by Ed DeRosa

Michael Iavarone’s New York homecoming following Big Brown’s victories in the Kentucky Derby Presented by Yum! Brands (G1) and Preakness Stakes (G1) has been rained on by his local media, as the New York Times, Bloomberg News, and Newsday all reported on the former financial worker’s indiscretions.

Big Brown will attempt to become the first Triple Crown winner since Affirmed in 1978 when he goes postward in the Belmont Stakes (G1) on June 7, and many in the racing industry thought those in the area would embrace IEAH Stables Inc., the locally based ownership group that Iavarone founded, but that has not necessarily been the case.

Team Big Brown, including IEAH co-Presidents Iavarone and Richard Schiavo, part owner Paul Pompa Jr., and Three Chimneys President Case Clay, opened the New York Stock Exchange on May 28 by ringing the opening bell—an opportunity local newshounds used to dig up some dirt on the supposed “high-profile investment banker on Wall Street,” according to the IEAH website.

“Michael Iavarone … said it was the first time he had set foot in those hollowed halls of commerce, which might surprise some of his investors at International Equine Acquisitions Holdings [Inc.] as well as the public at large,” Joe Drape wrote in the May 29 issue of the Times.

IEAH Inc. is the parent company of both IEAH Stables and IEAH Corp., which is the nonprofit arm of the company. In the weeks leading up to the Derby, Iavarone talked about raising $100-million for a hedge fund involving assets related to Thoroughbred racing. IEAH is still pursuing the establishment of such a fund, but Big Brown would not be a part of it. On May 17, IEAH reached a deal to stand Big Brown at Three Chimneys that valued the colt in excess of $50-million.

While discussing plans for IEAH’s future, Iavarone rarely discussed his past. He traded penny stocks in the 1990s and did day trading before founding IEAH in 2003. Iavarone said he did poorly as a day trader, and his finances were not in good shape during IEAH’s fledgling years. From 2002-’04, Keeneland Association won a judgment against him for failing to pay for horses, and the Internal Revenue Services obtained a lien for unpaid income taxes.

Iavarone worked for A.R. Baron from 1993-’96. The New York District Attorney’s office prosecuted A.R. Baron for enterprise corruption. The company pleaded guilty and regulators shuttered it in 1997. For his part, Iavarone received a $7,500 fine and a ten-day suspension from the National Association of Securities Dealers, but he never was implicated in any criminal activity.

Schiavo joined IEAH first as an investor in 2003 and then as an officer in February ’04, and business has improved for the company since.

A call to IEAH for comments on this story was referred to Kelly Wietsma, who has not returned repeated calls and e-mails. Gary Tolchin, an IEAH investor who is involved in the ownership of Big Brown, could not be reached for comment.

Ed DeRosa is news editor of Thoroughbred Times