“About ten years ago, Harvey entered thoroughbred racing as a partner with some of his RexCom executives in a couple of horses. The partnership did well. One of the horses ran in the Kentucky Derby, to which Rexroth reacted in characteristic fashion. He was so excited about the horse’s future after it ran second in the Derby that he forced his partners to sell out their interests to him. Since these men worked for him, that was pretty easy to accomplish. Then he changed trainers and began buying horses by the carload. He spent millions to acquire a beautiful breeding farm near Lexington, Kentucky. In other words, he jumped into racing with both hands and a wide-open wallet. There were plenty of Kentuckians eager to welcome Harvey and his money.
“Harvey’s racing stable did okay,” Karen continued. “Nothing fantastic, no more Derby starters at least to date, but he had a few stakes winners. He also had a number of trainers. He is a very impatient man, and if the horses didn’t perform to his expectations, no matter how unrealistic they were, he usually fired the trainer. But he always paid these men well, so he never had trouble finding a successor for any of them. He was far more liberal in his payroll practices regarding racing than in any of his other businesses.
“Four years ago, a newspaper called Racing Daily ran a long story detailing what it termed Harvey’s revolving door policy regarding trainers.” Karen paused to smile at Elaine, who reached across the table to freshen their coffee. “To say that Harvey took offense at this story is putting it very, very mildly. He was enraged. He threatened a lawsuit, until his attorneys pointed out the folly of that. He made angry phone calls to a man named Walter Sandler, whose family had owned Racing Daily for over fifty years. Rexroth never received the satisfaction he was seeking.
“It was at that point that Rexroth made what was probably the first serious business error of his career. He was so angry at the Racing Daily for the story that he decided to strike back by going into competition with it. He decided to launch his own national racing paper.
“Rexroth spared no expense. He hired away some of the Racing Daily’s people, brought in big-time talent from other publications. He called his paper Horse Racing Journal. By virtue of spending money faster than his horses were running, he got this project off the ground in less than six months. He made all kinds of public pronouncements about how his new product would dominate.
“The problem was that Rexroth let his desire for revenge cloud his business judgment very badly. He completely misread the situation regarding horse racing and its need for daily publications. The old paper, the Racing Daily, was already tottering. Its circulation was way, way down from previous years. Horse racing itself was staggering. In contrast to years past, when racing was the only legal means of gambling all over the country, things had changed tremendously. States had developed lotteries, they had casinos, and there was a whole younger generation that had very little interest in racing. As a result, the Racing Daily was already on the downward slide.”
Karen paused to thank Elaine for refilling her coffee cup. Tirabassi shifted impatiently before Karen continued.
“When Rexroth came in with Horse Racing Journal, which was pretty widely recognized as a good product,” she said, “he believed he’d blow Walter Sandler’s paper off the map. He undoubtedly knew that the shrinking market couldn’t support two such papers, and he was very confident that his glittering, new, highly promoted publication would take over the market that was left.
“Rexroth was wrong. What he had failed to take into account was the extraordinary loyalty of the Racing Daily’s aging fan base. There were thousands fewer of them than in the earlier glory days of racing, but they had read Racing Daily all of their horse-playing lives, and most of them decided to stick with what they knew.
“Rexroth was stunned by this negative reaction to his pride and joy. He remained in denial for almost a year. He continued to pour money into his new paper, but it didn’t work. He couldn’t pry away enough readership from Sandler’s paper to make even distantly future profits a possibility. Rexroth soon imposed all kinds of editorial changes, ordered huge cutbacks in staffing, slashed expenses and overtime, but without really improving his bottom line. After an early show of interest, maybe because of the novelty of the paper, readership leveled off. And it was at a level that cost him a bundle. Rexroth is a very stubborn man. He took a huge financial hit.
“But that wasn’t what bothered him-the bulk of the Rexroth fortune remained intact. No, apparently what really affected Rexroth was the embarrassment he had suffered in this failed venture. He pretty much retreated from public life, spending most of his time on his farm in Kentucky. He’d only occasionally visit the racetrack to see his horses compete. The disastrous experience with Horse Racing Journal left a big scar on his monumental ego, a scar that hasn’t healed.”
Doyle said, “Okay, I get the picture regarding Rexroth and his financial flop. But so what? He lost a ton of money. What’s illegal about that? Where does the FBI-and me, for that matter-come into the picture?”
Tirabassi said, “Doyle, sit back and hear us out. We’re getting to the part that has to do with you. In fact, Karen, let me take it from here, okay?” She nodded her assent.
“A couple of years ago,” Damon said, “the Bureau-along with several other agencies, I might add-succeeded in cracking a small ring of horse killers. There were six of them, most from the Northeast. What they did was accept contracts on horses from the owners of those horses, if you can believe that. This ring-these people-all were figures in the world of show horses. You know, the equestrian shows. This is kind of a society sport, and it’s expensive to be in, but most of the people have money. As it turned out, some didn’t have as much as they thought they needed. That’s why they hired these killers.”
Doyle held up his hand to stop Damon. “Hold on a second. You mean to tell me that people who own horses, and presumably like them, would cold-heartedly have them killed anyway? That’s kind of a stretch for me, pal. I’ve been around the racetrack, remember. I’ve seen how those animals are cared for and treated-very, very well, is how. What you’re describing is hard for me to picture.”
“Jack,” said Karen, “take our word for it. It’s true. In fact, the only way that we finally cracked this ring was when we got a tip on one of its members and turned him with a promise of immunity. He testified about who was working with him, and who they were working for. The list of their employers included some of the biggest names in the show horse world. This was a sensational case.”
“Yeah, I remember seeing something about it in the paper,” Doyle said. “But refresh my memory-what was the motive for these people to kill their own horses?”
Damon responded, “It was a way for them to recoup their investments. Say a guy has paid a hundred grand for a top hunter/jumper prospect. He has the horse a couple of years, and it turns out to be a loser. Can’t win ribbons at any of the major shows, can’t win much prize money at the minors. He’s got this horse insured for at least a hundred grand, the price he paid, but it turns out he couldn’t sell it for more than twenty-five thousand. Rather than eat this loss, he calls in the horse killers. The horse suffers an ‘accidental death,’ one that is hard to discern-many veterinarians were fooled by the methods used and thought the deaths resulted from natural causes. Or the vets and insurance examiners thought the accident looked strange, but couldn’t prove it. In a few cases, a veterinarian was a willing accomplice of the horse killers.
“These guys were very discreet, very clever, very good. It’s quite possible that they’d still be operating if there hadn’t been a classic ‘falling out among thieves’ that led to the tip that led to their arrests and convictions. When those cases were finished, believe me, all the agents involved breathed a sigh of relief. Case closed, everybody thought.