Lawyer Dismissed in RSI Case; Bala Files Bankruptcy

The attorney representing Racing Services Inc. official Raymundo Diaz was removed from the case by a U.S. District judge Thursday because of a conflict of interest. In other developments, Racing Services founder Susan Bala filed for Chapter 11 bankruptcy protection on behalf of the company.

North Dakota Attorney General Wayne Stenehjem took issue with Bala's filing, which lists the company's assets at $7.2 million and debts at $10 million. He said the move is designed to make Bala the debtor in possession of the company so she can be in charge of day-to-day operations.

"We don't necessarily agree with the assertion, but this will have to be settled in the bankruptcy court," Stenehjem told the Fargo Forum.

A response from the state was expected to be filed Friday.

Bala, Diaz, and Global Contact Inc., which is owned by Diaz, have pleaded not guilty to 12 federal charges of money laundering and running an unlicensed gambling facility.

Dennis Fisher, who was representing Diaz and Global Contact Inc., was removed from the case because he had previously represented Bala and RSI. There was also concern former RSI president Ken Maloney may have shared confidential information with Fisher.

"Since a conflict exists with Fisher's prior representation of Maloney and his current representation of Diaz and Global Contact, he must be disqualified," said U.S. District Judge Ralph Erickson.

The case is scheduled to go to trial Aug. 23.