Credit Suisse Execs Subpoenaed Over “Predatory” Yellowstone Club Loans

By Amy Linn, 9-15-09

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.")

-- Credit Suisse allegedly used a Cayman Islands branch “to skirt federal banking law and appraise the Yellowstone Club and other private resorts at grossly inflated values.”

The story from Blixseth Group is apparently part of an ongoing PR push that Blixseth has been mounting in recent months.

The offensive comes in advance of a number of legal challenges. The Yellowstone Club and the club’s unsecured creditors’ committee are suing Blixseth for fraudulent transfer and breach of fiduciary duty for borrowing the $375 million from Credit Suisse and using more than $200 million of it for his own purposes. He’s also accused of failing to share the proceeds with minority shareholders. The trial in that proceeding is expected to resume this fall.

Credit Suisse might also pursue claims against Blixseth. And his ex-wife, Edra, could potentially try to reopen their August 2008 Marital Settlement Agreement, arguing that she was not fairly compensated. Under the agreement, Tim received properties like a resort in Turks and Caicos and the high-end El Tamarindo resort in Mexico, with private beaches and a stunning 18-hole championship golf course.

Edra got the debt-ridden Yellowstone Club and Porcupine Creek, a 30,000-square-foot estate outside of Palm Springs, among other properties. Edra declared personal bankruptcy in June and is currently in the middle of a Chapter 7 proceeding, a forced liquidation overseen by a U.S. Trustee.