[Vision2020] Tim Blixseth (The Saga Continues . . . )

[Tom Hansen]

Yes.  THAT Tim Blixseth; the poor, neglected billionaire con-artist who is
simply trying to eek out a living.

Shouldn't Latah County be forming a welcoming committee or something?

Courtesy of New West at:

http://tinyurl.com/Blixseth-Saga-Continues-022510

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Blixseth Fraud Trial: Court Seeks Assets, Answers
Tim Blixseth is facing claims that he looted the Yellowstone Club and hid
$280-plus million. How will it end?
By Amy Linn, 2-25-10

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.

The gated millionaires-only community, home of Bill Gates and former Vice
President Dan Quayle, went into bankruptcy in November 2008, chiefly due
to a 2005 loan transaction in which Blixseth borrowed $375 from Credit
Suisse, ostensibly for the club, and then pocketed $209 million of it.
Among other deluxe items, Blixseth used the cash to buy a French chateau,
a private island, a Mexican golf resort and other properties around the
world for a failed uber-rich resort club business he called Yellowstone
Club World.

Today, the Yellowstone Club Liquidating Trust, a group charged with
liquidating assets to pay off creditors in the wake of the bankruptcy,
alleges that Blixseth’s actions “can only be described as looting.” The
loan—and Blixseth’s “pattern of deception and self-dealing”—left the club
“doomed to failure,” according to the civil complaint by Trust attorney
Charles Hingle.

“The truth of the matter is that Blixseth walked away from the Debtors
after receiving the benefit of hundreds of millions of dollars, and the
Debtors”—the Yellowstone Club and associated entities--"received nothing
in return, except enormous liens against their property and an obligation
to repay a loan that was never meant for their benefit in the first
place,” Hingle wrote. “Blixseth cannot just walk away this time; rather,
he must be held accountable for his actions.”

In court today, Blixseth’s lawyers argued in hair-splitting legalese that
Blixseth could not be held responsible for the hundreds of millions of
dollars at issue. Blixseth maintains, among other things, that the
disputed assets and liabilities were transferred to his ex-wife Edra
Blixseth in the August 2008 marital settlement agreement (MSA) in the
couple’s divorce. He also claims the MSA “released” him from the claims in
general, and from claims for breach of fiduciary duty in specific.

Blixseth attorney Thomas Banducci kicked off day one of the three-day
trial by questioning Marc Kirschner, head of the Trust, about another
defense argument: that there was conflict-of-interest on the Trust board.

“Four out of seven members of the trustee advisory board are appointed by
Credit Suisse,” Banducci said to Kirschner. “Didn’t that cause you to
think there was a conflict?”

“They’re independent businessmen or work for hedge funds-- they’re not
beholden to Credit Suisse,” Kirschner answered from the stand.

But Judge Kirscher himself ruled that Credit Suisse’s actions in the
Yellowstone Club matter “were so far overreaching and self-serving that
they shocked the conscience of the Court,” Banducci reminded Kirschner.
“Did that not concern you?”

“No, because the matter was resolved,” Kirschner replied.

“But if this lawsuit is successful, the lenders [Credit Suisse] will
benefit,” Banducci said.

“If this lawsuit is successful, all the creditors will be successful,”
Kirschner answered.

Outside of court, meanwhile, some of the evidence against Blixseth seemed
more clear-cut, particularly in terms of a court document filed by the
Trust on Feb. 19.

The complaint alleges that shortly before the Yellowstone Club filed for
bankruptcy, Blixseth made “numerous transfers of assets” to a Nevada
entity, Desert Ranch LLC, that he set up to shield his assets from
creditors, rendering himself insolvent, at least on paper.

“Blixseth implemented a scheme to defraud his creditors, including the
debtors,” immediately after signing the marital agreement, the complaint
asserts. “Specifically, beginning in August 2008, approximately three
months prior to the filing of this bankruptcy, Blixseth personally
transferred or caused to be transferred virtually all of his assets to
Desert Ranch for less than reasonably equivalent value.

At the time of the transfers, Blixseth knew the Yellowstone Club and its
associated firms “had substantial claims against him ... and he knew that
the Debtors were in serious financial trouble. At the time of the Desert
Ranch transfers, Blixseth was insolvent or became insolvent as a result.”

The complaint calls the Desert Ranch set-up “a garden-variety asset
protection plan” that shields assets while allowing debtors to continue
enjoying their wealth.

Blixseth, a Washington resident, owns 98 percent of Desert Ranch; the
other 2 percent is owned by an associated Nevada company, Desert Ranch
Management, in which Blixseth owns a 40 percent share. His son Beau
Blixseth owns 30 percent of it; the remaining 30 percent is owned by two
trusts run by George Mack, “a long time friend and business associate of
Blixseth,” the court document claims.

More remarkable, the alleged asset-hiding was laid out in smoking-gun
invoices from Thornton Byron, a Boise law firm that allegedly guided
Blixseth through the Desert Ranch deal. According to court documents,
Thornton Byron advised Blixseth how to “isolate” his assets from “the
imminent bankruptcy” after the division of property in his divorce.

Detailed billing statements--more than 30 of which are posted in the
complaint--give shorthand descriptions of the divorce battle starting in
April 2008; they end in June 2008 with details about how Blixseth
protected what he’d won.

On June 17, 2008, according to the invoices, the lawyers discuss concerns
“regarding Mr. Blixseth’s possible liability to creditors of Mrs.
Blixseth, Blixseth Group Inc. or the Yellowstone Club entities if Mrs.
Blixseth were to assume liabilities of business entities.” They also
perform “analysis of documentation and transactional steps to limit Mr.
Blixseth’s exposure on subsequent collection efforts with respect to
liabilities assumed by Mrs. Blixseth.”

On June 10, 2008, the lawyers plan how to “isolate Desert Ranch property”
to “limit potential liability.” On June 9, 2008, they “evaluate the
cancellation of debt considerations and potential issues with respect to a
bankruptcy.” And on June 6, 2008, they “address the issues re the
potential exposure vis-à-vis a bankruptcy ... to provide maximum
protection for Mr. Blixseth.”

The complaint demands that Blixseth give all the transferred assets to the
Trust. According to the court document, the properties protected by Desert
Ranch include:

-- One-third ownership interest in Western Pacific Timber, valued at $40
million
-- Three entities that own stock in a Mexican company with residential
properties in Tamarindo, Mexico, valued at $2 million
-- Fifty percent ownership in a 640-acre parcel of land in Bozeman,
Montana (not valued)
-- The Buffalo Bill Ranch in Cody, Wyoming, valued at $3.5 million
-- Western Air & Water, valued at $25 million
-- Emerald Cay Ltd., with a private island in the Turks & Caicos worth an
estimated $35 million
-- Desert Ranch, which owns 3,000 acres of land, valued at $100 million
-- Tamarindo resort in Mexico, valued at $40 million
-- Nineteen businesses in the United States and more than 10 other foreign
businesses

Blixseth is not the defrauder, Blixseth’s lawyer Michael Flynn told the
court. Among other things, Flynn alleged that Blixseth and the club were
misled by Edra, who derailed a more than $400 million bid by Boston-based
CrossHarbor Capital Partners to buy the Yellowstone Club in the spring of
2008, he said. (CrossHarbor, led by real estate investor Sam Byrne,
succeeded in buying the bankrupt club for $115 million last July.)

Edra Blixseth is now in Chapter 7 bankruptcy, but she’s the one who hid
assets, Flynn alleged.

Blixseth, a man whose name in news articles is rarely mentioned without
the accompanying words “timber baron,” listened soberly from the defense
table in a charcoal-gray zip-necked sweater.

“In fact, Mr. Blixseth was defrauded,” Flynn said.

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Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho

"The Pessimist complains about the wind, the Optimist expects it to change
and the Realist adjusts his sails."

- Unknown