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Moe must pay $983,000

Sat., Feb. 20, 2010

Judge rules against former racetrack owner

A federal judge has ordered Orville Moe to pay $983,000 to his bankrupted company that owes money to hundreds of creditors.

It’s the latest twist in a complicated episode that stripped Moe of his Airway Heights racetrack and touched off round upon round of legal maneuverings, lawsuits and business intrigue.

The bankruptcy of Moe’s Spokane Raceway Park Inc. is resulting in the sale of all assets, closure of the firm and the messy business of winding up affairs.

John Munding, the bankruptcy trustee wrapping up the case, won the judgment against Moe for engaging in activities that enriched him at the expense of his business interests and its investors.

A hearing on the bankruptcy plan that will formalize repayment plans to creditors and push the case toward closure is scheduled next month.

Moe founded the company in 1971 to oversee the development of a racetrack and stadium on 640 acres of vacant land in Airway Heights. To help finance the development, he sold minority partnership stakes in a related company called Washington Motorsports Limited, which was supposed to manage the operation of the raceway enterprise.

Moe kept tight control over the financial activities during his 30 years in charge. His business practices included a web of problematic transactions including securities offerings, land development, off-the-books accounting and intercompany dealings, according to voluminous court records stretched across state and federal courts.

Some of Moe’s antics ended in expensive litigation with adversaries such as the Kalispel Tribe of Indians, his investors, professional firms and others.

In 2003 a handful of Moe’s business investors filed a breach of duties lawsuit. A 14-day trial that ended in June 2005 found in favor of the investors and revealed numerous record-keeping inconsistencies and omissions, bogus claims, insider dealings and other red flags. A judge then appointed local attorney Barry Davidson as receiver.

Though Moe was allowed to continue in his role as general manager of the racetrack, Davidson was ordered by the court in summer 2005 to investigate the business and protect investors.

Then in summer 2006, Davidson asked that Moe be held in contempt of court for interfering with his investigation. A second contempt motion followed before Moe took his Spokane Raceway Park business into bankruptcy. The federal action temporarily put the brakes on Davidson’s receivership work, including the contempt motions and sanctions sought against Moe.

Undeterred, Davidson petitioned the bankruptcy judge overseeing the case to either appoint a trustee to take control of Moe’s company or order the business to be broken up, sold piece by piece and then dissolved.

The bankruptcy judge appointed Munding as trustee in fall 2006.

More investigations were undertaken and Munding determined that Moe left numerous assets out of the bankruptcy filings. The investigations pulled together some 250 boxes of disorganized documents.

Eventually Moe’s racetrack was auctioned off to settle business debts. Spokane County bought the property for $4.5 million and has run into its own management problems.

The entire episode involving Moe has been further complicated by the filing of baseless lawsuits that had the effect of perpetrating a fraud on the court, Munding wrote in one of his trustee reports to a federal bankruptcy judge. Moe continues to accuse Munding and Davidson of being part of a conspiracy against his business.

The bankruptcy case – now 3 1/2 years old – has resulted in more than 1,080 filings and tallied more than $525,000 in lawyer fees.

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