Lukas’ Public Racing Stable Is Sued by Investors : Operation Has Lost $4 Million Because of Bad Horse Purchases, Court Is Told

A publicly owned racing stable formed by trainer Wayne Lukas in 1987 is being sued by at least three investors after the group allegedly lost $4 million.

The suit was filed against Mid-America Racing Stables in U.S. District Court in Norman, Okla. The plaintiffs are Bill L. Kelley, Marvin Blubaugh and Dwayne Henderson, who say that the Mid-America stock was not properly registered. The suit also contends that a Mid-America sale of horses originally owned by Mel Hatley, a longtime Lukas client, did not come close to reaching book value.

When Mid-America was formed, the stock was sold at $8 a share, and $4 million was raised. David Burrage, general manager of Lukas’ coast-to-coast racing operation and vice president of Mid-America, said Friday that the stock is now worth 50 cents per share.

Mid-America reported a loss of $220,000 for 1988, and its report for the first quarter of this year showed a loss of $87,694.

Several of the horses that Mid-America bought did not come close to winning back their purchase prices at the track, and none of the horses has won a stake.

Decoy, a $200,000 yearling, earned $16,000 last year. This year, he underwent surgery for a throat problem. Some More Magic, who cost $100,000, suffered sore shins while running at Santa Anita early this year and recently finished off the board in a race at Arlington International. Profit Key, a 2-year-old colt that was bought by Mid-America, is running in a maiden race at Del Mar today.

“We will vigorously defend this lawsuit,” Burrage said. “We disagree with these allegations. I don’t believe those doing the suing know the facts. We feel that we’ve done a good job of keeping all of the shareholders informed about the operation.”

For the seventh consecutive year, Lukas’ overall operation is leading the national trainer standings. But despite more than $8.5 million in purses, it has been a difficult year for the California-based trainer.

He was involved in a California investigation of trainers whose horses had tested positive for cocaine after races. Those charges were dropped. Lukas also underwent surgery for a back injury, and his main client, Eugene Klein, is leaving racing and will sell his horses at the end of the year.