Moe says accountants to blame in profiteering case

The operator of Spokane Raceway Park testified Tuesday that he can’t explain a $182,500 “consulting fee” he claimed as a business expense to neutralize his tax liability on a 2002 federal income tax return.

Orville Moe also couldn’t answer why limited partners who invested in the Airway Heights drag strip were told they are responsible for a $1.4 million note, while Moe told the IRS on tax returns that the receivable amount is $760,515.

As for the consulting fee, the witness said he had no idea who may have received such a payment and acknowledged Spokane Raceway Park’s business ledgers show no such expenditure.

“Can you explain to the court why you told the limited partners one thing and another to the IRS, the federal government? Which one was true?” attorney John Giesa asked Moe.

“I have no idea,” Moe responded. “That’s the accountants’ job.”

Later, when he was pressed about the apparent discrepancies in the federal tax returns, the 68-year-old businessman blamed his accountants. “They put it together. If it’s wrong, we’ll have to ask them why it’s wrong.”

Moe is scheduled to return to the witness stand today as a group of limited partners, led by Spokane businessmen Donald Materne and Ed Torrison, is seeking to have Superior Court Judge Robert Austin appoint a receiver to take over the financial operations of Spokane Raceway Park.

The current hearings, expected to last through Thursday, are a continuation of testimony begun last year when the limited partners amended their initial lawsuit against Moe filed in October 2003.

The suit alleges Orville Moe has headed a “criminal profiteering organization” that’s been perpetuated with fraud and evasion of state and federal taxes.

The suit includes allegations that Moe regularly paid employees “under the table,” without withholding appropriate taxes, and routinely under-reported receipts from cash ticket purchases for racing events.

Orville Moe contends he has done nothing illegal and is the victim of a hostile attempt to take over the raceway, engineered by his own brothers and family members. The track is located on 588 acres of underdeveloped land in Airway Heights, adjoining the popular Northern Quest Casino, which wants to expand with overnight accommodations.

An estimated 500 limited partners say the current suit against Orville Moe is the first time he has been held accountable for what he did with $2.5 million of their money. The money he collected was from the sale of “A” and “B” shares of stock in Washington Motorsports in the 1970s.

Many of the limited partners packed the courtroom to capacity on Tuesday.

With their stock purchases in the 1970s, the limited partners entered into a partnership with Spokane Raceway Park Inc., the general partner controlled by Orville Moe. The limited partners have received no return on their investments and are told their shares are worthless. Such partnerships are no longer legal in Washington.

Until late 2003, Orville Moe’s brothers, Maynard and Earl Moe, also were officers of Spokane Raceway Park Inc., but they were voted out by the board of directors, composed of Orville Moe, his attorney Robert Kovacevich and Pat Kenney, a real estate salesman.

Orville Moe testified the ousters occurred after he learned his brothers and Maynard Moe’s son, Troy Moe, “said they were going to destroy me” in a takeover attempt.

Troy Moe has said the takeover attempt is engineered on the premise of giving the limited partners the option of having their investment funds returned with interest.

Under questioning by Giesa, Oroville Moe testified the split with his brothers came after Maynard Moe told an accounting firm that Orville Moe was “under-reporting revenue” at the Airway Heights track, which hosts Friday Night Street Racing, oval track events and national drag races.

The accounting firm, LeMaster’s & Daniels, provided annual “compilation audits” for Washington Motorsports and its general partner, Spokane Raceway Park. Oroville Moe testified that he doesn’t think that’s a conflict of interest and hasn’t seen a legal document waiving the potential conflict.

Nor did he think it was a conflict, he testified, when Dominick Zamora, an accountant at LeMaster’s & Daniels, became an officer of Spokane Raceway Park Inc. The accounting firm official resigned from the raceway’s board last December after published accounts detailed his involvement in the raceway.

After LeMaster’s & Daniels was told about the alleged “under-reporting” of revenue at Spokane Raceway Park, the accounting firm had Orville Moe sign a legal document saying its accountants wouldn’t be responsible for “errors, misappropriation of assets or illegal acts” in preparing tax returns and financial statements.

Larry Wyatt, the accounting firm’s “engagement partner” who handles work for Washington Motorsports, Spokane Raceway and Orville Moe’s personal tax matters, is expected to be called as a witness before the hearings conclude.