 in his name.
In another court complaint, the trustee also asks for $ 28,848 in return from New York University (NYU) which Zayat allegedly paid to the school in the 90 days before he filed for bankruptcy.
Zayat has four children, and they all graduated or are attending / frequenting NYU. The youngest of the siblings, Emma, just enrolled in school in 2020, according to her LinkedIn profile (Emma was the inspiration for the name of Littleprincessemma, the mother of American Pharoah).
Even though this money was paid for tuition or pre-existing debt, the complaint states that (among a list of other legal reasons) the trustee may try to recover these funds because “the debtor was insolvent at the time. and [NYU] had reasonable grounds to believe that the debtor was insolvent. “
In the cases of the two allegedly fraudulent transfers, the trustee is pursuing the money not by suing Zayat himself, but by listing both the law firm and NYU as defendants, meaning they would be at the mercy. reimbursement if the judge decides. the favor of the trustee.