July 4, 2004 in City
Like a dueling dragster, the man who operates Spokane Raceway Park is squaring off with disgruntled investors who say they haven’t seen any return on $2.5 million in stock they bought 30 years ago. Orville Moe, a crusty, gun-toting 67-year-old millionaire, says that the power struggle is being inflamed by estranged family members and that he’s done nothing illegal.
But the Spokane business legend could face state and federal investigations, and he has been named in at least two lawsuits, including one brought by the Kalispel Indian Tribe.
More than 100 angry investors, including Moe’s two brothers, are attempting to oust Moe as a general partner and take over the multimillion-dollar drag strip and two adjoining tracks on nearly a square-mile site in Airway Heights.
“It’s a family feud and a hostile takeover attempt,” Moe said last week from his sweltering, trophy-lined office that has a window view of the drag strip. “They see some asset value out here, and they want to get at it,” he said, his black-and-white cat, Nitro, at his feet.
Moe has not been charged with criminal wrongdoing, but complaints have been filed with the state offices of the attorney general, the Department of Financial Institutions, and the Department of Labor and Industries.
For the past 30 years, Spokane Raceway Park has hosted drag, oval and motorcycle races every weekend from April to October. The American Hot Rod Association World Finals pulls in 100,000 spectators every August. On Friday nights, as many as 10,000 young people flock to the track for Night Street Racing at $5 a head.
Moe said Spokane Raceway Park has never made money, but he acknowledged that subsidiary companies he formed for track-related business, including his advertising firm and a concession business, have been profitable.
Meanwhile, scores of “limited partners,” including Moe’s brothers Earl and Maynard Moe, said they haven’t seen any of the money.
“We’re talking no profits, no dividends, no nothing,” Earl Moe said. “This stock has been held hostage for years, and now Orville offers to buy my stock for 2 cents on the share.”
“We’re talking about Orville being unfair with the stockholders and us, his brothers,” Earl Moe said, his brother Maynard nodding in agreement.
Spokane attorney Greg Lockwood, who represents two shareholders in a civil suit filed in October in Superior Court, said he expects to file additional papers soon requesting a court-ordered independent audit of the books of Washington Motorsports and Spokane Raceway Park Inc. The suit seeks financial records and damages for Moe’s alleged breach of fiduciary duties.
“It’s unconscionable what he’s done to these limited partners,” Lockwood said. “A number of them are elderly and a majority of them are what I’d call unsophisticated investors.’ ”
Last month, Superior Court Judge Robert Austin ordered Moe to produce a “partnership register” showing who bought stock in Washington Motorsports and who currently owns shares.
“Without that, we don’t know who owns what out there,” Lockwood said. “Orville Moe has made it almost impossible to hold a vote to get him out as the general partner.”
Moe and his attorney, Carl Oreskovich, have resisted turning over the names of limited partners and their shares, claiming such shareholder information is proprietary.
Moe initially turned over what was described as a mailing list, but Judge Austin ordered a more detailed stockholder register to be produced within the next few days.
On another front, the Kalispel Indian Tribe is suing Moe in an attempt to invalidate a joint venture agreement he signed when he sold the tribe 40 acres of racetrack property for Northern Quest casino.
The dissident shareholders said they’ve never been given details of the casino-land deal and wonder where the money from that and three other land sales went.
Moe said he can account for everything.
The battle over Spokane Raceway Park started a year ago when Moe’s 43-year-old nephew, Troy Moe, quit after working three years at the track. He managed the Friday night street races, among other duties.
“I have direct personal knowledge of ongoing underreporting of gate and admission revenue at Spokane Raceway Park,” Troy Moe said in sworn court documents.
“Orville Moe does not provide even the most rudimentary of controls and procedures to safeguard the gate and admission receipts for racing events,” he stated in the documents.
Troy Moe said that the raceway uses a “rather archaic combination of rolled carnival tickets and hand-stamping,” and that Moe’s wife and daughters generally are the only ones handling gate revenue.
He also claimed that stockholders’ assets are in jeopardy because some race events are either underinsured or not insured at all. Many of the 16- and 17-year-old drivers in the Friday night races don’t sign insurance liability waivers, he said.
According to Troy Moe, there are persistent reports that his uncle has a horde of cash, a stash of gold bullion and offshore bank accounts.
“You find that stuff, and I’ll split it with you,” Orville Moe responded in a separate interview. “Naw, what we got is here at the track.”
For his part, Moe accuses his nephew of stealing business records and whipping up stockholders “by filling them full of lies.”
He has also filed a countersuit against his nephew in state court alleging defamation and business interference.
According to the countersuit, Troy Moe falsely accused his uncle of being “a crook, liar and thief” who has “stolen millions of dollars” from Washington Motorsports and “defrauded the limited partners.”
After quitting his uncle’s business, Troy Moe formed his own company, Spokane International Raceway Inc., with partners Terry Dunn and Dan McKinney. Troy Moe also lined up dissident investors Don Materne and Ed Torrison, both of Spokane, who filed the suit alleging financial irregularities. The civil suit is set for trial this fall.
“After 30 years, it’s time we should be paid something,” said Materne, a 69-year-old Spokane contractor whose construction company helped build Spokane Raceway Park, partly in exchange for stock in the facility. “We figure if we all went together, maybe we can get Orville to start answering some questions … instead of being stonewalled.”
Troy Moe said he has new investors ready to cash out Orville Moe and about 500 other shareholders who bought about $2.5 million worth of stock in the 1970s.
“We have the capital and stand ready to step in and make all these investors whole, paying them fair market value after a new appraisal of the facility,” Troy Moe said, estimating stockholders should get 400 percent to 600 percent of the value of their original investments. Investors also could stay vested or sell their stock on an annual basis, he added.
A cash business’
Scores of limited partners, who have no control over business operations, said in court filings and interviews they have been defrauded.
One of them, Earl Wham, scraped together $5,000 to buy one “B unit” share in Washington Motorsports in the 1970s before later going to work at the facility as director of competition.
“It’s strictly a cash business, and I’ve been there when he’s hauled away bags full of money,” said Wham, a longtime car and hydroplane racer who worked as a security guard at the track, frequently accompanying Moe with a shotgun.
“Not one of us shareholders has ever received a cent, not one red cent,” Wham said.
Another shareholder, Evelyn Andersen, 78, of College Place, Wash., told Orville Moe earlier this year that she was eager to get anything back from the $10,000 her late husband invested in Washington Motorsports.
Moe told her the stock was “worthless” because of his ongoing fight with the tribe, she said, but he later indicated he might be able to line up a woman who might buy her $10,000 investment for $3,000.
When the transaction concluded, Andersen’s stock was transferred to Susan Dry, who is Moe’s daughter. Dry has also acquired other Washington Motorsports stock at distressed prices, according to court documents.
Moe said Andersen and other investors knew the stock was being purchased by his daughter.
Fred Rogers, an 80-year-old retired Spokane Valley farmer and lifelong racing enthusiast, sat in court at a recent hearing when Moe was ordered to turn over his investor list.
Rogers said he invested $10,000 in Washington Motorsports in 1973, convinced it was a sound investment. “It was going to make money, lots of money.”
Individual investors can’t afford the cost of an expensive legal fight with Moe, Rogers said, but there may be some hope if they band together.
A track’s history
The track at Airway Heights – a destination spot for thousands of motor racing fans each summer – was built in the 1970s after Orville Moe began selling two types of stock investments in Washington Motorsports Ltd. Those securities were registered with the state and only sold to Washington residents.
About $2.5 million was raised from the sale of “A units” at $500 apiece and “B units” at $5,000 apiece. Later, “A units” were sold for $1,000 and “B units” went for $10,000.
The individual shareholders were designed as “limited partners” in Washington Motorsports.
Spokane Raceway Park Inc., buying the 640-acre site, was designated as the “general partner” and given 90 “B units,” worth $450,000, with a $140,000 property mortgage remaining. At the time, Moe controlled 45 percent of Spokane Raceway Park Inc. His father, Clarence Moe, owned 45 percent, and 10 percent was assigned to tax attorney Robert Kovacevich.
Moe and his father, who operated the Deer Park Drag Strip in the 1960s, were charged with income tax evasion in April 1970. The government dropped the charges before the case went to trial, after Clarence Moe’s sudden death.
The first race at the track was held in 1974, the same year Spokane hosted the World’s Fair.
After Clarence Moe’s death, his 45 percent share was left to his widow, Georgia. After her death in 1991, she willed 15 percent to Orville Moe and 15 percent to each of his brothers, Earl and Maynard. With a 60 percent share, Oroville Moe now controls Spokane Raceway Park Inc., and is viewed as the general partner.
Orville Moe is still only a minority owner of Washington Motorsports, which owns the entire facility.
Last October, Earl and Maynard were ousted as directors and officers of Spokane Raceway Park and replaced with two men who have business relationships with Moe.
One of the new officers, Dominick Zamora, works for LeMasters & Daniels, the accounting firm that does the books for Spokane Raceway Park. The other new officer is Realtor Pat Kenney, a former Spokane city councilman who has handled private real estate transactions for Moe.
Moe disagrees with critics who say it’s a conflict of interest for his business associates to be officers of Spokane Raceway Park.
Kenney said he has handled real estate transactions for various Moe family members for years and thinks that background will help him resolve the current battle. Zamora didn’t return telephone calls for comment.
Orville Moe said he was asked last year to sell his controlling interest in Spokane Raceway Park to Troy Moe and his father, Maynard Moe, but he declined.
“What Troy told me was, Unless you agree to what I’m doing, I’ll take you down.’ They were going to take the whole place over,” Orville Moe said. “Even then, they didn’t offer to buy me out. They just wanted me to move aside.
“If they’ve got somebody that wants to buy the place, make us a written offer and bring it to the office,” Moe said. “I don’t have a problem with that if it’s a good deal, but we’ve never seen that.”
Moe said he understands why stockholders are frustrated. “I’m a stockholder, too, and I haven’t received any return, either.”
Moe said shareholders shouldn’t put their trust in Troy Moe, whose state securities license was suspended in the early 1990s when he and his father operated Dillon Securities, a penny-stock securities firm that folded.
Troy Moe said the suspension involved technicalities that existed when his father purchased the securities firm and has nothing to do with issues now being raised about Washington Motorsports and Spokane Raceway Park.
The best deal’
Public records show Orville Moe personally owns several properties in Spokane County, including 50 acres of mostly undeveloped land adjoining Spokane Raceway Park. Moe said he recently paid off the mortgages on two houses he bought for his daughters.
“I’m 67 years old, and I started when I was 16,” said Moe, adding that he still works at the track seven days a week. “I don’t think you’ll find anybody in town who we deal with that will say I’m not fair. But I do get the best deal that I can.”
The agreement between the limited partners and Orville Moe expired in 2000. Moe asked for a 12-year extension and claims to have received approval with a secret vote. But some of the shareholders question the validity of the vote.
Among questions being asked by shareholders is for an accounting of Moe’s assets, including $250,000 from the sale of the 40 acres to the Kalispels; $450,000 from another venture with the tribe; $230,000 from the sale of 8.5 acres to Metropolitan Mortgage for a state prison access road, and $60,000 from Inland Power and Light for 2 acres he sold.
Shareholders also want to know where the money is going from a gravel-mining operation Inland Asphalt is running on the western edge of the racetrack property. Court documents show the paving company has paid almost $500,000 to Moe. Moe said that money went toward repaving the strip and other maintenance expenses.
Pushing back his hat, Moe said he can account for all the money from the land sales, which he said is approximately $1 million.
The money, he said, was placed in separate bank accounts and is being held “for contingencies,” including plans to build a hotel and exhibit hall at the track in a joint venture with the Kalispels.
In the mid-1990s, Moe recruited the Kalispels to buy racetrack property and convert it into federal tribal land, even though he legally couldn’t be involved in the operation or profits from the Northern Quest casino. But the law allows him to be involved in adjoining trust land he and the Kalispels planned for joint development.
But that venture soured last year when Moe climbed on a D-8 Caterpillar tractor and used its rip hooks to tear up part of an expanded casino parking lot being built by the tribe. Moe contends the tribe was infringing on raceway land.
Despite his assets, Moe and his wife live modestly in the house they built on West Kiernan Avenue, on Spokane’s North Hill, in 1954 and paid off seven years later.
Moe refuses to talk about his personal wealth and won’t estimate the value of Spokane Raceway Park or his personal real estate holdings.
“I’ve got no idea,” he said. “For me, it’s like that song, The Gambler.’ It ain’t the time for counting until the dealing’s done.”