BILLINGS, Mont. -- The founder of Montana's exclusive Yellowstone Club claims in a new lawsuit that he was betrayed by his ex-attorney in a civil fraud case that resulted in a $40 million judgment against him.
Resort developer Tim Blixseth also accuses former attorney Stephen Brown of participating in a plot to blame the club's 2008 bankruptcy on Blixseth, who has spent much of the past three years refuting allegations he looted the club before it spiraled into almost $400 million of debt.
In a federal lawsuit filed Wednesday in Missoula, Blixseth said he was seeking at least $375 million in damages against Brown and others he says conspired against him.
Other defendants in the case are current club owner Sam Byrne of CrossHarbor Capital Partners, several attorneys connected to the club's bankruptcy and their firms.
Brown on Thursday denied any liability on the part of himself or his Missoula law firm, Garlington, Lohn and Robinson.
"We will file a formal response," Brown said. "There's going to be a lot of disputed things in there."
Blixseth made hundreds of millions of dollars off the ski and golf resort before giving it up during his divorce.
Three months later, the club was bankrupt, unable to repay debts including the bulk of a $375 million loan Blixseth arranged for the club through Credit Suisse ( CS - news - people ).
Most of that loan was passed to Tim Blixseth and ex-wife Edra Blixseth.
At the time, according to Tim Blixseth's lawsuit, Brown signed off on the deal as legitimate. But creditors later claimed Blixseth had fraudulently pocketed $286 million meant for the resort. The creditors won a $40 million judgment against Blixseth last year before U.S. Bankruptcy Judge Ralph Kirscher.
Brown was chairman of the unsecured creditors committee that filed the original complaint over the $286 million. Prior to that role, he served as Blixseth's personal attorney and the attorney for the club.
Brown gained a seat on the unsecured creditors committee in part because his firm was among the club's creditors when it filed for bankruptcy. Blixseth was not an original party to the creditors' lawsuit but intervened in the case about a month after it was filed.
He has yet to pay the $40 million judgment, and the issue remains caught up in a tangle of lawsuits and appeals stemming from the resort's bankruptcy.
In a separate case, court documents filed last week show Tim Blixseth is seeking $808,000 in legal fees and unspecified punitive damages from the state of Montana after state tax authorities unsuccessfully tried to force him into bankruptcy.
Montana had alleged Tim Blixseth owed more than $57 million in unpaid taxes and penalties from the Credit Suisse loan. A federal judge in Nevada threw out the case last month saying it was not filed in the proper venue.
Tim Blixseth is a resident of Washington state. A family trust that holds most of his assets is incorporated in Las Vegas.
The dispute over the $57 million remains pending before the State Tax Appeal Board.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
No comments:
Post a Comment