Kentucky Derby contender Great Hunter is one of two favorites in Saturday's Blue Grass Stakes at Keeneland. But if the colt finishes in the money, it's up to a judge to determine whether his earnings go to a bank or to owner J. Paul Reddam.
That's because Fifth Third Bank in Lexington says it has legal claim to the horse that was once owned by Ilona Whetstone, formerly of Jessamine County. A lawsuit filed Jan. 29 in Jessamine Circuit Court says that Ilona and her husband, L. Eric Whetstone, defaulted on loans and a bank-issued credit card that were secured using racehorses as collateral.
Ilona Whetstone sold Great Hunter last year to Reddam, the founder of ditech.com, an online mortgage company that he sold to General Motors in 1999.
Reddam lives in Sunset Beach, Calif.
In late March, a Superior Court judge in California's Orange County approved a temporary restraining order that allows Reddam to run Great Hunter in the Blue Grass Stakes.
On April 24, that California judge will consider whether the order should be extended into a permanent injunction. But even if the judge decides in favor of the bank, "there's nothing stopping us from running the horse in the Kentucky Derby," said Dan Baren, an attorney for Reddam.
A new twist occurred yesterday, when Fifth Third sent a letter to Keeneland asking the track "to withhold any proceeds or purse winnings in the event that Great Hunter earns anything on Saturday, and not to disburse it to Mr. Reddam," Baren said.
"We believe that that's a violation" of the temporary restraining order, Baren said. That California order prevents the bank from attempting to take possession of Great Hunter or from doing anything to stop him from racing.
The bank's assertion of a security interest in the horse and its threat to take the animal "was initially quite shocking," Reddam said in a telephone interview.
"It actually has the whole team upset, not just myself, but also (trainer) Doug O'Neill," Reddam said. "It's just kind of emotionally devastating to me that they're taking what should be a once-in-a-lifetime experience with him and really casting a huge cloud over it."
Reddam said he considered not even entering Great Hunter in the Blue Grass Stakes "just because we didn't want to have any trouble with this bank."
The California lawsuit also says that Great Hunter is now worth several million dollars, "and his value could increase significantly based on his performance in the Blue Grass Stakes, the Kentucky Derby and other races."
The bank, according to Reddam's attorneys, had said that it was negotiating with two parties to sell its alleged interest in Great Hunter, and that the buyer will take steps to take possession of the colt.
Scott Rickman, a Lexington attorney who represents Fifth Third Bank, and Debra DeCourcy, a spokeswoman at the bank's Cincinnati office, both declined to comment. An attorney for the Whetstones also had no comment.
Great Hunter, the son of 2000 Kentucky Derby and Belmont Stakes runner-up Aptitude, has won three of eight starts and earned $750,000. Last month he won the $200,000 Robert B. Lewis Stakes in Santa Anita, Calif., where he is stabled.
Ilona Whetstone purchased Great Hunter for $35,000 at the 2005 Keeneland Yearling Sale.
She sold the thoroughbred to Reddam for $550,000 in late June, about two weeks after The Olympian newspaper in Olympia, Wash., published a story detailing her husband's criminal past.
L. Eric Whetstone was convicted several times in the 1980s for fraud in Texas, Oklahoma, Kentucky and Pennsylvania, according to recent articles in The Olympian. Last year, Fifth Third withdrew a $125 million loan offer to Eric Whetstone, who was trying to convert a Washington brewery into a water-bottling plant.
Fifth Third sued the Whetstones in January for failure to pay two loans and a bank-issued credit card, according to Jessamine County court records.
The Whetstones, who formerly lived in a 17-room home in The Champions in northern Jessamine County, have denied the allegations in court papers. They now live in Lexington.
On March 2, Jessamine Circuit Court Judge Hunter Daugherty ordered authorities to seize 29 horses belonging to the Whetstones. (Great Hunter was not one of the 29.) Deputy sheriffs verified the location of some of the horses at Seclusive Farm on Bethel Road in Fayette County.
Since then, Fifth Third has hired Hinkle Farms in Paris to oversee and manage the breeding and racing of the Whetstone horses, and to market and prep them for sale as it deems appropriate. Hinkle recommended that those horses be moved to different training facilities in Kentucky and Illinois and with different trainers to maximize their value and earning potential, according to Jessamine court records.
Yesterday, Judge Daugherty authorized Fifth Third Bank to name an agent to apply for and obtain racing licenses in Kentucky, Illinois and "whatever other jurisdictions" the bank and Hinkle Farms deem appropriate in order to maximize the value of the horses. Yesterday's order said the racing licenses shall be issued in the name of the agent "as agent for Ilona Whetstone" and the racehorses "shall be entered in subsequent races under that name."
Fasig-Tipton Inc., the Lexington horse sales company, also has an active lawsuit against Ilona Whetstone in Jessamine Circuit Court.
That suit says Ilona Whetstone contracted to buy a dark bay/brown mare named Dis Miss at a February 2006 sale but "has failed and/or refused to pay" $60,000 plus interest of $10,240. Dis Miss is among the Whetstone horses that Fifth Third was given legal possession of through Judge Daugherty's March 2 court order. The order also lists a filly that Dis Miss foaled in January.
Reach Greg Kocher in the Nicholasville bureau at (859) 885-5775. News researcher Linda Niemi contributed to this report.