March 10, 2010 in City

Spokane raceway bankruptcy nearing end

Funds gathered, but it’s wait and see for investors
By The Spokesman-Review
 

Orville Moe’s bankrupted racetrack company may pull together enough money to pay lawyers, taxes and a handful of business vendors, but the several hundred people who invested in an affiliated company will have to wait to hear how much they’ll be repaid.

A federal judge signaled Tuesday that she will sign an order that will end the bankruptcy of Spokane Raceway Park Inc. and formally dissolve the business that Moe used to control his Airway Heights racetrack from 1971 until it was taken over by a receiver in 2005.

John Munding, the bankruptcy trustee appointed to take control of the firm from Moe, said there’s still work to do, including trying to collect a $983,000 judgment leveled against the Spokane businessman.

“We have reason to believe that he has the funds,” Munding said. “We’re going to start collection efforts by exploring any and all transfers of property and other assets.”

While Munding wraps up the bankruptcy case, a separate action wending through state court is recovering money for those who invested in a company Moe formed to share in the proceeds of Spokane racing.

That case involves several hundred people who bought units, or partnership stakes, in Washington Motorsports Limited.

Moe’s mismanagement of that company led to an investor lawsuit filed in 2003. After a 14-day trial revealed myriad accounting problems, off-the-books business dealings and other questionable transactions that enriched Moe and deprived his partnership investors, a judge appointed a receiver to investigate.

The legal issues then grew in size and complexity – including the bankruptcy.

The receiver, Barry Davidson, eventually sold the racetrack at auction to Spokane County for $4.5 million.

As of Dec. 31, the receiver had pulled together $7.9 million in cash, according to court records. While $1 million has been set aside to cover possible environmental issues, the several hundred people with partnership stakes in Washington Motorsports should expect at least a partial disbursement of funds to offset their losses.

Aaron Goforth, an attorney involved in the receivership case, said a repayment schedule has not been finalized.

Moe is pursuing appeals – including a $373,000 sanction against him in state court – and has accused the trustee and receiver of conspiring against his businesses.


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