McMahons' bankruptcy a murky chapter in her rags-to-riches tale Senate race: Linda McMahon portrays her 1976 bankruptcy as a rags-to-riches story, without dwelling on the details -- such as a failed investment in Evel Knievel's famous flop, 5 years of federal tax liens and whether $1 million in debts have been repaid.

Republican candidate for U.S. Senate Linda McMahon, right, and husband Vince McMahon, left, wait for delegate totals to be tallied during the Republican nomination at the Connecticut Republican Convention in Hartford, Conn., Friday, May 21, 2010. (AP Photo/Jessica Hill) less Republican candidate for U.S. Senate Linda McMahon, right, and husband Vince McMahon, left, wait for delegate totals to be tallied during the Republican nomination at the Connecticut Republican Convention in ... more Photo: Jessica Hill, AP Photo: Jessica Hill, AP Image 1 of / 3 Caption Close McMahons' bankruptcy a murky chapter in her rags-to-riches tale 1 / 3 Back to Gallery

Linda and Vince McMahon's personal bankruptcy, a key element in the rags-to-riches tale propelling her surging candidacy for the U.S. Senate, is a mystery the candidate herself has steadfastly refused to clarify.

But tax records obtained by Hearst Connecticut Newspapers and statements provided by the campaign offer voters for the first time a glimpse of the McMahons' financial troubles.

The couple filed for personal bankruptcy in 1976 after amassing, according to the campaign, about $1 million in debt.

What McMahon does not advertise is the fact some of that debt was racked up by an investment in a spectacularly bungled stunt by motorcycle daredevil Evel Knievel. The McMahons also had unpaid federal taxes over five straight years that amounted to $142,763.

While the McMahons are now wealthy, with an estimated net worth of up to $370 million, it's unclear whether all her creditors were ever paid. A campaign spokesman said recently it was "impossible" to pay creditors at the time of the bankruptcy filing. The campaign declined to say whether all of the debts were paid or if the McMahons felt a moral obligation to make good on those bills once their business fortunes took a dramatic upswing in the early 1980s.

No federal bankruptcy records on the matter can be located -- including documents that would identify the McMahons' creditors and how much they were owed. Linda McMahon has declined requests for an interview on the subject, and neither she nor her campaign has released any records pertaining to the bankruptcy.

That hasn't stopped her from using it in her advertising and during interviews.

"I've gone from bankruptcy at the beginning of my career, of losing my home, losing cars, not (being) able to get any credit, to rebuilding, and now having a company that grew from a small family business, you know, to a global brand," McMahon told ABC News in January, referring to the family's Stamford-based World Wrestling Entertainment.

Critics say that if McMahon wants to reap the benefits of sharing her story, she should fully explain the circumstances to voters.

"It's a brilliant use of a personal narrative that in today's day and age fits perfectly. There are a lot of people who are struggling. If I was running a campaign, I'd use that all night and day," said Ben Davol, a former Republican operative-turned-unaffiliated voter and political columnist for The Day of New London.

But, Davol said, "We need to understand the circumstances. Were you irresponsible or, like so many people, got hoodwinked on a mortgage or medical expenses or what have you?"

Some have mistakenly assumed the bankruptcy involved WWE, the hugely successful, international business the McMahons built out of Capitol Wrestling, the company they purchased from Vince's father in 1982.

"My impression was that WWE went bankrupt or they went bankrupt as owners of WWE and built it back up," said Weston economist Peter Schiff, who unsuccessfully challenged McMahon in August's GOP primary and plans to vote for her.

"It would be fair game to say `Look, let's actually see what happened'," Schiff said. "I never went bankrupt. Is that something I should be ashamed of? Nobody who loaned me money didn't get paid. When you go through a bankruptcy, people you borrowed money from aren't going to get it back."

`Big payday failed to materialize'

In the mid-1970s, Vince and Linda McMahon were a young couple not far removed from college who had just started a family. They relocated from Maryland to West Hartford, where Vince was working as a wrestling promoter for his father and also as a television announcer.

"They tried to branch out into areas that were not their area of expertise," said Ed Patru, spokesman for McMahon's campaign. "They took investment advice from people who, in retrospect, they shouldn't have."

The family's financial hardships were attributed, at least in part, to a pair of high-profile debacles promoted by Vince, according to a 2002 book that chronicled the rise of the McMahons' empire, "Sex, Lies and Headlocks."

The first was a failed live televised jump over the Snake River Canyon in Idaho in 1974 by Evel Knievel.

ABC televised the stunt. The jet-powered sled driven by Knievel cleared the edge of the canyon, but "his parachute ejected prematurely" and he was saved from certain death after the craft landed on the rocks at the river's far edge, according to Wide World of Sports' website.

Then McMahon attempted to arrange a fight in 1976 between boxing legend Muhammad Ali and Japanese professional wrestler Antonio Inoki in Tokyo.

"There had been a script which called for Inoki to win, but that went out the window when Ali gave away the ending to reporters," recalled a 2007 Sports Illustrated magazine story. "Unable to use karate chops and flying kicks, Inoki resorted to sweeping leg kicks and, on one occasion, headbutted Ali in the groin. Ali, wearing gloves, threw about a half-dozen halfhearted punches in the boring, 15-round draw."

And according to "Sex, Lies, and Headlocks," the ticket sales "were only slightly better than for the Snake River fiasco. Once again, Vinnie's big payday failed to materialize."

Vince McMahon, through WWE, declined to comment on the bankruptcy, citing it as a political topic best addressed by the campaign. But when discussing the subject in a 2001 interview with Playboy magazine, he said: "It was visions of sugarplums. It was, `Look how successful I am! I guess I really am somebody.' I got involved with people who weren't that bright and let them tell me that I needed tax shelters. There was a construction company, a horse farm, a cement plant, and it all went belly-up. I felt bad about the bankruptcy. I wanted to pay what I owed, but there were other people involved, and finally the banks wrote it all off."

Patru confirmed the Knievel stunt contributed to the McMahons' financial problems, but was unable to provide additional details. According to Patru, the couple filed for personal bankruptcy of "around $1 million" while living in West Hartford, but the campaign cannot identify their largest debts or their creditors.

"They took risks that are not atypical to most entrepreneurs," he said.

Five years of unpaid taxes

Bills to creditors were not all that went unpaid. Federal tax liens on file with the Greenwich town clerk recorded on May 17, 1984, state the McMahons owed the federal government for $142,761 in unpaid taxes for the years 1973, 1974, 1975, 1976 and 1977.

Of that amount, $81,481 was for unpaid income taxes and $61,282 was for employer withholding wages.

The liens were placed on a home at 21 Hedgerow Lane in Greenwich. Real estate records show the home was owned by Charles and Lea Bell.

"The McMahons didn't own that property; they rented it," Patru said. "The Bells were the landlords. That was the extent of their association."

An Internal Revenue Service spokesman said the agency is not permitted under federal law to discuss taxpayers' cases.

Richard Di Marco, a Westport tax attorney who has been practicing since 1984, while not commenting directly on the McMahon tax liens, noted that bankruptcy does not allow filers to avoid liability for taxes.

On the matter of the residence listed on the liens being a rental, "Sometimes the IRS will just file a notice of federal tax lien in the town where the person resides and they may or may not know whether the person owns any real estate," Di Marco said.

Documents show the liens were released in August 1984. It's unclear whether the taxes were paid in full or if there was a settlement with the IRS. Patru said the McMahons paid "what they owed the federal government in taxes."

The release of the liens came just a few months before McMahon began planning a risk that did pay off, the first of WWE's extravagant Wrestlemania mega-bouts that helped transform the company into an entertainment giant.

BankruPtcy records can't be found

The whereabouts of federal bankruptcy records pertaining to the McMahons' filing are a mystery in itself.

A pair of recipe-sized index cards on file at the U.S. Bankruptcy Court in Hartford confirm the bare minimum -- the McMahons' bankruptcy filing was in April 1976 and was discharged in February 1977.

The clerk said the files long ago would have been shipped to the offices of National Archives and Record Administration in Waltham, Mass.

An archivist in Waltham told Hearst they cannot search for the files without three different filing numbers which the clerk in Hartford cannot find, a development that is not unusual considering the bankruptcy preceded computer records.

According to the index cards in Hartford, attorney Martin Hoffman handled the bankruptcy for the McMahons and attorney Charles Greenwald was appointed to represent their creditors.

Hoffman died last year and his widow said his office files are long gone.

Greenwald recalled handling the case, but said he destroys files after a few years and does not remember the particulars of the McMahon bankruptcy.

"If I'd known this was going to happen, I may have held on to those files," joked Greenwald, a Democrat.

A few scraps of court records can be found: The cover sheet of foreclosures and other claims by a handful of creditors: Hartford National Bank & Trust; Society for Savings; Bristol Construction Co.; CBT Co.; Oil Heat & Engineering.

The McMahon campaign said its own records of the couple's mid-1970s financial troubles are incomplete and equates questions about the bankruptcy to "political attacks."

"As much as I would like to wave a magic wand for you, I can't do that," Patru said. "It was a long time ago. I was in diapers when it happened. Gerald Ford was president. `Charlie's Angels' debuted on TV."

A moral obligation?

After the 1976 bankruptcy, the McMahons continued to be self-employed wrestling promoters.

"After their house in West Hartford was auctioned off, they moved into a rental property for a short time and then built a three-bedroom home, where they lived for about a year before relocating to Cape Cod, where they resided until 1983," Patru said.

At that point the couple purchased Capitol Wrestling from Vince McMahon's father and his partners, and soon they moved to Greenwich. And they began building the WWE, their marketing innovations and adroit use of cable TV programming transforming the industry.

The McMahons reaped the benefits of success. The couple last year had income of between $9 million and $13.9 million, according to candidate disclosure reports and assets valued at between $103 million and $370 million.

In February 1985, according to Greenwich land records, the couple had left the hard times far behind and purchased their current home on Hurlingham Drive in the exclusive Conyers Farm section of Greenwich. The 10-acre property is valued at $11.8 million.

Asked if once the McMahons had achieved success they felt any moral obligation to fully repay their creditors from 10 years earlier, Patru said, "They repaid some of their debts ... but bankruptcy is fundamentally designed to create a fresh start."

In a statement, he added: "Linda's experience with bankruptcy resonates with people because she doesn't have to pretend to understand what economic anxiety and uncertainty feels like. She's experienced it firsthand. And just as importantly, her response to that experience is inspiring, and it speaks to her resolve. Today, nearly 600 Connecticut workers have jobs because of Linda, and tens of millions of dollars have flowed over the years from WWE to support government services, community investments and myriad social and charitable causes." But Mindy Myers, campaign manager for McMahon's Democratic opponent -- Connecticut Attorney General Richard Blumenthal -- said the Republican candidate needs to be straight with voters about the circumstances of her financial failure and whether the couple ever made good on their bills.

"Did she in fact walk away from a million dollars in debt and was it because she and her husband gambled on a risky Evel Knievel stunt?" Myers asked.

Do voters care?

Former Connecticut GOP Chairman Chris DePino doesn't think so.

"Bankruptcy is not a bad word any more, " he said. "If this conversation was to happen 30 or 40 or 50 years ago, it was taboo. You were looked at as a failure. Bankruptcy now (means) you took a chance. People take chances and chances are what bring success ... To me it sounds like honest-to-goodness risk takers trying to chase the dream."

Staff writers Bill Cummings and Frank MacEachern contributed to this report.