Raceway trustee files lawsuits

The court-appointed bankruptcy trustee for Spokane Raceway Park has filed separate lawsuits against Orville Moe, the former operator of the facility, and its attorney, Robert Kovacevich.

The new suits are an attempt by trustee John Munding to have a U.S. Bankruptcy Court judge render legal rulings on damages, indemnification, claims for payment, preferential and fraudulent transfers, negligence and breach of duty allegations.

The new suit against Moe is the latest legal complication facing the 70-year-old self-made millionaire. He is scheduled to stand trial Sept. 17 in U.S. District Court in Spokane on federal criminal public corruption charges.

A grand jury indictment alleges Moe made cash bribes to Dale Perry when he was mayor of Airway Heights, where Spokane Raceway Park is located. Perry struck a plea deal with federal prosecutors last month and is scheduled to be the primary government witness against Moe.

Among other things, the new suit against Moe alleges he has presented no proof that he is owed more than $2 million by Spokane Raceway Park. He was president and majority shareholder of SRP, owning 60 percent of its outstanding shares. Kovacevich is a 10 percent owner of SRP.

“There’s no truth to any of these allegations,” Kovacevich said when reached for comment Wednesday. “It’s pure retaliation.”

Moe wasn’t available for comment.

Munding was named trustee for SRP last October after Moe filed for protection from creditors under Chapter 11 of U.S. bankruptcy laws. That legal move by Moe was seen as an attempt to halt a civil suit against him and Spokane Raceway Park in Spokane County Superior Court.

But the bankruptcy stay was quickly lifted, and the Superior Court lawsuit was allowed to proceed. It was filed in 2003 by limited partners who invested an estimated $2.5 million in Washington Motorsports Ltd. in the early 1970s. Spokane Raceway Park Inc., the corporation Moe headed, was the operating general partner of the limited partnership.

The SRP bankruptcy filing by Moe “contained misleading and false information,” the suit filed by Munding alleges.

As a director and officer of SRP, Moe failed to “act in good faith” by not keeping a partnership register of limited partners and commingling his assets with those of Spokane Raceway Park and Washington Motorsports, according to the suit filed last month in U.S. Bankruptcy Court.

Spokane Raceway Park Inc., by and through Moe, and Washington Motorsports Ltd. “used a single bank account for multiple years, from which income and expenses of each were commingled,” the lawsuit claims.

Moe created and controlled subsidiary companies, including U.S. Fast Foods, owned by him and Kovacevich, and transferred money and property from SRP and Washington Motorsports “for the benefit of (Moe) and his family,” it also alleges.

“Despite numerous years where Washington Motorsports Ltd. profited from the activities at the race park, no distribution of earnings has ever been made by WML to its limited partners,” it says.

Moe’s breach of fiduciary duty included self-dealing, unfair competition and “placing his personal interests and those of members of his family ahead of SRP’s,” the suit contends.

The separate suit against Kovacevich says he prepared the articles for the limited partnership, Washington Motorsports, and the offering circular that solicited investments from the limited partners. Kovacevich also became a 10 percent owner in Spokane Raceway Park and U.S. Fast Foods, which provided concession services at the racetrack.

Being the attorney for Moe, Spokane Raceway Park and Washington Motorsports presented conflicts of interest issues for Kovacevich, the suit says. He advised Moe to have SRP file the bankruptcy action, and then listed fees for his services among the creditors, it says.