LeMond, Blixseths Back in Court
Yellowstone Club Legal Drama Rages
The ritzy Yellowstone Club in Montana has seen its share of troubles lately and things are coming to a head. There promises to be high drama in a Dillon courtroom Thursday.By Robert Struckman, 5-28-08
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On Thursday morning in a courtroom in Dillon, Mont., lawyers in a case between the embattled Yellowstone Club and a group of long-time investors, including former cycling great Greg LeMond, will face off over an unpaid legal settlement of $20 million. But much more is on the line - including the financial fate of owner Tim Blixseth, his wife Edra, their families, and, ultimately, the Yellowstone Club itself.
The settlement was part of an agreement reached in October, 2007, between the Yellowstone Club and the LeMond group over alleged mismanagement of the club’s finances. The club paid the first $18 million of the settlement but defaulted on the final $20 million, due at the end of January this year.
“It’s being contested. We believe we have valid counter claims,” said Robert Sumpter, Yellowstone Club’s vice president of real estate development. The counter claims hinge on the assertion that the settlement was no longer valid after the LeMond’s group allegedly broke a confidentiality agreement, according to papers filed in the new case.
All this has been made much more complicated by an ongoing legal fight between Yellowstone Club owners Edra and Tim Blixseth, who are involved in an acrimonious divorce. Plus, a group of 125 members of the uber-exclusive private club have formed an association to oversee ongoing operation of the facility.
“We’re concerned with the negative publicity. We’re working diligently to get the legal issues—the biggest issue is the divorce. The parties are working to get that put to bed. It’s a distraction, and it’s noise,” Sumpter said.
Edra Blixseth, reached for comment, declined to talk until after Thursday’s court hearing.
The other big development involves the planned sale of the club to CrossHarbour Capital Partners, a Boston-based financier, which fell through at about the same time the Yellowstone Club failed to make its $20 million settlement payment.
Sumpter, in his testimony, said negative publicity helped derail the sale. Others said complex and murky finances at Yellowstone Club did the damage. Whatever the cause, the sale didn’t go through.
All the while, tensions and tempers are rising, and sometimes erupting in unlikely settings. This year, on Employee Appreciation Day at the club, Edra’s daughter Julie Barve allegedly told the club’s CEO, “‘You are a piece of shit,’ or words to that affect,” according to a letter sent from the Yellowstone Club’s lawyer to Barve.
LeMond originally filed suit last spring against the Blixseth Group, which owns the Yellowstone Club and other companies and assets, saying Tim Blixseth had tried to buy out LeMond’s ownership interest in the club for less than it was worth and otherwise denied him money that he was due. The litigation included allegations that Blixseth diverted more than $400 million of Yellowstone Club cash—including more than $100 million from a loan from investment bank Credit Suisse against the Yellowstone Club itself—into his and his wife’s bank accounts and Yellowstone Club World, a company with top-dollar land holdings around the world including a castle in France.
The Yellowstone Club team has maintained a different story: all the financial dealings have been legal and proper, and that the club’s finances remain solid.
“We’re still performing, and business is business,” Sumpter said. “We had a good year last year, and we anticipate having a good year this year.”
Other documents, including recently filed court records, suggest the Yellowstone Club is in fact on the verge of bankruptcy, unable to keep up with construction debt and operating costs.
The club itself is on about 13,000 acres near the community of Big Sky, Mont., north of Yellowstone National Park. One of its log cabins (which lacks the famous ski-in, ski-out access) is on sale for more than $15 million.
Issues likely to arise in the courtroom include allegations such as this one: That this spring Tim Blixseth arranged for a below-market purchase of a lot from the club to another party and himself for $15 million, which was then mortgaged at market value for $20 million, according to court documents.
Sumpter, on Blixseth’s behalf, defended the transaction, saying it was both appropriate and fair.
It’ll be interesting to see how the case plays out.
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Comments
I just love the Scandal Sheet aura of all this. Billion dollar cow pie fights are fun to watch. You gotta know that the legal profession is going to be there to buy up some more Montana real estate when this is all over.
When Timmy was a tad in Roseburg reading obits so he might find a widow woman with a section of old growth he could buy on the cheap because he had a deal with her now dead husband, did he ever think he would someday be in Dillion, Montana in a prelude to playing hardball split-the-assets with a billion or so at stake? Is a woman going to take his financial pants down in the end, in a very poetic dance of marital dissolution, and bring grace to the widow women of his past, and other investors? Yeeeeee! Hawww! How fun it is to see the public persona in all its frailty and weakness. Jung would be so excited!!
Big Sky finally got a good snow yearjust when the economy tanks, Credit Suisse's big play in New West resorts went mammaries to the sky on several fronts, and Timmy can't play from a position of power when assets values are decreasing. Now is NOT a good time for him to go hunting with LeMond's brother and Dick Cheney. Or Edra, for that matter.
Keep the fun stories coming. I want to read the Thursday story. I want to be around to read the accounts of the splash when this divorce cannon ball hits the water.
I would advise not to take anything Sumpter says regarding Blixseth as remotely accurate.
The real scandal here is that the Vice President of Accounting during the time frame of the financial fraud is no longer with us. She and her home were blown to bits in a so called propane gas leak accident. Hmm, I am sure she may have shed some light on where all the money went, God rest her sole.
While the money was being moved around the Blixseth's and/or the company had 4 personal jets, Gulfstream 550, Gulfstream IV, GII Aerospace, and a Falcon. Lets see, that might be 70-75 million
or so. Just a bit much don't you think?
I sincerely hope Mr Ego gets what he deserves. I think the happy divorce was derailed because Tim hid money from her for the after life. I hope she gets it all and he is left in financial ruin.
As for the deal falling through, I believe Mr. Byrne's statement
was, " We could not obtain clear title to the property". That sounds like more Blixseth monkey business to me. Tim should just sail away into the sunset on his 150 foot yacht and never come back to this beautiful State of Montana!
Shark Bait: People don't change that much. I remember Timmy's timber baron days when he got his first jet just so he could fly his dogs with him to Hawaii....or so said the Oregonian at the time. But my logging friends from southern Oregon just remember him as the slick talkin' promoter who didn't pay his bills, and when you went after him, all the assets were in someone else's name...or he bankoed...or skipped out and let you piss away a fortune on lawyers who got you nothing.
So, in the name of levity and good humor, the unfolding spectacle of financial hide and seek, rumbles in the legal jungles, hesaid shesaid games, even the appearance of long lost bastard children, is going to provide a lot of hoots and chuckles for readers for a long time to come. Keep us posted.
Why is Tim Blixseth such a bad person and why is everyone attacking him?
Is Tim Blixseth in court today?
Why are members so unhappy?
What are the members wanting to do at this stage?
Edra or Tim should win control of the club and why?
Why is the divorce not settled?
What happened to the peaceful divorce?
Where is Sam Byrne these days?
Finally, what the hell is this story about Alisa being a potential daughter with a twin brother and Tim being the father? Has anyone verified this strange and rather sad story with such facts being mentioned?
Some symptons of Borderline Personality Disorder or BPD include, but aren't limited to:
Intense Bouts of Anger
Depression
Pathological Lying
Distortions in Cognition
Anxiety
Impulsive Aggression
Drug Abuse (Cocaine and Ritalin mostly)
Boredom
Attempts To Make Empty Threats When Anxious
Shift from Idealization to Devaluation (Especially towards Family, Friends, and Loved Ones)
Inability to Focus for Extended Periods of Time
Extremely Manipulative Personality
Increasing Need to Lie to Project a Better Sense of Self
Feelings of Emptiness
Sensitivity to Rejection
Multiple Sexual Relations
Feelings of Worthlessness
False Suicidal Attempts for Attention
Distortion of Past Memories
Transformation of Image
Cravings to Have Unprotected Sex with Multiple Partners
Constant Need to Feel "Taken Care Of"
Inability to Take Care of Self
Distortions of Self Truth
Risky Sexual Behavior
Various Impulsive Behaviors
Inability to Handle Problems by Themselves
And Much More
Told there’s much to be achieved
Must keep the wheels spinnin’ ‘round
Never stop and settle down
Cannot relax or meditate
There’s so much to accumulate
So much to be, so much to do
Said those I found had little clue
All the effort, all the tryin’
Now I see they all were lyin’
What will they have when it is done
When they find themselves where all is one
That magic place I sense beyond
‘Tis that which keeps me keepin’ on
To find my way to sweet seclusion
Away from chaos and confusion
The bliss I’ve found that I have felt
Is what my life is all about
The secret’s not what we achieve
But the love we let ourselves receive
Age: 56
Industry: Timberland, real estate
Questions and Answers from the Forbes Article. Question 9 should be answered shortly it looks like. Always fun to see what some say not so long ago.
1. What do you eat for breakfast?
I seldom ever eat breakfast. But when I do, it is oatmeal.
2. What was your nickname in high school?
I was so poor they would not give me one.
3. What was your first job?
Boxing groceries.
4. How often do you exercise?
Every day.
5. Who was your mentor?
My senior high school teacher.
6. How many hours a day do you read?
I only read documents associated to business, about four hours a day.
7. What motivates you?
Trying to make a difference in people's lives who cannot make the difference themselves.
8. What is more important: the idea or the execution?
Many great ideas go unexecuted, and many great executioners are without ideas. One without the other is worthless.
9. Worst day of your life?
I do not think I have had it yet.
10. Do you pray?
In my own way I do.
11. What was your biggest mistake?
Trusting people too much.
12. Worst business idea you ever heard? (Did it succeed?)
Starting a one-room hotel. No.
13. What can’t you live without?
The plane.
14. What is your favorite way to relax?
Being on the boat.
15. What is the best part about being the boss?
You get to sink or swim on your own ideas.
16. What is “success” to you?
It is once your ideas have been transformed into enough money, and if all failed, you would still live your lifestyle, and you understand that just because you have made more money than most, you are not better than the common person. We are all going to die broke.
17. What is the best investment advice you ever heard?
Follow your gut feelings and do not listen to the critics.
18. Is there any reason to get an MBA?
That is one approach to success, but most people I know with a substantial net worth do not have one.
19. If you could be anything else, what would it be?
Travel to the moon.
20. What is your advice to young entrepreneurs?
You are the next wave, and all of our shoes will be filled by someone. It may as well be YOU. Never give up trying.
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Burlingame, Calif. - Tim Blixseth grew up poor in Oregon, made a fortune selling timberland, and thanks to his skilled dealmaking, created The Yellowstone Club, a posh private skiing and golf resort on a vast spread in the mountains near Big Sky, Montana. In large part due to his ownership of the Yellowstone Club, he entered the ranks of the Forbes 400 Richest Americans; last year, his net worth was an estimated $1.3 billion.
Now Blixseth's luxe resort--which attracted as members the likes of Bill Gates and former Citigroup (nyse: C - news - people ) Chief Financial Officer Todd Thomson and early last year boasted it would have one of the world's most expensive residences--has become the centerpiece of a bitter divorce battle, with allegations of a liquidity crunch at the club on one side and emphatic denials on the other. This has left members up in arms.
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Earlier this month, nearly half the Yellowstone Club's members staged an uprising of sorts, albeit a civilized one. A committee representing 125 club members had its lawyer send a letter to lawyers for Tim and Edra Blixseth, seeking a resolution to the troubles plaguing the club. Forbes.com obtained a copy of the letter. Tim and his estranged wife Edra have separate legal representation because they are in the midst of a contested divorce settlement.
The letter sent on behalf of the concerned Yellowstone Club members states that the members have grown "increasingly concerned" about "myriad issues confronting the club," including negative press coverage, operational difficulties such as "canceled contracts," "minimal, if any, new membership sales" and "the club's many demands for cash" including "potentially significant payables," "servicing existing obligations" and a settlement in a lawsuit filed by cycling champion (and club member) Greg LeMond.
As of early April, the Yellowstone Club owed Montana businesses at least $13 million but needed closer to $50 million to resolve liquidity issues, according to a statement given by Edra Blixseth on April 4 in conjunction with the LeMond lawsuit.
Bob Sumpter, vice president of real estate development at the Yellowstone Club, denies that the club is having liquidity problems. He says creditors have been paid.
"Luckily, we've had some sales, some closings," he says. What's more, he says, there is a $56 million sale coming down the pipeline.
But clearly Tim Blixseth isn't feeling as cash-rich as he was in January 2007, when he told Forbes.com of his plans to build the world's most expensive home and sell it for $155 million. Blixseth recently sold the 160-acre lot on which he planned to build the home for $10 million.
"When we got into it, it was going to cost $65 million to $75 million [to build the superhouse] and take two to three years," says Yellowstone Club's Sumpter. "We decided it wasn't a good use of capital." (Tim Blixseth referred questions from Forbes.com to Sumpter and two of his lawyers.)
And e-mails that Tim Blixseth sent to Edra Blixseth in March, filed as part of Edra's affidavit in the LeMond case court documents, also point to a cash crunch. In a March 26 e-mail, Tim Blixseth wrote, "the main thing right now ... is to calm the members and get the overlook lots sold and the bills paid and have liquidity in the company."
Sumpter says that there was a period when creditors were not being paid because the club was in the process of being sold to CrossHarbor Capital Partners, a hedge fund, for a reported $455 million. That sale fell through at the end of March. Afterward, says Sumpter, creditors were paid. Edra Blixseth says, however, that some creditors still have yet to be paid.
A lawyer for Tim Blixseth places the blame for the club’s troubles with Edra Blixseth and her lawyer, Deborah Klar. “Edra wants to oust Tim. She needs money to buy her 50% of the [couple’s ownership of Yellowstone Club]. She’s been pulling all kinds of maneuvers to drive the market value of the property down, so she doesn’t need as much money to buy Tim out,” says a lawyer for Tim Blixseth. Some of the maneuvers include getting press coverage about the club’s troubles, claims the lawyer.
In an e-mail, Edra Blixseth emphatically denies allegations of attempting to drive the market value of the property down so she can better afford to buy out her husband and says she initially refused to speak with a reporter for Fortune magazine, which published a long article in February detailing the club's troubles.
Tim and Edra Blixseth didn't start out intending to have a messy divorce. An article in the Wall Street Journal in January 2007 described a meeting over a bottle of wine at the Beverly Hills Hotel in which the couple decided how to split up assets, without lawyers, armed just with notebooks.
Now the lawyers for the Blixseths are surely being paid millions. And the battle between Tim and Edra Blixseth over the future of the Yellowstone Club is unlikely to end anytime soon