That’s the Way the Industry Works Ð But Is It Legal?

Undisclosed profit-taking by trainers facilitating horse sales and purchases is a widespread practice touching every discipline in our industry. Many clients adopt a “don’t ask, don’t tell” approach to under the table compensation when buying or selling a horse through an equine professional, viewing it as a necessary evil. Others are outraged to learn that their trainer made an undisclosed profit on their horse transaction, but believe they have no recourse and even blame themselves for being too trusting. However, trainers profiting on the sly is not only unethical, it is also legally actionable and may even be criminal.

In 2004, the federal government successfully prosecuted criminal cases against Kenneth Berlin and Joshua Cardine, regionally well-known Virginia hunter/jumper trainers. The allegations involved various horse sales schemes in which Mr. Berlin and Mr. Cardine sold horses on behalf of their clients and then remitted none or only a portion of the proceeds to the clients. Mr. Cardine and Mr. Berlin each plead guilty to conspiracy to commit fraud and swindle of livestock in interstate commerce, a felony. Cardine and Berlin were sentenced to 18 and 21 months, respectively, in federal prison, followed by three years of probation. The court also ordered the trainers to make restitution to their victims in the amount of $94,300.

In 1997, the Neal family engaged internationally known dressage trainer Sjef Janssen to sell their horse, Aristocrat. The Neals agreed to pay Janssen a 10% commission on the sale price. Janssen told the Neals that he could only get $312,000 for Aristocrat, but unbeknownst to the Neals, Janssen actually sold the horse for $480,000. The Neals later learned the true sale price and sued Janssen for breach of fiduciary duty and fraud. A jury awarded the Neals $250,000 in compensatory damages and $250,000 in punitive damages. The ruling was upheld on appeal, where the court noted that Janssen had “no valid defense on the merits