No Charges Filed

Yellowstone Club Founder Edra Blixseth Under Investigation by FBI

Edra Blixseth, ex-wife of Tim Blixseth and former owner of the Yellowstone Club, is at the center of a criminal investigation, according to a report filed last night by the Associated Press.

In it, Edra Blixseth denies wrongdoing in the probe regarding several multimillion-dollar loans she either took out or guaranteed during the time of her divorce. In documents, it’s alleged she underreported her assets. No charges have been filed. According to the AP:

Update

Judge: Blixseth Responsible for Yellowstone Club’s Collapse

Federal Bankruptcy Judge Ralph B. Kirscher did not mince many words in a decision released this week in the Yellowstone Club bankruptcy case: Tim Blixseth’s “pattern of self-dealing,” is what ultimately led to the crash of the exclusive Montana resort.

But, that doesn’t mean he’ll be on the hook for all the club’s debts. Some, but not all. And, the club’s lender, Credit Suisse, whose loan was at the center of the long, brutal battle over the club’s finances, was no saint either.

A large issue in the resort’s bankruptcy case has been the $375 million loan from Credit Suisse that quickly evaporated after it closed. Not being able to pay that loan back was the crux of the resort’s bankruptcy filing in fall of 2008. The club has since emerged from bankruptcy under new ownership.

Blixseth was accused of pocketing the Credit Suisse loan for private jets and other lavish purchases and the bank was charged with being irresponsible, flippant even, in making the loan. 

Blixseth Fraud Trial

Blixseth’s Fate in a Judge’s Hands

The fate of Yellowstone Club founder Tim Blixseth, and the health of his wallet, depend on the fine print of a divorce settlement and a variety of accounting questions that were argued in exquisite detail in federal court in Missoula today.

Blixseth stands accused of fraud and “breach of fiduciary duty” related to a $375 million loan he obtained from Credit Suisse in 2005. The 59-year-old former billionaire spent more than $200 million of the cash for his personal use, buying everything from high-end real estate to airplanes.

Blixseth's Alleged Breaches

Blixseth Fraud Trial: Court Seeks Assets, Answers

Accused of secretly siphoning $286.4 million of his assets to a Nevada company so creditors couldn’t get it--and charged with bankrupting the ski resort he built from scratch--Yellowstone Club founder Tim Blixseth sat in a federal courtroom in Missoula yesterday and watched the latest chapter in his legal saga unfold.

The ending might be riches-to-rags.

The 59-year-old real estate tycoon, who launched a lavish 13,400-acre private enclave above Big Sky a decade ago, is on trial before U.S. District Judge Ralph Kirscher for allegedly committing fraud and breaching his fiduciary duties to the club.

Resort Bankruptcies

Blixseth’s Son Leads New Lawsuit Against Credit Suisse

The son of Yellowstone Club developer and former owner Tim Blixseth is taking a lead role in a new lawsuit against investment bank Credit Suisse, accusing the financial giant of deliberately engineering the failure of at least four major resort projects so that it could acquire them on the cheap.

Beau Blixseth, the son of Tim Blixseth and a Yellowstone Club property owner, and L. J. Gibson, an individual who bought property at Tamarack Resort in Idaho, Lake Las Vegas in Nevada, and Gin Sur Mer in the Bahamas, are the initial plaintiffs in the proposed class-action lawsuit, which was filed Sunday in Federal District Court in Idaho. The suit alleges a host of illegal acts by Credit Suisse and the real estate firm Chushman & Wakefield, including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), fraud, negligence and breach of fiduciary duty, and seeks $24 billion in damages.

Resort Bankruptcies

Moonlight Basin Files for Bankruptcy Protection

Moonlight Basin, the troubled Big Sky, Montana ski resort, filed for Chapter 11 bankruptcy protection on Wednesday, just a day before a foreclosure hearing that could have put the property in the hands of its primary lender, Lehman Bros. Moonlight took a loan of $100 million from Lehman Bros. in the fall of 2007 with the intention of quickly selling the resort, but the real estate meltdown scotched that plan, and the bankruptcy of Lehman Bros. itself in the fall of 2008 has left the six-year-old resort in limbo.

In the bankruptcy filing, Moonlight seeks permission to obtain $21 million in interim financing from Trilogy Capital, a Connecticut based hedge fund, which would enable Moonlight to remain open and have a ski season as planned. Lehman Bros. indicated in the foreclosure case that it also intended to keep the resort open, but the investment bank wanted to gain full control and appoint a receiver in the place of current management before it provided the funds needed to continue operations. The foreclosure proceeding, which is a state court action, is automatically put on hold by the bankruptcy filing.

News Nugget

Touted as Utah’s ‘Yellowstone Club,’ Elk Meadows Also Goes on the Auction Block

Once hailed as the Utah version of the posh Yellowstone Club, the Elk Meadows development near Beaver has followed a similar fate and is now on the auction block.

As the Salt Lake Tribune reported earlier this week, the development near Beaver, which was supposed to have all the amenities of the high-end resort market of earlier this decade: Jack Nicklaus golf course, private ski runs and extravagant second homes, was once worth $3.5 billion, but is now in an online auction with a suggested value of $5.15 million. But, the starting bid is $1 million. As Jodi Peterson notes on the High Country News Goat blog, (HCN, by the way, did a good story on the resort in 2008, which you can read here) in May, the Yellowstone Club was sold for $115 million.

The original developers, the Mount Holly Partners, filed for bankruptcy this summer, but in the face of objections from one of the resort’s investors, MHU Holdings of New York City, the bankruptcy was rejected and Mount Holly turned the property over in foreclosure proceedings.

Yellowstone Club Loan Info Sought

Credit Suisse Execs Subpoenaed Over “Predatory” Yellowstone Club Loans

Yellowstone Club founder Tim Blixseth has subpoenaed 31 Credit Suisse officials, demanding that they hand over documents that will shed light on the “predatory lending practices” involving the ritzy club, according to a story today in Marketwatch.com. The source of the story is the Blixseth Group, which is headed by Tim Blixseth.

Here are some story highlights (much of them representing the Blixseth Group’s spin on current events):

-- “Brady Dougan, the Chief Executive Officer of Credit Suisse First Boston, and Hans-Ulrich Doerig, Chairman of the Board of Directors, received the subpoenas along with past and current Executive Board officials and Credit Suisse’s Board of Directors.”

-- The subpoenas stem from the $375 million Credit Suisse loan to the Yellowstone Club in 2005. Blixseth wants to uncover internal documents that explain how the bank developed the loan scheme (one that U.S. Bankruptcy Judge Ralph Kirscher described as “naked greed” that “shocks the conscience of this court.")

Bankruptcy Aftermath

Yellowstone Club Pays $6 Million to Local Creditors

Nearly $6 million in checks were distributed this week by the Yellowstone Club, satisfying almost all the claims of more than 140 vendors and contractors who have been waiting almost a year for their money.

The payments came as a result of an unusual bankruptcy court settlement in which trade creditors are getting their money before the consortium of lenders led by Credit Suisse gets theirs. It is very rare in a bankruptcy case for unsecured creditors to get paid in full ahead of secured lenders.

In a letter accompanying the checks, Sam Byrne, managing partner of CrossHarbor Capital and the new owner of the club, said: “Yellowstone Club, its new owners, members and employees all recognize the delay in payment of these monies has caused significant financial hardship for many who provided goods and services to Yellowstone Club. We hope that full payment on your approved claims will provide some relief to his financial burden, and that this will be the beginning of a rebuilding of the reputation of the Yellowstone Club with vendors and service providers in the Big Sky and greater Bozeman communities and beyond.”

While most of the club’s trade debt has now been paid, considerable friction has emerged between the so-called Liquidating Trust - the entity charged with collecting money and paying it to those who are owed - and the committee representing unsecured creditors. The trust, which is being managed by New York-based attorney Mark S. Kirschner, has sought to disallow even some small claims on the grounds that they are the responsibility not of the club but of former club owners Tim and Edra Blixseth.