BILLINGS – The founder of the millionaires-only Yellowstone Club goes on trial Wednesday to face claims that he fleeced the private Montana resort out of at least $286 million.
Before its 2008 bankruptcy filing, the club gained a reputation as a Western mountain haven for the nation’s elite. Its high-megawatt membership list includes Microsoft Corp. co-founder Bill Gates, hotel magnate Barry Sternlicht and former Vice President Dan Quayle.
The club is now out of bankruptcy protection, but creditors are still chasing club founder Tim Blixseth in federal court.
They want a civil fraud judgment against the real estate tycoon and former timber baron, who took a loan ostensibly for the club and used it to bankroll a gilded lifestyle including estates in Mexico, the Caribbean, Scotland and France.
“His conduct can only be described as looting, and he should be held accountable for his actions,” creditors attorney Charles Hingle wrote in court documents filed Tuesday.
Blixseth, 60, argues that the club’s debts were transferred to his former wife, Edra, when she got the 13,600-acre resort in their divorce settlement. He said that ended his obligations on the $375 million loan.
“She knew it and acknowledged it,” he said. “I got waivers, releases, she had millions of dollars of advice.”
Edra Blixseth is in personal bankruptcy and has already sold the club, for $115 million, to Sam Byrne of Boston-based CrossHarbor Capital Partners.
Under court order, she’s liquidating her assets and has given up multiple homes and estates and most of her jewelry and other possessions. Her main residence, a 230-acre estate in California, was recently put on the market for $75 million.
Tim Blixseth, too, has been trying to shed property, including a small private island in the Turks and Caicos. The asking price for that was recently cut from $75 million to $48.5 million.
Until two years ago, Tim Bilixseth was listed on the Forbes magazine list of the 400 richest Americans, with an estimated fortune of $1.3 billion. He is no longer on the list, and in an interview declined to estimate his worth.
Like many in the high-end real estate market, he said he’s been forced to “hunker down” since the recession and tone down his lifestyle.
But he maintains his economic moves at the Yellowstone Club were the right ones. He said it was thriving, with $50 million in pending sales, before his divorce and then the bankruptcy cut sales to almost nothing for about a year.