Resort founder claims bankruptcy judge is biased

AP News
Posted: Oct 11, 2010 7:12 PM
Resort founder claims bankruptcy judge is biased

Real estate mogul Tim Blixseth is alleging that a judge who issued a $40 million fraud judgment against him is biased and should be removed from the case.

Blixseth is a founder of Montana's ultra-exclusive Yellowstone Club. He made the claim against U.S. Bankruptcy Judge Ralph Kirscher in a proposed motion introduced in an appeal of one of the judge's rulings.

It includes assertions that Kirscher may have hampered a criminal investigation into Blixseth's ex-wife, and that Blixseth was denied his rights of due process.

Bankruptcy Clerk Bernard McCarthy said Monday it would be inappropriate for the judge to respond.

"I would not anticipate that any comment would be made by the judge now or in the future," McCarthy said.

Kirscher has blamed Blixseth for the Yellowstone Club's 2008 bankruptcy. Last month the former resort owner was ordered to pay $40 million to the club's creditors.

But Blixseth said $22 million of that judgment was subject to unresolved legal challenges, denying his right to a fair trial.

"I have not gotten a fair shake," he said. "On the $22 million, (Kirscher) just abandons the trial, basically does an award without ever hearing the evidence. That's bizarre in American juris prudence."

Blixseth added that the judge's repeated statements in defense of his ex-wife, Edra Blixseth, appeared to be an effort to "quash" a pending FBI investigation into her financial dealings.

The proposed motion was filed as an exhibit in Blixseth's appeal of the $40 million judgment. Attorneys for the club's creditors say Blixseth should pay far more _ $286 million _ and they want their case heard by the 9th Circuit Court of Appeals.

After the creditors' petition to the appeals court is filed, Blixseth's attorneys will seek to have the case returned to the lower court and will ask for Kirscher's removal or for the case to be reassigned.

Tim Blixseth turned over the Yellowstone Club to Edra Blixseth during their divorce. Months later it was revealed to be hundreds of millions of dollars in debt.

The private ski and golf resort has since emerged from bankruptcy under new ownership. However, its sale last year for $115 million to Boston real estate investor Sam Byrne remains subject to a separate appeal.

Arguments in that case are scheduled for Oct. 29.