Clark extracted a series of fees, penalties and other charges, leaving only $22,000 in the account, according to company documents obtained by The Sun and verified by multiple sources.
Clark did not return calls left on his personal and office phones. Banks, his investment partner, said Clark was in Dubai.
According to the memo, Clark charged the racing company an additional $42,000 in interest, $63,000 in late fees, $50,000 in legal fees, $26,000 in hospitality reimbursements, $82,000 in sanction fees and $32,000 in mobile application fees. He also withdrew $75,000 to give to Banks as repayment for a loan.
In a separate transaction, Raml said, a $25,000 loan was repaid to company manager Rather.
"It has come to my attention that two bank transactions have occurred in the last 45 days that have benefited members of the organization (beyond normal guaranteed payments)," Raml wrote to Mygatt on Nov. 21. "Given that there are tax liens filed ($567,594.19), unpaid loans, and other liabilities, I have become greatly concerned with the possible ramifications of these transactions. … The net impact of these transactions has contributed to BRD's inability to make amusement tax payments."
Raml also warned that the state considers amusement taxes as "trust funds" and the money is not "legally the property of the holder of the funds" to disburse.
"Failure to remit these taxes can cause responsible persons to be personally liable for the amounts owed," he wrote.
Davidson, the former CEO, said he thought the money would go first to pay the amusement tax. He questioned why Banks was repaid before other obligations were met.
"There are lots of people who had loans into the company including other managers and members, including myself and my father-in-law," he said. "I'm curious as to why it made sense to pay that one in front of everybody else."
Banks said the $75,000 was repayment for a personal check he wrote to Dale Dillon, a construction executive Baltimore Racing Development hired in late summer to manage the race.
"I had to give him a check out of my own pocket," Banks said. "But when you're desperate, you have to pay the expert. The race wouldn't have run without Dale Dillon."
Banks said that he and Clark had no idea Davidson and other company officials planned to use the funds from the ticket account to pay amusement taxes.
"There was no mention of there being amusement taxes from that fund," he said. "Davidson said that was all taken care of."
Banks said Clark should be praised for saving the race, and Baltimore Racing Development officials shouldn't complain about the loan contract. He said if race organizers hadn't accepted Clark's terms, the event would have imploded.
He also said Clark was within the rights of the contract to withdraw fees and penalties from the account.
"That's the gamble. You could lose a million dollars. The race could have been stopped," Banks said. "For that high risk, he was awarded appropriately."
The loan terms indicate that race managers were growing increasingly desperate as the event drew near, said John Collard, who specializes in helping financially struggling companies.
"The fact that the interest rate is as high as it is, I think they were in very dire straits," said Collard, chairman of Annapolis-based Strategic Management Partners. "They were probably at the 11th hour and 59th minute."
Collard said Clark was wise to extract such high interest, considering that "there are no guarantees on ticket sales."