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Yellowstone Club 'looted' by billionaire owner Blixseth

post #1 of 20
Thread Starter 

 

MISSOULA, Mont. (April 22) - A federal bankruptcy judge Wednesday continued until next week a civil trial over the alleged "looting" of the Yellowstone Club by the resort's former owner, Tim Blixseth.
In the years before the mountain resort he founded spiraled into bankruptcy, Blixseth lived a jet-setting life of luxury, bankrolled largely by a $375 million loan made to the club through Credit Suisse.
After transferring the bulk of that 2005 loan to his private accounts, Blixseth and his former wife, Edra, bought plush airplanes, sprawling estates in France, Mexico and Scotland and a private island in the Caribbean.
But with the club now more than $400 million in debt, its creditors say the loan should never have been diverted. The club, which has a private ski hill on 13,600 acres, counts former Vice President Dan Quayle and Microsoft 's Bill Gates  among its more than 300 members.
 
The creditors are seeking to have the loan declared illegal and for Blixseth to return the money he received. They also want Credit Suisse to return to the club $146.4 million in principal and interest already paid.
"Enticed by the riches available from Credit Suisse, the Blixseths chose to breach their fiduciary duties (and) abandon the Yellowstone Club," creditors' attorney Thomas Beckett wrote in documents filed with the court.
In another brief, Beckett described Tim Blixseth as "looting" the club prior to transferring control to Edra Blixseth as part of their divorce settlement last August. The pair built the club in the late 1990s on former U.S. Forest Service land near Yellowstone National Park.
As the trial opened Wednesday, Blixseth's attorney asked for his client's case to be heard at a later date and separated from the creditors' claims against Credit Suisse. Attorney Joseph Grant said hundreds of thousands of pages of documents in the case were made available only Tuesday night, hobbling Blixseth's defense.
"We're not talking about hardship. We're talking about a fundamental denial of due process," Grant told the court.
U.S. Bankruptcy Judge Ralph Kirscher said Blixseth would be given another week to prepare, but would not receive a separate trial as his attorneys requested. He said pushing ahead with a trial immediately could have left the case open to appeals
post #2 of 20

Living within one's means is a gigantic lesson being shoved down the throats of all Americans right now.

 

The rest of the world is thankful that wasteful business strategies are showing signs of failure. The Death of Big Business is fun to watch because it was never real. It was just packaging. Those of us who do live within our means are quite content to ride out a 10 year recession. It doesn't impact us at all. That's the irony. Those losing money come back with the argument that a falling economy hurts everyone. But the truth is, it doesn't hurt those who don't borrow beyond what they can afford. It just hurts business who invested in their packaging instead of their product. 

 

Starbucks spends more money on health insurance for employees than coffee beans. When you can't count your beans, you're doomed. I would much prefer to buy my beans from the importer down the street. He offers me 54 (or so) roasts from around the world... with no coffee to go. Wrap your mind around that one. One man, one roasting kitchen, no coffee tables. Buy your beans and leave. 

 

What does Yellowstone have to do with Starbucks? Packaging. If you don't understand that packaging is a business that will kill your product without it, you're gone. Finally. 

 

Bye bye. 

post #3 of 20

Samurai, I agree.

Those of us who have chosen to live within our means and not buy into the package will be better for it, and perhaps will gain some footing in the long run.

 

Develope a trade, don't trade a development. 

post #4 of 20

The Credit Suisse loan has been under scrutiny for some time.  It was done through a branch in the Cayman Islands.  The same day the papers were complete Blixseth transferred over $100 million from the loan to his private account, something that would have raised alarms in the US.  I really hope they stick it to Credit Suisse and all the other banks that have been using branches in shady places to get around rules and regulations put in place to prevent abuse like what happen to the Yellowstone Club.

post #5 of 20

If Mr. Blixseth did what he's accused of doing he deserves no sympathy. Frankly, building a private ski area adjacent to one of the most underutilized ski areas in America was always strange to me. It's probably just me but I dint' see the attraction of lonely, lift served skiing. Some days Big Sky seems almost deserted - Yellowstone club must look like it's abandoned!

 

I don't know beans about coffee and I certainly don't agree that "packaging is a business that will kill your product without it". I do know that you may have followed the rules, lived within your means, gave your employer a good days work for a days pay and may still be financially ruined due to unemployment, health care costs that exceed your ability to pay or the loss of a lifetime of savings you thought were conservatively invested.

 

I believe the consequences of our collective economic misdeeds hurts almost everyone. Some are partially protected but few avoid the impact of the downturn entirely.

post #6 of 20

A few years back a kid on another ski board was talking about his dad maybe buying a place at the Yellowstone Club.  I asked why would anyone WANT to?  Did it have better terrain?  Big Sky has the terrain and some people on it, not many.  All I saw was the possibility of real boredom and they'd never come across the body.  The only thing I could think of was that the members were the kind who traveled with a mass of bodyguards and they wanted to give the guys a day off or something.....  It's not like there's a lot of the "wrong kind of people" or whatever skiing at Big Sky...Snowbowl maybe ....

post #7 of 20

To say that living within your means indemnifies you from a financial recession is to ignore all those who have been living frugally but have suddenly found themselves without employment and with no job prospect on the horizon.  Savings only last so long.

 

I feel fortunate to be in a situation where the current economic problems don't negatively affect me.  I don't think that everyone can be as lucky as me, however. I'm sure plenty of people put themselves into a bad position, but some just ended up there even though they did everything right.

post #8 of 20

 

Quote:
Originally Posted by sibhusky View Post

..  It's not like there's a lot of the "wrong kind of people" or whatever skiing at Big Sky...Snowbowl maybe ....

OH NO YOU DIDN'T!

True though, we do have a paucity of snobs.
 

post #9 of 20

I KNEW I'd get a reaction from ya!

Quote:
Originally Posted by volantaddict View Post

 

OH NO YOU DIDN'T!

True though, we do have a paucity of snobs.
 

 

post #10 of 20

 

Quote:
Originally Posted by samurai View Post

Living within one's means is a gigantic lesson being shoved down the throats of all Americans right now.

 

The rest of the world is thankful that wasteful business strategies are showing signs of failure. The Death of Big Business is fun to watch because it was never real. It was just packaging. Those of us who do live within our means are quite content to ride out a 10 year recession. It doesn't impact us at all. That's the irony. Those losing money come back with the argument that a falling economy hurts everyone. But the truth is, it doesn't hurt those who don't borrow beyond what they can afford. It just hurts business who invested in their packaging instead of their product. 

 

Starbucks spends more money on health insurance for employees than coffee beans. When you can't count your beans, you're doomed. I would much prefer to buy my beans from the importer down the street. He offers me 54 (or so) roasts from around the world... with no coffee to go. Wrap your mind around that one. One man, one roasting kitchen, no coffee tables. Buy your beans and leave. 

 

What does Yellowstone have to do with Starbucks? Packaging. If you don't understand that packaging is a business that will kill your product without it, you're gone. Finally. 

 

Bye bye. 


If you think your job is safe, think again....

There are going to be very few professions not impacted by a prolonged economic downturn.

Big Business has nothing to do with individual crooks. I'm extremely liberal but even I will concede that most business operates under proscribed terms of the law.

It's unfortunate that the US Forest Service released 13,000 acres to a private individual and now that land is going to be subject to possible auction to recoup losses. We had a 110 acre plot previously owned by Hewlett Packard near my house. The taxpayers pleaded with the commissioners' court to let it remain a green belt-rare in no-zoning Houston. There is yet another shopping complex on that land, with a 75% vacancy rate.

post #11 of 20

Lets see Yellowstone Clue files bankruptcy. That means they can't pay the guards at the gate.   And the place is always uncrowded! Sounds to me like a new privet Powder stash........... But you didn't  hear that from me.

post #12 of 20

csavage

The land the yellowstone club is built on was swapped for other land owned by Blixseth's logging company. That swap might not have been completely legit but the Yellowstone club didn't get their land for free from the government.

 

post #13 of 20

Extreme exclusivity always brings some very special people to your area; just ask them.  It is always a shame to see any skiing based endeavor go TU, but very rich people often have some very large blind spots. 

 

We have seen two major ski projects blow up this winter; Yellowstone club and Tamarack.  They were both financed by Credit Suisse.  Those folks from Rolexland might want to look at the Western US a bit different than Davos.  In both of these endeavors the locals were not all thrilled with the concept.  As a nonresident of both of these communities it will be fascinating to see what they become in the end. 

 

Old story from Augusta National (one of THE most exclusive country clubs in the world) home to The Masters.  They decided to build a fence around the course for privacy.  The locals looked at the fence and thought that it should have been built much higher; some of those folks could still get out.

 

Maybe projects like these should be required to build higher fences?

post #14 of 20

 

Quote:
Originally Posted by csavage View Post

 


 

 We had a 110 acre plot previously owned by Hewlett Packard near my house. The taxpayers pleaded with the commissioners' court to let it remain a green belt-rare in no-zoning Houston. There is yet another shopping complex on that land, with a 75% vacancy rate.

So they were unsuccessful in making a piece of private property worthless by not letting the owner develop it as he saw fit. Sounds like a positive to me. If they wanted a park then buy it.

post #15 of 20

 

Quote:
Originally Posted by stevesmith7 View Post

 

So they were unsuccessful in making a piece of private property worthless by not letting the owner develop it as he saw fit. Sounds like a positive to me. If they wanted a park then buy it.


Its unfortunate the community was not able or willing to pony up the money to purchase the property to make it a public amenity.
 

 

Speaking of public property, I wonder how the Yellowstone Club came to acquire this piece of property from the public domain. I know the USFS does engage in land swaps in order to acquire property deemed more important to its mission but this property would seem to be significant. I wonder if this transfer occurred during the Reagan administration when there was a directive from the administration to agencies like the Forest Service to sell off public l;lands. Every unit of the USFS was directed. I think, to make a certain amount of property available for sale under the presumption that it was surplus. Fortunately his administration came to an end before the local National Forest got around to doing this. I can only imagine that there were significant numbers of dedicated employees and officials who understood this was a betrayal of the public trust. The National Forests were especially apt to be treated as plunder for profit during that era. It is amazing what the voters will allow themselves to be sold on by a clever group of swindlers.

post #16 of 20

Yellowstone Club history:  The land was originally part of the huge land grants from the Federal Government to the transcontinental RRs.  Then it went to logging with Plum Creek being the final company taking the lumber.  When they'd logged it out an effort was made by a grass roots organization to protect the land, with USFS help they managed to raise the necessary funds and land swaps to think they'd acquired the property.  When they went to the final meeting to close the deal, Plum Creek said the deal was off, they'd "sold" the property to Blixseth.  It happened that fast.  I believe Blixseth was a board member or partner (Plum Creek might be - have been - a partnership of some sort).  It was a strange deal and caused much consternation in that part of Montana in the 1990's.  I was living and working at Big Sky at the time, hence the knowledge of how the YC came to be.

 

post #17 of 20

Here is a link to an interesting article in this morning's Oregonian newspaper

 

http://www.oregonlive.com/business/index.ssf/2009/05/a_fight_for_control_of_the_yel.html

 

Nice to see the judge take both the bank and Blixseth to task for their behavior and put the hedge funds behind the rest of the creditors to get paid.  Hopefully the locals will eventually get paid.

post #18 of 20

Looks like this chapter is finally closing - Judge Lays Club Blame Firmly With Blixseth & Credit Suisse

 

In his Yellowstone Club decision, Kirscher wrote: Tim Blixseth’s “pattern of self-dealing,” is what ultimately led to the crash of the exclusive Montana resort,,, In this case, Credit Suisse and the Prepetition Lenders are just as a culpable as Blixseth,” wrote Kirscher.

 

““The corporate greed of Credit Suisse and Mr. Blixseth’s sense of entitlement” created a toxic combination. And in fact, Kirscher’s decision found that, “Contrary to Blixseth’s arguments, the Credit Suisse loan was created so that Blixseth could extract large distributions from the development projects, without the need for any personal guarantee. Thus, the overall purpose of the loan was not for development of the Yellowstone Club, but instead, the purpose was to permit Blixseth to take money out of the Yellowstone Club and in fact, the record shows that very little, if any, of the Credit Suisse loan proceeds were used to fund development and construction at the Yellowstone Club.”

 

As for Blixseth’s claims that the bankruptcy was caused by early litigation from Greg LeMond, the management of the club under his ex-wife Edra or a fallen-through deal with Sam Byrne and CrossHarbor Capital, Kirscher called hooey on all of them.

 

Credit Suisse's consortium of lenders was repaid about US$80 million during an earlier phase of the bankruptcy case from the proceeds of the club's sale last year, to Sam Byrne of Boston-based CrossHarbor Capital Partners.

 

“Blixseth blames theDebtors’ downfall on the lawsuit filed by the LeMond Plaintiffs, the alleged conspiracy between Edra and Byrne, and Byrne’s failure to follow through with purchase of the Yellowstone Club in 2008. Given the evidence, Blixseth’s arguments are without support,” he wrote.

post #19 of 20
Quote:
Originally Posted by samurai View Post

 ...Those of us who do live within our means are quite content to ride out a 10 year recession. It doesn't impact us at all. That's the irony. T

I agree in spirit with what you are saying, but the (10 year) recession will have an impact on those that did the right thing and lived within their means.  All the "victims" that did not live within their means would like a redistribution of wealth (or our Gov't can just print more) so their quality of life is not impacted, and you can bet that if you lived within your means, someone will find a way to tax you more to help in that wealth redistribution.

Finding a good return on an investment that is not going to be taxed to death will be no easy task either.

 

post #20 of 20

Thanks for the update, baitingbear. It's nice to see the court case is decided; hopefully the locals can get some retribution. 

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