Commissioner McGraw files for Chapter 7 bankruptcy

Latah County Commissioners Chairman Dave McGraw said he has filed for Chapter 7 bankruptcy over growing legal costs from a lawsuit filed against him by First Step Internet earlier this year.

He told the Daily News he could not elaborate on the details because of continuing litigation.

First Step purchased Elk River Cable's assets in June 2012 and alleges in its claims against McGraw and his wife that the commissioner did not disclose pending claims, debt and investigations against the company when the sale was negotiated.

"It's a byproduct of our lawsuit with First Step," McGraw said, "and an unfortunate byproduct of our lawsuit."

The lawsuit also states the McGraws did not own all the assets sold and that they also were not free of claims or restrictions, despite guarantees provided in the sales agreement. First Step also claims the McGraws did not use proceeds from the sale of the company to pay off corporate creditors.

The Internet provider is seeking termination of the contract and wants the McGraws to repay revenue from the sale. The total amount of damages being sought is to be determined at trial, the claim states.

Legal counsel for both the McGraws and First Step requested in July that Second District Judge Jeff Brudie table further court proceedings for at least six months, and a status conference is set to occur in December.

The customers and their cable plans that McGraw sold to First Step were in local communities, he said, including Rosalia, Rockford, Fairfield, Potlatch, Colton, Uniontown, Genesee, Juliaetta and Kendrick.

An attached list of creditors includes several banks, credit card companies, credit unions, the KXLY Broadcasting Group and Avista Utilities.

First Step Chief Executive Officer Kevin Owen earlier this year reported on the company's website that some of its customers' Internet service could be affected by a dispute between Elk River Cable and Avista regarding a physical cable McGraw's company held that was likely going to be removed from service.

Paul Kimmell, regional business manager for Avista, said that issue has been resolved with First Step, and no legal recourse is being sought by the utility company against Elk River Cable at this time.

"We had discussions, Kevin and I. We can pretty much say that there's no potential disruption of service with that," Kimmell said. "That portion's been resolved, because ultimately we don't want to impact our customers. I think the Juliaetta Library is one of the ones that was concerned about their service."

The McGraws are seeking to keep their Troy home, vehicles and boat through their U.S. Bankruptcy Court filing by reaffirming the debts. Their three-bedroom vacation home in Cabo San Lucas, Mexico, was foreclosed on in January, and the Troy Motors business was returned to the seller, Troy Mayor Ken Whitney, in October.

Despite the financial hardships, the Latah County Commissioner said he will remain focused on issues of importance in his elected position.

"My focus is doing what's right and what's best for the citizens of the county," McGraw said, "and being the best commissioner I can be."

Brandon Macz can be reached at (208) 883-4631, or by email to bmacz@dnews.com.