Four former members of Daily Racing Form's management team, including longtime chairman, editor and publisher Steven Crist, have sued the newspaper and online publisher's previous owner, saying they were fraudulently induced to invest in the company when it changed ownership in 2007.
Crist and Rich Rosenbush, who served in executive roles in editorial, each invested $100,000 with Sports Information Group Holdings (SIG) in October 2007, shortly after the company merged with Arlington Capital Partners, which had just purchased Daily Racing Form, according to the complaint filed on Nov. 1 in the Supreme Court of New York, County of Nassau. Two others, Amanda (Mandy) Minger, vice president of marketing, and another vice president, Jeff Burch, invested $75,000 each.
The complaint says the four were led to believe by Jeffrey Freed, co-founder and managing partner of Arlington Capital, and others that they would realize a 12% annual return on their investment and that their money would be “as safe as putting the money into a savings account at a bank.”
None of the four received any economic gains, the complaint reads, and their investment was deemed “worthless and lost forever” after SIG Holdings sold Daily Racing Form in July 2017 to Z Capital Partners.
The complaint says the four plaintiffs were misled into believing the 2007 purchase of the publication was a cash deal, but that the buyers in fact took out a “huge loan, to recklessly buy” Daily Racing Form for $200 million. The complaint says DRF was “approximately an $80 million company” at the time and that it later sold for under $100 million.
Over the years, the complaint states, none of the plaintiffs received financial information or K-1 tax forms – despite repeated requests – and that SIG Holdings and individuals with the company “fraudulently concealed” malfeasance and fiduciary breaches from the plaintiffs.
Named as defendants in the suit are Arlington Capital Partners, L.P.; Sports Information Group Holdings, LLC; Sports Information Group LLC (aka Daily Racing Form); Z Capital Partners, LLC; John Hartig (chairman and CEO of SIG/Daily Racing Form) and Jeffrey Freed of Arlington Capital.Current owner Z Capital is listed as a “successor in interest” from the previous owners.
The complaint alleges breach of contract, unjust enrichment, fraudulent inducement and concealment, and negligence.
The plaintiffs seek return of their investment, treble damages and court costs associated with the case.
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