The Brooks Brothers Find Trouble-- And Harness Racing Holds Its Breath
The rubble of body-armor manufacturer David H. Brooks' once formidable empire continues to claim its victims. First it was investors in his body-armor company, DHB Industries, whom he and a co-defendant allegedly defrauded out of approximately $190 million. Now it's an entire industry, the sport of harness racing in North America, which has been left dazed and reeling over the possibility that its biggest and most controversial owners may soon be out of the business.
Brooks and his brother, Jeffrey, evidently own or otherwise control at least 800 Standardbred race horses all over North America (some put the figure closer to 950). Whatever the precise number, it represents an inordinately large percentage of the Continent's entire racing population--perhaps the largest ever owned by a single ownership group at one time. Over the years, racing under stable names like Perfect World Enterprises and Bulletproof Enterprises, Brooks horses have often been at the top of the sport. This past year, for example, Team Brooks won more than $12.5 million--nearly three times more than their closest competitor. The Brooks Brothers (and family) also own some of the best broodmares in the business and several fashionable sires.
They are also, I am told by dozens of industry movers and shakers who asked not to be identified for this piece, among the most odd, unyielding and incomprehensible people ever to participate in a sport that's been around for more than 100 years. So having endured their success for decades, many horsemen and horsewomen--owners, breeders, trainers, drivers, trackmen alike--now are left wondering whether the Brooks family's demise in racing is nigh. If it is, if all those horses have to be sold on the open market, the end of the Brooks dynasty would have enormous ramifications for a sport already struggling to find its place in the 21st century world of gaming and entertainment.
Here's how it's gone down. The seriousness of the charges against David Brooks--counts that could land him 25 years in prison if convicted--ultimately begat a deal brokered between federal prosecutors and defense attorneys which allowed Brooks to remain free on bail pending his trial. As part of David Brooks' bail conditions, Jeffrey Brooks, and perhaps other family members as well, were required to disclose and pledge some of their assets to honor David's commitment. At some point in this timeline (it's still unclear but evidently under investigation) David Brooks allegedly transferred some or all of his ownership interests in the horses to his brother.
Jeffrey Brooks in turn, more recently, has attempted to transfer some of those racing interests to other family members. Just before the David Brooks trial began on Long Island last month, however, prosecutors proved that David Brooks was improperly hiding and/or transferring assets. Scotland Yard, according to prosecutors, saw a Brooks family member allegedly taking millions in cash out of a bank in London in a duffel bag. U.S. District Judge Joanna Seybert quickly revoked David Brooks' bail and sent him to prison during the pendency of his trial. The news about the revocation of the bail, and whatever role, if any, Jeffrey Brooks may have played in it, generated a new round of action on both sides of the Canadian border.
First, the Ontario Racing Commission, from Canada's dominant harness racing jurisdiction, announced that Jeffrey Brooks, and the horse-business he and/or his family operate(d) as Perfect World Enterprise and Bulletproof Enterprises, have had their racing licenses suspended. "All racetracks," the stark decision reads, "are ordered to hold, freeze and maintain all funds, purse accounts or monies related to" the Brooks Brothers' enterprise pending completion of the ORC's investigation. No Brooks Brothers horses have raced since in the province. They've all been scratched.
Just a few hours after the Canadians spoke, the United States Trotting Association chimed in. A staid, conservative group that has overseen the harness industry for about a century, the USTA took a relatively bold step (for it, anyway) Thursday afternoon of declaring it would not accept any transfers in ownership interests in horses from Jeffrey Brooks or anyone in his family pending an ongoing investigation into Bulletproof. Put the emphasis on "ongoing," one source told me last week.
And, indeed, this past Tuesday, the USTA, citing the Ontario action, suspended its membership privileges for all of the Brooks' entities. Now regulators in Pennsylvania, Kentucky and Illinois, among others, are mulling whether to honor those suspensions. New Jersey, which hosts the most important track in America at the Meadowlands in East Rutherford, already has suspended Brooks Brothers' horses from racing there. At Ohio's only harness track now in operation Brooks' horses were scratched Saturday. New York quickly followed. On Wednesday, so did Delaware.
At some point, if the horses cannot race because the Brooks Brothers cannot be licensed, and if the federal government, Canadian authorities, or private creditors of Team Brooks seek to tap into the value of all that horseflesh, harness racing may see its biggest dispersal sale ever. Many folks in harness racing told me privately that they wouldn't shed a tear if the Brooks Brothers were forced out of their sport. But getting from here to there, they worry, won't be a smooth ride.
On Friday, I emailed Jeff Pocaro, an attorney who often represents horsemen and horsewomen in harness racing. I wanted to know if he was involved in a defense to the regulatory action against the Brooks Brothers. Pocaro emailed back to say that while he was an "advisor," he had not been "asked to represent any of the Brooks' family members in Canada or with the USTA" so "it would be inappropriate for me to comment. Sorry about that. Normally I would."
But Pocaro was willing to give me a general quote "as a horse attorney." And in that capacity alone, he wrote that he considered "the Brooks' family suspension detrimental to racing, both short and long term. The suspension changes the level of competition. The Brooks' horses produced record earnings for a stable last year, with many of the horses being made the public's betting favorite. If the suspension continues on a long-term basis, racing fans will have to adjust their handicapping to take into account that there are no Brooks' horses in the race. Sometimes there were two or three Brooks' horses in a stakes race and the entry gave you value when placing a bet.
"And," Pocaro added. "A long term suspension could result in the forced liquidation of the Brooks' horses by creditors to raise capital. With more than 900 horses, a sale would dwarf the last big dispersal by Lana Lobell Farms of Bedminster, NJ, when there was a bankruptcy. With the economy the way it is and purse structures suffering at too many tracks in the US and Canada, it would be a huge fire sale beyond imagination, as harness racing would be hard pressed to absorb so many horses at one time."
An owner, breeder and writer in racing, I was up in Mississauga, Ontario this past weekend for the "Academy Awards of Harness Racing," otherwise known as Standardbred Canada's O'Brien Awards. It's a black-tie affair that honors the Canadian industry's most successful horses and humans. It's great fun. But this year anyway all anyone seemed to be talking about were the Brooks Brothers. So sudden was the regulatory takedown last week that there was a full-page, color advertisement in the night's program from Bulletproof--even though Standardbred Canada was forced at the last minute to scratch Bulletproof entries from consideration for annual divisional honors.
The harness racing folks I spoke to up in Canada and then back home in the states--scores of people--don't think much of Pocaro's logic. Some used the word "absurd;" calling it tantamount to arguing that some crimes are too big to be prosecuted or punished. Not a single person I talked to (and granted I did not talk to everyone) uttered a word of encouragement or support for the Brooks family. Many of them have their own unflattering stories about the family's racing operation and, based upon those stories, were not necessarily surprised to find this day come.
The harness people I spoke with over the weekend told me they aren't worried so much about who is going to buy the Brooks Brothers horses if they are ultimately sold as they are worried about who is going to be feeding those horses today. They aren't worried so much about losing the family from the sport as they are about who is going to pay all of the people who say today that the Brooks racing enterprise owes them money for one service or another.
In the absence of detail from regulators on both sides of the border, the sport's vaunted backstretch rumor mill is operating at a high level. There is loose talk of lawsuits and trustees, of trainers and other contractors banding together to get themselves paid. There is talk of rescuing the horses themselves if they ultimately need it. There is talk but no one seems to know what to do next. There are so many jurisdictions involved, and so many different rules and administrators, and two countries each with their own timing and system of justice. There is no centralized Commissioner's Office; no one to direct a coordinated response.
Which is why, right now, the industry is following the increasingly zany David Brooks trial with an intensity usually reserved for the Hambletonian, the sport's most prestigious race. Horsemen and horsewomen, many of whom live week to week anyway, are watching to see whether new lawsuits or a criminal case rise up against Jeffrey Brooks. They are watching to see how regulators in their own business continue to handle this extraordinary event. They are waiting for someone, anyone, to clear title to those hundreds and hundreds of beautiful horses. The question, these earnest people say, isn't how bad it looks now--but how bad is it likely to get down the trail.