The founder of t h e m i l l i o n a i r e s - o n l y Yellowstone Club goes on trial today to face claims that he fleeced the private ski resort out of at least $286 million. Before its 2008 bankruptcy filing, the Montana club gained a reputation as an alpine haven for the nation's elite. Its membership list includes Microsoft Corp. co-founder Bill Gates, hotel magnate Barry Sternlicht and former Vice President Dan Quayle. The club came out of bankruptcy protection last year, but creditors are still chasing former owner Tim Blixseth in federal court. They want a civil fraud judgment against the real estate tycoon and former timber baron, who used a loan ostensibly for the club to bankroll a gilded lifestyle of luxury jets, fleets of cars and international estates. "His conduct can only be described as looting, and he should be held accountable for his actions," creditors' attorney Charles Hingle wrote in court documents. A three-day trial is set to begin today be fore U.S. Bankruptcy Judge Ralph Kirscher in Missoula. Blixseth, 59, claims the club's debts were transferred to his former wife, Edra, when she got the 13,600-acre resort in their divorce settlement. He said that ended his obligations on the $375 million loan, which Credit Suisse arranged in 2005. "She knew it and acknowledged it," he said Tuesday. "I got waivers, releases." Edra Blixseth is in personal bankruptcy. She sold the club last year for $115 million to Sam By r n e o f Bo s t o n - b a s e d CrossHarbor Capital Partners. Under court order, she's had to give up multiple homes and most of her jewelry and other possessions. Her main residence — Po r c u p i n e C r e e k , a 25,000-square-foot mansion with its own golf course in Rancho Mirage, Calif., — was recently put on the market for $75 million. She has blamed her former husband for the club's problems, starting with the 2005 loan. Tim Blixseth, too, has been trying to shed property, including a small private island in the Turks and Caicos. The asking price was recently cut from $75 million to $48.5 million. Blixseth denied the sale was prompted by his court troubles. Until two years ago, Tim Blixseth was listed on Forbes magazine's list of the 400 richest Americans, with an estimated fortune of $1.3 billion. He's no longer on the list and in an interview declined to estimate his worth. Like many in the high-end real estate market, he said he's been forced to "hunker down" since the recession and tone down his lifestyle. He maintains his economic moves at the Yellowstone Club were the right ones — that it was thriving with $50 million in pending sales before the August 2008 divorce. Yet he also blames Credi t Suisse for arranging a "predatory loan" he couldn't have been expected to repay. Three months after Blixseth severed ties with the club, the resort was $400 million in debt.
Founder goes on trial for looting resort
Published: Wednesday, February 24th, 2010
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