Judge wants jailed tycoon to reveal fate of diverted cash

AP News
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Posted: Apr 21, 2016 5:37 PM
Judge wants jailed tycoon to reveal fate of diverted cash

BILLINGS, Mont. (AP) — A federal judge demanded that a jailed former billionaire reveal what happened to hundreds of millions of dollars he diverted from a luxury mountain resort, raising the prospect that a decadelong legal saga could be coming to an end.

The order for the first time requires Tim Blixseth to file a complete inventory of assets his legal adversaries have been chasing since 2008, when the Yellowstone Club near Big Sky, Montana, went bankrupt. It is due Friday.

Courts have previously ruled that Blixseth fraudulently transferred $286 million for his personal use from a 2005 Credit Suisse loan intended for the club.

The private ski and golf resort, founded by Blixseth and his ex-wife, attracted elite members, including Microsoft co-founder Bill Gates and former Vice President Dan Quayle. It emerged from bankruptcy under new ownership in 2009.

Since the bankruptcy, Montana tax authorities and attorneys for the club's remaining creditors have been pursuing Blixseth's fortune in multiple federal courts. Those efforts so far have had minimal success, despite civil judgments against Blixseth topping $250 million.

He has never been charged with a crime for his financial activities. But for the past year, Blixseth has been behind bars for civil contempt in one of the numerous lawsuits brought by the club's creditors.

Blixseth was jailed after failing to satisfy U.S. District Judge Sam Haddon's inquiries into what happened to just one slice of his fortune — $13 million from a Mexican resort he sold in defiance of a bankruptcy judge.

His attorneys argue that Blixseth has done his best to cooperate with Haddon's prior orders and should be released. They reached a $3 million settlement with the club's creditors this month that closed the Mexican resort case. But other litigation against Blixseth is still active.

Attorney Philip Stillman said his client takes the latest directive from Haddon seriously but views it as a "fairly transparent attempt to have some reason to keep him in jail."

"From (jail), I don't know what he's supposed to do," Stillman said. "The scope of that order is problematic for a guy who's been in jail for a year and has access to nothing."

Blixseth originally bought the Mexican resort known as Tamarindo for $40 million. The proceeds from its sale are gone, his attorneys have said, as are the luxury jets, yachts, mansions and other assets of a man whose wealth was once estimated by Forbes magazine at $1.3 billion.

The order from Haddon extends to a financial trust that Blixseth created in the days leading up to the Yellowstone Club's bankruptcy. His legal adversaries have argued for years that the trust was set up to hide Blixseth's assets from creditors.

"If he does what the judge has ordered him to do, that will be a potential treasure trove for everybody to see what Tim Blixseth did with his millions and millions of dollars," said Kevin Barrett, an attorney with Bailey and Glasser, the law firm representing the club's creditors.

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Follow Matthew Brown on Twitter at https://twitter.com/matthewbrownap .