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Spokane, Washington  Est. May 19, 1883

Raceway lawsuit could be expanded

A group of minority shareholders is seeking to significantly expand its lawsuit against Orville Moe, the general partner of Spokane Raceway Park, alleging fraud, criminal profiteering and evasion of state and federal taxes.

The modified suit asks a Superior Court judge to dissolve the partnership and replace Moe with a court-appointed receiver to control assets of the racetrack and drag strip in Airway Heights.

It asks the court to slap Moe with a civil penalty and a damage award that could be tripled under Washington state law.

It also asks the court to order Moe to “provide a full and complete accounting” of his activities as general partner back to 1974.

Plaintiffs in the action, filed Monday in Spokane County Superior Court, are Spokane businessmen Donald Materne and Ed Torrison, who are among 250 “limited partners” who bought shares of interest in the track in the 1970s but haven’t seen any return on their investment.

At a hearing scheduled for Nov. 5, the plaintiffs will ask Superior Court Judge Robert Austin to let them amend their original suit filed in October 2003 against Moe, who has operated the racetrack since the mid-1970s. The initial suit was fairly limited in scope but did seek a full list of investors.

Moe’s attorney, Carl Oreskovich, said Tuesday he will resist the motion to allow the plaintiffs to amend their lawsuit.

If the motion is denied, the plaintiffs could file their amended complaint as a new suit, but that would start the clock and the motion-hearing process all over again.

Moe steadfastly denies claims made by the investors and contends he has not turned a profit at the racetrack, Oreskovich has said.

In their amended suit, the “limited partner” investors allege Moe is using money from the partnership to defend himself.

In their initial suit, the plaintiffs were successful in getting the court to order Moe to turn over a list of several hundred people who invested more than $2 million in the racetrack in the 1970s.

Moe produced some names on a mailing list but said he couldn’t produce the “partnership register” showing individual “limited partner” investors and the amount of the stock each bought.

At the last hearing in August, the judge said he was ready to hear arguments by the plaintiffs to add new defendants and for a court-ordered audit of Spokane Raceway Park.

But instead of pushing ahead on those fronts, the plaintiffs regrouped and hired a new team of attorneys in late summer.

Spokane attorneys John Giesa and Roger Reed, working with Portland attorney Mike Esler, drafted the amended suit and now jointly represent the plaintiffs.

Among other things, the amended suit accuses Moe of violating the state’s criminal profiteering law.

Moe, the complaints alleges, “has led organized crime by intentionally organizing, managing, directing, supervising or financing three or more individuals with the intent to engage in a pattern of criminal profiteering.”

The suit alleges Moe has commingled and underreported gate receipts at Spokane Raceway Park and used his own subsidiary companies to sell concessions and souvenirs at the facility and provide advertising and media promotion.

It also alleges that as general partner of Washington Motorsports, Moe has “reported only a fraction of the admission and participant revenues” to state tax collectors and the Internal Revenue Service.

“By signing tax returns with the knowledge of the underreported revenues, Orville Moe has violated federal criminal statutes of the Internal Revenue Code,” the suit alleges.

Further, by not paying excise taxes and workman’s compensation insurance to the state, Moe has exposed the limited partners to “significant interest and penalty assessments,” it contends.

The limited partners also are exposed to further liability because Moe allows minor age drivers to participate in Friday Night Street Racing at the drag strip without providing “minor waivers” signed by their parents.

Moe also “has recklessly allowed the racetrack facility to deteriorate into a condition that poses critical industry safety concerns for racing participants and spectators alike,” creating further potential liability for the limited partners, the suit said.

Moe uses unqualified individuals masquerading as “decoy” emergency medical technicians at racing events, the suit also alleges.