ND pays nearly $15.9 million in Bala settlement, appeal pending
BISMARCK—The state of North Dakota paid nearly $15.9 million early this year as part of a settlement agreement in a long-running bankruptcy case involving an off-track horse race wagering company.
But Susan Bala, the sole shareholder of Racing Services Inc., said Friday, Jan. 19, that her case isn't over.
A federal bankruptcy judge approved a settlement agreement Dec. 20 that requires the state to pay a bankruptcy trustee $15,872,000, an amount lawmakers set aside in a budget bill that Gov. Doug Burgum signed last year. Judge Thad Collins said the settlement was "reasonable, fair and equitable."
The state of North Dakota wired the settlement amount Jan. 2, State Treasurer Kelly Schmidt said. It came from a state fund that's intended for infrastructure improvements or efforts to boost state government efficiency and effectiveness.
"They have sent the money and it is now held in the RSI estate while these final matters and issues are resolved," Bala said.
Attorneys for Bala asked a U.S. District Court judge this week to reverse Collins' order and send the issue back for further proceedings, arguing that the settlement was "not reasonable." The settlement agreement, reached in May, said the bankruptcy court could enter a judgement for "anywhere between $5.2 million to in excess of $25 million."
RSI was forced into receivership during an investigation of a criminal case accusing Bala and the company of illegal betting and fraud. Bala's convictions were overturned by an appeals court and she was released in 2007 after serving about 17 months of a 27-month sentence.
A decade after RSI filed for bankruptcy in 2004, a federal judge said the state of North Dakota wasn't authorized to collect taxes on account wagering "during the time period in question," which was held up by an appeals court, according to court documents. A bankruptcy court was tasked with determining how much the state had to pay.
"I think that sometimes people mistake this as some kind of damages when it's not," Bala said last year. "It's just the state giving back what it improperly took."
Bala said Friday she hopes the legal proceedings will soon come to a close.
"But unfortunately, when it's this kind of a situation and this kind of a system, the wheels can grind very slowly," she said.
Kip Kaler, a Fargo attorney and the trustee in the bankruptcy case, didn't return an email by late Friday afternoon.