Thu, Oct. 07, 2004
Thoroughbred investment firm skips hearing, denies it's a scam

DON THOMPSON

Associated Press

SACRAMENTO - Although California regulators shut it down in July after accusing it of bilking investors out of $15 million, a Tennessee company claiming to invest in thoroughbred racehorses is continuing to operate under a different name as its lawyers say company did nothing wrong.

TC Enterprises LLC or Triple Crown Enterprises is still doing business as Thoroughbred Champions Enterprises LLC, but it will no longer sell horses in California to comply with the July desist-and-refrain order by the California Department of Corporations, said attorney Gayle Mayfield-Venieris.

Mayfield-Venieris denied the company's activities are a scam, as the state and some investors claimed, but she wouldn't say if the company is working in other states. Messages left on the firm's answering machine in Tennessee were not returned over two days.

The firm, on its now discontinued Web site, said investors could participate in the "sport of kings" by breeding horses instead of betting on them, earning "a king's ransom" by selling broodmares and their foal. The state says the firm illegally sold unregistered securities and overstated the value of its horses, while investors complain they haven't seen the promised profits.

The state cited claims by San Diego salesman Bret Lageson that the firm collected about $15 million from American investors, 80 percent of whom were in the San Diego area. That included members of a church congregation in Rancho Bernardo who were solicited by fellow churchgoers who had previously invested, in what the department alleged was an example of affinity fraud.

The company's mailing address is a Mail Boxes Etc. drop in Alcoa, Tenn., though Mayfield-Venieris said it also has offices in nearby Maryville, Tenn.; San Diego; and Bangkok, Thailand.

After initially challenging the state's July order, the company dropped its appeal last week. Still, company officers have been falsely telling investors the now-final order isn't significant, said Corporations Department spokeswoman Susie Wong.

Dropping the appeal was a business decision, Mayfield-Venieris said, and the company did nothing wrong.

In a letter to regulators Tuesday, Mayfield-Venieris offered several responses that include:

_ Selling horses doesn't count as selling securities, so it shouldn't matter that one of the firm's former salesmen had his securities license revoked. Not so, said Wong: "We've determined that this investment did involve the sale of securities. Our order stands."

_ Denying that co-founder and managing partner Tim Disney ever suggested he or the company has ties to the Walt Disney family. Investors and the state say such claims were made repeatedly. Mayfield-Venieris wrote that Disney "was told as a child that he is distantly related to the Walt Disney empire."

_ Mayfield-Venieris denied Lageson was ever a member or officer of the company, though she acknowledged company materials identify him as the firm's national sales manager. The state says Lageson and the company promised 25 percent to 50 percent returns on investments. Lageson did not return a telephone message, and Mayfield-Venieris said he's no longer with the firm.

_ "Mr. Disney is also very active in the Republican party, as evidenced by his appointment as an Aide-De-Camp of the 21st Legislative District in the Tennessee House of Representatives and his appointment in 2003 as an Honorary Chairman of the Business Advisory Council by Majority Leader U.S. Rep. Tom DeLay."

But any Tennessean can get an aide de camp certificate, suitable for framing, just by filling out a form on the governor's Web site, and aides to Tennessee Gov. Phil Bredesen or 21st District Rep. Russell Johnson said there's no record of such an appointment.

Being called an honorary chairman of the Business Advisory Council is meaningless as anything other than "a fund-raising tool," said Chris Paulitz of the National Republican Congressional Committee, which gives out the titles. Federal campaign finance records show Disney contributed $1,500 last year and $2,500 this year; "he has not had a long history of interacting with the party," Paulitz said.

The state investigation began after disgruntled investors contacted Barry Minkow, a former federal convict turned fraud investigator who turned over his findings to the Department of Corporations. Mayfield-Venieris' letter attacked Minkow, who has helped federal and state agencies uncover several Ponzi schemes over the last year. One, Orange County-based Financial Advisory Consultants, allegedly swindled investors out of more than $814 million.

Investor Mike Uyematsu said he was guaranteed an almost immediate profit of 25 percent to 50 percent on his $22,000 investment in a brood mare and her foal in June 2003. He said he was told this spring he could sell the mare and foal for $10,000 to recoup a portion of his investment.

"Back in June I said, 'Go ahead and sell it and give us our 10 grand.' We're still waiting," Uyematsu said.

Instead he got a letter from Mayfield-Venieris' office recommending he wait until next year to get a better price, and noting there is no profit guarantee in the horses' bill of sale.

Another investor, who spoke on condition he not be named, said he was refunded his $27,000 investment, partly by Lageson and partly by the company, though what he wanted was the extraordinary profits he had been promised. That investor says he has since talked with the FBI.

California securities regulators also are continuing their investigation, Wong said.