Ex-billionaire to seek sanctions against Montana
Thursday, May 19, 2011
BILLINGS, Mont. (AP) — Former billionaire Tim Blixseth said he will pursue court sanctions against the Montana Department of Revenue after a federal judge tossed a bankruptcy petition the state filed against him seeking $57 million in alleged unpaid taxes.
The petition could have forced the founder of Montana’s ultra-exclusive Yellowstone Club to liquidate his assets if it had been successful.
But the case was dismissed Wednesday by U.S. Bankruptcy Judge Bruce Markell in Nevada because Blixseth has no assets in the state, his attorneys said.
“They took a shot at me and it was a bad-faith bankruptcy filing,” Blixseth said. “We are going to depose everyone in the food chain that filed this.”
He added that the petition was a “desperate move” to derail pending litigation related to the Yellowstone Club’s 2008 bankruptcy and a separate lawsuit Blixseth is pursuing against Credit Suisse. The latter case involves a $375 loan the banking industry giant made to the club in 2005.
Representatives for the Montana Department of Revenue did not immediately return calls from The Associated Press seeking comment.
Blixseth, 60, is a resident of Washington state. Last month, he paid $1.9 million in back taxes to California and Idaho to get them to withdraw as co-plaintiffs with Montana in the forced bankruptcy petition.
As a condition of those settlements, Blixseth agreed not to seek sanctions against authorities in the two states.
The states went after Blixseth in Nevada because he put most of his assets into a family trust registered in that state several years ago.
Forbes once pegged Tim Blixseth’s value at $1.3 billion. Court documents recently put the figure at roughly $230 million.
He still faces a $40 million civil judgment handed down last year by federal bankruptcy judge in Montana, over claims related to the Yellowstone Club’s 2008 bankruptcy. That order is on appeal.
Authorities and creditors claimed he amassed his riches primarily by draining hundreds of millions of dollars from the Yellowstone Club, leading to its bankruptcy. The club has since emerged from bankruptcy under new owners.
Most of the money that Blixseth took out of the private ski and golf resort near Big Sky, Mont. came through the 2005 Credit Suisse loan. The money bankrolled a lavish lifestyle for Blixseth and his ex-wife Edra that included a fleet of cars, two luxury jets, millions of dollars in jewelry and furniture and estates in France, Mexico, California, Scotland and elsewhere.
Montana authorities contended the money should have been counted as income on which Blixseth owed taxes. The state’s claims spanned a five-year period, 2002 to 2006, and included more than $36 million in taxes and almost $21 million in penalties and interest.
Blixseth has said the Internal Revenue Service ruled years ago that the Credit Suisse money was a legitimate loan to the club. And he contended that any liabilities against the club were the responsibility of Edra Blixseth, who took control of the resort after the couple’s 2008 divorce.
After the bankruptcy petition was filed on April 4, Blixseth alleged it had been engineered by state authorities including Gov. Brian Schweitzer in collusion with Credit Suisse and the club’s new owners, CrossHarbor Capital Partners of Boston.
A Sept. 1 trial date was scheduled on the motion for sanctions. His attorneys said they intend to depose Schweitzer, Department of Revenue chief Dan Buck and other state officials.
Under federal bankruptcy law, any sanctions against the state could include awards for damages resulting from its widely publicized case against Blixseth, his attorneys said. Those could total hundreds of thousands of dollars, attorney Mike Flynn said.
“No American should have to go through what I just went through, but if somebody had to I’m glad it was me,” Blixseth said. “Most people wouldn’t have the fortitude or the resources to fight.”
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