Moe files for bankruptcy, avoids hearing

Spokane drag racing czar Orville Moe was supposed to appear in Superior Court on Friday on a contempt charge, but he got the hearing canceled by filing bankruptcy.

Because he filed the bankruptcy petition for Spokane Raceway Park Inc., all pending legal matters against Moe were immediately frozen. But the legal maneuver was done in “bad faith” and possibly bordered on bankruptcy fraud, according to a court-appointed receiver who represents 500 limited partners in Washington Motorsports.

Those limited partners, who invested more than $2 million to help acquire and build the Airway Heights drag strip and oval track in the 1970s, are suing Moe in Superior Court. They contend they haven’t seen any return on their investments and that the stock is now worthless while Moe has become a multi-millionaire.

As part of their suit, a court-appointed receiver, Spokane attorney Barry Davidson, was named on July 1, 2005, by Superior Court Judge Robert Austin to take over all financial and day-to-day operations at Spokane Raceway Park, which remained open this season.

But Moe has refused to cooperate with Davidson and, according to public records, continues to defy court orders.

On June 1, Austin fired Moe as general manager of the racing complex and ordered him banned from the facility. Moe was ordered to immediately turn over an $8,300 check he received for rent of the race track in March – money that should have gone to the court-appointed receiver. He also was ordered to turn over gasoline credit cards and the titles and keys to all vehicles owned by Spokane Raceway Park, including two ambulances, a fire truck and a late-model pickup that Moe used as his personal vehicle.

“Orville Moe and SRP have intentionally failed to comply with the (court’s) orders,” an attorney representing the receiver said in an Aug. 10 motion. It asked that Moe be found in contempt, which could result in substantial penalties.

A few weeks ago, Moe fired his original attorney, Carl Oreskovich. The attorney’s bill, $140,000, is listed among the top 10 creditors on Moe’s bankruptcy petition. Moe paid Spokane attorney Bruce Boyden $1,600 to file the Chapter 11 petition on Aug. 17 that asks the U.S. Bankruptcy Court to oversee a repayment plan, documents associated with the filing show.

Within three business days of the filing, the court-appointed receiver countered.

“Having breached its fiduciary, contractual and statutory duties, SRP now has invoked the jurisdiction of this (U.S. Bankruptcy) Court for the apparent purpose of interfering with the administration of the (state court) receivership action and related litigation,” Davidson wrote in court papers.

The interference, Davidson said, included forestalling Friday’s hearing, which included legal motions for contempt of court, “imposition of remedial sanctions” and steps needed to put Spokane Raceway Park up for sale.

At that same hearing, Davidson was going to ask the Superior Court judge for permission to hire Kennedy Wilson International Inc. to appraise the value of the 600-acre Spokane Raceway Park and market the property for sale to reimburse the limited partners.

“This Chapter 11 filing (by Moe) was timed to delay or stay pending hearings in the (Superior Court) receivership action,” Davidson said in legal filings.

Davidson urged the U.S. Bankruptcy Court to lift the stay as soon as possible “to avoid unnecessary delay in the administration of matters” pending in Superior Court and a related lawsuit in U.S. District Court involving Moe and the Kalispel Tribe of Indians, which operates Northern Quest Casino on land adjoining the race track.

In his bankruptcy filing, Moe listed hundreds of thousands of dollars in assets that do not belong to Spokane Raceway Park and omitted hundreds of potential creditors.

Davidson also filed a motion asking that SRP’s petition be converted to a full bankruptcy, if it’s allowed to proceed, and that a trustee be named.

“These grounds may include fraud, but clearly include dishonesty, incompetence and gross mismanagement of the affairs” of Spokane Raceway Park, Davidson’s filing said.