Salt Lake marathon owner accused of fraud, 'downright immoral' business practices

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Ethiopian runner Atalech Asfaw knows she is not alone when she complains it took Devine Racing nearly a year to pay her $2,500 in prize money she won for placing second in last year's Salt Lake City Marathon.

Runners, vendors and business associates from Los Angeles, Las Vegas, Salt Lake City, Chicago and New York for years have accused owner Chris Devine of failing to pay bills on time and reneging on deals.

Records show the 55-year-old Chicago resident, who also owns a home in Salt Lake City, has been taken to court at least four dozen times by unhappy businesses and individuals. Some, such as Asfaw, who hurt herself in last year's race and only recently has begun training again, have suffered financial hardships because of Devine's delays.

Now a new federal lawsuit filed in New York alleges the radio-station-owner-turned-marathon-mogul financed his complex web of troubled companies by defrauding isolated multimillionaire C. Robert Allen of nearly $70 million.

No criminal charges have been filed against Devine, who portrays himself as a hard-working and genuine man whose financial woes are the fault of "bad management" by others.

The family of the 78-year-old Allen, however, characterizes Devine in a much worse light. Their lawsuit accuses him and business partner Bruce Buzil of racketeering, fraud and embezzlement in their dealings with Allen, described as a "mentally and physically frail" man the pair took advantage of.

"It is a sad story," said Nate Read, a New York City lawyer representing the Allens, including son Luke, who is now his father's legal guardian. "It resonates with a lot of people. ... He has misled a lot of people to great tragedy."

A relationship forms

Devine, a New Jersey native, had two passions growing up in the Chicago area: running and radio.

He worked in the radio business while attending Loyola University and also competed on the school's track team. He ran the Boston, New York and Chicago marathons and in 1981 distinguished himself by running across the U.S. in 76 days.

In 1986, he moved to Salt Lake City and started the station KBER, now owned by Citadel Broadcasting. "In terms of being a runner and being outdoors the way I like to do, it's a terrific environment," Devine said of Salt Lake City.

Charles Allen Jr. was a runner, too, not in marathons but in the New York Stock Exchange. At age 15 he quit school to work on Wall Street.

He kept a low profile but was highly successful, opening his own firm in 1933 and becoming known as the "shy Midas of Wall Street."

The firm grew into today's Allen & Co., described as a secretive financial business that connects investors with influential business executives. A family fortune that Forbes magazine in 2007 valued at $2 billion left Charles Allen's heirs more than comfortable after he died in 1994.

C. Robert Allen is among his heirs, and, according to the lawsuit, believed he could repeat his father's success by owning radio stations. The younger Allen suffered from osteoporosis and scoliosis that limited his mobility, but he was still involved in the world enough to meet Devine when he invested in one of Devine's companies.

Major Broadcasting Co. bought poorly performing radio stations, turned them around and resold them for higher prices in much the same way someone might flip a house, according to the lawsuit. A 1995 report in Crains Chicago Business profiling Devine's company valued it at $30 million. The same story credits the source of his first capital to a 1985 introduction to a "wealthy family of Long Island, N.Y. investors."

Suit spells out alleged fraud

Devine apparently had found his fountain of money in Allen, according to the lawsuit. After their initial meeting, the complaint charges that Devine took advantage of Allen's isolation and loneliness, visiting often, calling constantly and performing personal favors for him.

The lawsuit alleges Devine and Buzil arranged for "gifts" to Allen including $22,000 worth of slippers and a $250,000 Bentley automobile. The problem, according to the complaint: They were paid for with Allen's own money.

In 2000, the same year Allen lost his "mental stamina" according to the lawsuit, Devine and Buzil allegedly asked Allen to make loans to their company, Superior Broadcasting Company Inc., telling him the company was buying and developing radio stations across the country.

But Superior was merely a shell company set up by Devine and Buzil that never owned a single radio station, the lawsuit claims. It says the two men kept soliciting loans from Allen -- more than $25 million between 2002 and 2004, and $33 million in 2005 -- and filtered the money to other businesses, including marathon company Devine Racing.

Also allegedly phony was the friendship between Devine and Allen.

"The reality was that Devine saw Allen as a mark, someone he could talk into giving him money based solely on his unverified information and personal charm," the suit says.

Beginning in 2005, concerned family members tried unsuccessfully to force Devine to account for nearly $70 million in Allen loans, according to the suit. The relatives obtained legal guardianship of Allen in March. Their lawsuit, filed Feb. 18 in U.S. District Court in Brooklyn, seeks an unspecified sum. Buzil, who declined an interview request, was dismissed as a defendant in March. The Chicago resident had argued the federal court in New York lacked authority to hear the lawsuit against him because of his lack of material connections with that state.

Devine and his defendant companies have asked to be dismissed, too, saying the failure to name Superior as a defendant and the dismissal of Buzil puts them at risk of having to pay more than their fair share if there is a judgment against them. If the suit is not dismissed, they want it moved to Illinois.

Devine declined to discuss the lawsuit or his relationship with Allen, saying only: "It will probably be settled."

Financial problems linger

Devine Racing, which established the Salt Lake City Marathon in 2004, expanded rapidly during the period Devine is alleged to have received millions from Allen.

The racing company also bought the Los Angeles marathon in 2004 for more than $15 million, according to the Los Angeles Times . Devine then bought the Las Vegas marathon in 2005 for an undisclosed amount.

But even though he apparently had capital to buy marathons, Devine still had trouble paying his bills.

Winners in many of his races, including those in the 2006 and 2007 Salt Lake City marathons, weren't paid without months of haggling. The stories were similar in Los Angeles and Las Vegas.

Devine sold the Los Angeles and Las Vegas marathons for undisclosed amounts last year amid financial troubles. At the time of the sale, he owed the city of Los Angeles about $500,000, according to published reports.

Then, as he does now, Devine blamed his money woes on a bad management team. He said a contractual agreement prevented him from firing the team because he would have lost the lease in Los Angeles to run the marathon.

"We've gone through an incredibly challenging two years," he said, adding that by selling the two marathons he was able to "cut the cancer out," and his company is now healthy. He pointed to his ongoing acquisitions of the Palm Beach and New Jersey marathons as evidence his company is on firm standing.

Devine acknowledged delinquent payments to runners in the past but said all winners now will receive their prize money on race days.

The promise, however, rings hollow to those who say he has made that promise before without following through. They wonder why he is buying more marathons rather than taking care of his bills.

Tim Kelly, who served as the assistant race director for the Las Vegas marathon for two years before resigning a year ago, described periods when the power and Internet in the company offices would be shut off because Devine failed to pay the bills.

"Our copier ran out of toner and we couldn't even get him to pay $41 for it," Kelly said. "That stuff went on monthly. But what really bothered me were all the promises and misrepresentations he made to athletes. He said all the right words to the media, but he wouldn't pay until he absolutely had to."

Devine's false promises have prompted agents to avoid sending runners to his events. Agent Tom Ratcliffe, who represents mainly Kenyan runners, said his clients were always paid late, leading him to avoid Devine's events. "There is no indication his 'business practices' have changed, thus we would have no interest in being involved."

Chris Bybee, owner of Cooling and Power Rentals in Las Vegas, still is trying to recoup $38,500 from Devine. Since alerting the news media to his situation, Bybee said Devine has set up a payment plan with his company. However, Bybee warns vendors who work with Devine to make sure they get paid upfront.

"If you don't get your money first and make sure it is good, you're probably going to be working for free," he said.

'It's our only way of making money'

Racers, such as Ethiopian Genna Tufa, the men's Salt Lake City winner in 2008 who is owed $5,000, don't know how they'll pay their bills or cover expenses to get to races.

A few thousand dollars may not seem like much, but for runners and small businesses the impact can be great.

Ethiopia's average per capita income was $160 a year in 2007, so winning $5,000 in a marathon is often viewed as huge wealth.

The 2008 winner of the Las Vegas marathon, Abebe Yimer, didn't have the funds needed to cover his rent because the money he counted on from Devine never came. Kelly said he eventually paid Yimer his winnings of $11,000 when he realized how bad Yimer's financial situation was. He knew Devine would never pay it.

"Chris is not a good man," Kelly said. "That is the reason I resigned. The way he runs his business is downright immoral."

While runners such as Tufa and and Asfaw stress over bills, Devine enjoys a lifestyle the Allen lawsuit describes as "luxurious." According to the lawsuit, Devine and Buzil were personally enriched in the amount of at least $10 million.

The Allen family is confident it will prevail in its lawsuit, said Read, their attorney.

Unlike the Allens, though, Tufa can't afford an attorney. But he does share one thing with the wealthy New York family: He wonders what Devine has done with his money.

"It's our only way of making money," Tufa said. "We don't have another job. A lot of runners are scared to run. You spend your time, your money to do this."

Devine, meanwhile, maintains his intentions are good and he plans to continue his businesses.

"I'm not somebody who quits," he said. "The easy thing to do would be to give up."