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Billionaire accused of 'looting' posh Mont. resort

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[April 22, 2009]  MISSOULA, Mont. (AP) -- Flamboyant billionaire Tim Blixseth lived the high life as the posh mountain resort he founded for the ultrarich spiraled into bankruptcy.

HardwareThe timber baron turned luxury resort developer bought plush airplanes, sprawling estates in France, Mexico and Scotland and a private island in the Caribbean.

But creditors say he paid for all of that with a 2005 loan ostensibly meant for the Yellowstone Club, a 13,600-acre private ski resort that counts former Vice President Dan Quayle and Microsoft's Bill Gates among its members.

A civil trial for Blixseth was set to begin Wednesday, with creditors seeking to have the $375 million loan arranged by Credit Suisse declared illegal. 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 his wife, Edra, as part of their divorce settlement last August. The pair built the club in the late 1990s from former U.S. Forest Service land near Yellowstone National Park.

The Yellowstone Club filed for bankruptcy protection in November. Its members and creditors blame Blixseth and Credit Suisse, a Swiss investment bank.

In recent years, Credit Suisse packaged more than $2 billion in loans to at least six luxury resorts now in financial trouble. Some of those deals -- including the Yellowstone Club's -- were marketed as a way for resort owners to extract massive and early "profit dividends" before the developments were completed.

After the real estate market collapse, the resorts were unable to keep selling property to cover the loans.

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Tim Blixseth's attorney contends the money he took from the loans was deserved, and that the bankruptcy was spurred by economic forces outside his control.

Credit Suisse contends there was nothing improper about the deal and that it was approved by numerous attorneys. That included Tim Blixseth's attorney Steven Brown, who now sits on the creditors' committee that is suing Credit Suisse.

The club is up for auction next month, with a starting minimum bid of $100 million.

If the creditors prevail in the lawsuit, any sale proceeds would go to the contractors, utilities, banks, employees and others owed between $25 million and $50 million by the club. Credit Suisse would have to wrangle directly with the Blixseths to reclaim the $307 million it is still owed.

Whether Credit Suisse could get its money back from the Blixseths is uncertain. Edra Blixseth filed for personal bankruptcy last month, while Tim Blixseth has been trying to unload his island in the Turks and Caicos for $75 million.

[Associated Press; By MATTHEW BROWN]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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