North Dakota's attorney general and U.S. attorney are named as defendants in a lawsuit seeking damages from a woman whose conviction was overturned in the state's largest gambling prosecution.

Susan Bala, the president of now-defunct Racing Services Inc., which handled off-track betting in North Dakota on horse races, claims she is a victim of malicious prosecution by Attorney General Wayne Stenehjem and U.S. Attorney Drew Wrigley.

The lawsuit, filed in U.S. District Court in Bismarck, seeks unspecified damages for what it contends are violations of Bala's constitutional rights.

Stenehjem, through a spokeswoman, declined to comment Thursday on the lawsuit. Wrigley was traveling and could not be reached for comment. Neither has yet filed an answer in the case.

Also named as defendants were two members of the state Racing Commission and Michael Cichy, an RSI employee and witness for the prosecution.

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Bala's civil lawsuit is the latest development in a tangle of legal actions that date back to 2003, when state and federal agents raided RSI offices in Fargo, confiscating computers and records.

In 2007, 18 months after Bala's conviction, the 8th U.S. Circuit Court of Appeals determined that federal prosecutors failed to prove Bala had committed any crimes, including failure to pay taxes on $99 million of bets wagered by "high-roller" horse-racing fans.

"I've always wondered where the crime was in this case," Bala's lawyer, Bruce Schoenwald, said Thursday. "The 8th Circuit said there was no crime, there was nothing there."

After the ruling, federal prosecutors agreed to withdraw the convictions against two of Bala's co-defendants, wiping the convictions from their records, but refused to do so for Bala, who spent 523 days in prison.

Before the federal prosecution, the state brought a civil action against Bala and RSI to collect taxes it claimed they owed.

Bala's lawsuit said Stenehjem threatened to "ruin" her and her company if she did not turn over control of the company to a receiver Stenehjem had selected.

Bala did so, claiming she had been coerced, and suffered losses as a result.

After the state went after Bala in the tax case, Wrigley in 2003 directed a federal criminal prosecution against Bala and others. The state followed with its own criminal prosecution, but dismissed charges.

The tax dispute between North Dakota and Bala continues in bankruptcy court, where the state contends that Bala and RSI still owe $6.7 million in taxes.

Bala, however, contends that the law failed at the time to provide for collecting the taxes on bets placed by "high-roller" clients with accounts.

Underlying the snarl of legal actions, Schoenwald said, were flaws in the laws and regulations governing off-track betting involving the accounts maintained by "high-roller" bettors.

"The problem is they had a legislative screw-up that took several years to get fixed because they were prosecuting Susan Bala," said Schoenwald, who tried to unseat Stenehjem in 2004.

"It just snowballed into a flawed criminal proceeding that ultimately got dismissed after she spent a year and a half in jail," Schoenwald said.

Readers can reach Forum reporter Patrick Springer at (701) 241-5522