A renegade lawyer, who had represented insurance companies, taught Tim Ray his grim stock in trade. Slice an extension cord down the middle. Clip one half to the horse's ear, the other to its anus. Plug the end into an electrical outlet.
Death is immediate. But the culprit looks a lot like colic -- the equine equivalent of bowel trouble.
Until July, when federal prosecutors brought indictments against Ray and 18 others in connection with the deaths of heavily insured show horses, many insurers routinely compensated horse owners for their losses. Now they are trying to understand how they were all so easily duped.
Ray, who also was known as Tommy Burns as well as the Sandman to his clients, pleaded guilty Aug. 31 to conspiracy to commit mail and wire fraud and is expected to testify against many of the socialites, trainers, veterinarians and others he says hired him to do their dirty work so that the horses' owners could collect insurance money.
Yet, he is almost nonchalant about what he did.
"The horses I killed never suffered," he has said over and over in interviews. "It was just a business."
A nasty business at that. Charging $5,000 or so per job, Ray says he made $150,000 all told from his chosen career. And he is far from being the only hitman-for-hire to have plied the horse business.
Last year, a reputed member of the Colombo crime family,
Lawrence Lombardo, was convicted in Miami of having a veterinarian lethally inject a horse sired by the 1977 Triple Crown winner, Seattle Slew.
Lombardo and his associates collected $400,000 in insurance money from the scheme -- and might have kept it if investigators had not captured him on tape bragging that it took five hours for the horse to die.
No one knows exactly how much insurance companies lose underwriting horses that are victims of foul play.
Insurers charge at least $40 million in annual premiums to insure about $1 billion of horse flesh in this country alone, and of the $30 million or so in claims submitted annually, equine adjusters said perhaps five percent are bogus, compared with an estimated 10 percent of all property and casualty insurance claims.
Temptation to defraud
But the temptation to defraud reached a crescendo in the last decade. Many horses -- especially thoroughbred racehorses -- trade nowhere near where they did in the mid-1980s, and the 1986 tax act deprived many owners of the chance to write off their losses.
"The insurance policies provided an alternative to recoup on a losing investment," said Steven Miller, a federal prosecutor who spent five years investigating show horse crimes.
Certainly, Ray, an eighth-grade dropout from Illinois who single handedly helped swindle the insurance industry out of thousands of dollars, had no dearth of clients.
Generali-U.S., the American office of an Italian company, forked over $250,000 after the 1990 death of Charisma, an arthritic horse that authorities say Ray killed. The horse was owned by George Lindemann, Jr., a champion equestrian and son of George Lindemann, chief executive of the Southern Union Company in Austin and one of the country's 400 richest men. The younger Mr. Lindemann, indicted on wire fraud in July, is fighting the charges.
American Bankers Insurance Co. of Florida lost $90,000 on two horses that the indictments state met untimely deaths at Ray's hands -- Rub the Lamp and Belgium Waffle. The American Live Stock Insurance Co. believes Ray helped bilk it out of $200,000 while Bankers Standard Insurance Co., a subsidiary of Cigna Corp., believes it lost $238,000 because of Ray, the indictments also note.
Throwing in the crop
In the face of such losses, several insurers are throwing in the crop. Bankers Standard, the Cigna unit, no longer insures
horses. Markel Rhulen Underwriters and Brokers, a leader in horse insurance, has reduced its exposure on standardbreds, a type of horse often used in harness racing, and shies away from thoroughbreds, where the stakes can easily soar into the millions rather than tens of hundreds of thousands of dollars per horse.
"We may not write policies on some breeds because they are prone to have accidents or be overvalued or if we don't have an accurate method to value them," said Ron Abram, president of the Virginia company.
Companies that are staying in the ring are more involved in post-mortems and in deciding who does them. They want more proof of the horse's stated value.
And they are doubly interested if a horse was losing races or limping just before its death.
Insurers more wary
"The insurance industry as a whole has become more wary," says Harvey Feintuch, a New York lawyer who counts Lloyd's and other big insurance companies among his clients.
If horse insurance fraud had once seemed small-time, a 1986 Kentucky trial alerted insurers that the industry's wealthiest and most prominent patrons could concoct elaborate frauds. In that case, Harold Snowden Sr., former member of the Kentucky State Racing Commission, sued Lloyd's of London after it refused to pay any more than $1 million for Pelerin, his dead stallion.
Lloyd's argued that the $1.4 million value he was seeking -- not to mention $10 million in punitive damages he wanted atop that -- was inflated. Lloyds also let him know it was skeptical of his claim that the animal had overdosed on vitamin D solely from its diet.
To bolster his claim in court, Mr. Snowden produced letters from 10 of racing's best-known names, all allegedly offering to pay dearly for a stake in his horse. Leslie Combs II, then chairman of Spendthrift Farm, J.T. Lundy, president at the time of Calumet Farm, and Warner L. Jones, a former chairman of Churchill Downs, were but three of the supposed suitors.
Trouble was, Lloyd's was able to convince the judge that letter after letter had been written after the horse died -- and backdated. The show-stopper came when a secretary and a receptionist who had typed two of the letters testified that they did not even begin working for those bosses until after the horse died. A federal grand jury investigation yielded no indictments, but Mr. Snowden had to pick up Lloyd's legal costs.