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US$65 Million Judgment Stands

Monday, 22nd July 2013

In the US, a federal appeals court upheld a US$65 million judgment against the operators of a horse breeding program that turned out to be fraudulent, finding that the sales and tax benefits were "dramatically oversold", reports bloodhorse.com. The U.S. 6th Circuit Court of Appeals found that the operators of a mare-lease program, ClassicStar Farms, GeoStar corporation and three owners, actively sought to mislead investors. ClassicStar and GeoStar sold the mare-lease programs as tax shelters, but failed to tell prospective investors that the Internal Revenue Service (IRS) was investigating the programs. In 2009, ClassicStar co-founders David and Spencer Plummer pleaded guilty to US$200 million in tax fraud. "The evidence is pervasive that the GeoStar defendants were aware that the Mare Lease Program was dramatically oversold," stated Judge Eric Clay in a majority judgment. Arbor Farms, Jaswinder and Monica Grover, MacDonald Stables, Nelson Breeders, and West Hills Farms sued ClassicStar and others. U.S. District Judge Joseph M. Hood awarded US$49.4 million in damages and US$15.6 million in pre-judgment interest in 2011 to investors for a total of just over US$65 million.

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