Receiver named for racetrack

Individual investors battling drag strip king Orville Moe won a significant victory this week when a Superior Court judge ordered appointment of a receiver to supervise financial operations at Spokane Raceway Park.

Attorney Barry Davidson, who has handled several high-profile bankruptcy cases and receiverships, was named Wednesday by Judge Robert Austin to immediately assume control of the raceway’s operations.

“It represents a victory for the hundreds of investors who haven’t seen any return on their investment for over 30 years, and who now have a court-appointed receiver to protect their assets pending the outcome of this case,” said attorney John Giesa, who represented the plaintiffs.

Under the judge’s ruling, Moe will not be sidelined as limited partners had requested, but will be “retained as the general manager to promote and manage the race park under the direction of the receiver,” using universal accounting practices.

Moe and his attorney, Carl Oreskovich, have 30 days to file an appeal, which would stop – at least temporarily – the court-appointed receiver from taking over. Oreskovich said he was not particularly surprised by the decision, and wouldn’t comment on the possibility of appeal.

“I understand the judge’s ruling in terms of appointing a receiver,” Moe’s attorney said. “For various reasons, we haven’t had good (business) records, and now we have an investment that could have just an enormous value.”

The judge did not enter a specific finding that Moe had committed fraud during his 30 years as general managing partner of Spokane Raceway Park, but ordered the court-appointed receiver to further investigate that possibility.

“In the midst of all the allegations against Orville Moe, it makes sense to have somebody who’s independent determine who the partners are and their respective ownership interests,” Oreskovich said. He said he was glad there was no finding of fraud by the court.

As general partner, Moe used about $2 million from an estimated 500 “limited partners” to form Washington Motorsports Inc. and build what’s now known as Spokane Raceway Park, a square-mile complex in Airway Heights.

The receiver, who will report back to the court, also will investigate “self-dealing” – claims that Moe and his family members were buying back stock from limited partners for only a fraction of the purchase price.

The judge concluded that Moe “failed to properly keep, update and maintain accurate partnership ledgers, which is a breach of the partnership agreement and fiduciary duties” of the general partner.

The limited partners, led by Donald Materne and Ed Torrison, both of Spokane, filed suit in 2003, asking the court to oust Moe as general partner and appoint a receiver.

During 14 days of hearings spread over eight months, the plaintiffs presented several witnesses to bolster their claim that Moe was involved in an ongoing practice of fraud and self-dealing, including the use of subsidiary companies he exclusively controls for work at the raceway.

A forensic auditor hired by the plaintiffs testified in December that Moe may have failed to report as much as $20 million in gate receipts and that he regularly paid employees in cash “under the table” without withholding state and federal taxes.

But Moe testified he was a hard-working businessman who devoted his life to developing the track and hadn’t fraudulently enriched himself or his family.

The judge took note of that in his ruling, noting that Moe and his late father bought a section of scabland that would barely support cattle grazing. The site is now the home of popular racetracks and Northern Quest Casino, owned and operated by the Kalispell Tribe.

“Orville had a dream and he made it happen,” Austin wrote in his memorandum opinion. “He built a drag strip, oval track and road course. He created a unique joint venture with the Kalispell Tribe of Indians who built a casino.”

“He took worthless land that today may have a value in excess of $150 million,” Austin said.

Moe’s nephew, Troy Moe, who became spokesman for the limited partners, said he was pleased with the judge’s ruling and considered it a significant victory for the small investors.

“With the appointment of a receiver, the unit holders, as the majority owners of the partnership, can proceed with the necessary steps to bring a first-class motor sports complex to this region,” Troy Moe said Thursday.

“This appointment will also enable the unit holders to share in financial rewards, which they have been denied for over three decades,” he said.

As one of the lead plaintiffs, retired Spokane businessman Donald Materne said he was disappointed that the judge had not ruled on the fraud question.

For rock-crushing and road-building work he did at Spokane Raceway Park in the early 1970s, Materne was paid with 16 shares of stock in Washington Motorsports stock. But he received no dividend payments and has been told that stock is now worthless.

“Orville Moe needed the stockholders’ money to start out, but after that it was, ‘To hell with them,’ ” Materne said.

“The judge’s ruling has been a long time coming,” Materne said.