Jailed Club Founder Gets Final Chance to Account for $13.8M

BILLINGS – A one-time billionaire real estate mogul who’s languished in a Montana jail for six months gets his “final opportunity” to come clean about a disputed Mexican property sale during a trial starting Monday, according to the judge overseeing the case.

If Yellowstone Club founder Tim Blixseth again fails to satisfy U.S. District Judge Sam Haddon, he could face prosecution for criminal contempt of court, according to legal experts and one of Blixseth’s attorneys.

Haddon jailed Blixseth in April on a civil contempt charge, for not providing a full accounting of what happened to $13.8 million from the 2011 sale of the Tamarindo resort in the Mexican state of Jalisco. The sale violated a bankruptcy court order.

Blixseth, 65, of Medina, Washington, submitted more than 9,000 pages of financial documents during his five previous tries to placate the judge. But Haddon dismissed those attempts as “somewhat lacking.”

“This will be the final opportunity,” Haddon told one of Blixseth’s attorneys during a pre-trial conference earlier this month. “We’re going to have one more shot at this undertaking before we put the lid down on it.”

Creditors say Blixseth owes them more than $250 million after he pocketed for personal use the bulk of a massive Credit Suisse loan to the Yellowstone Club in 2005. Afterward, the private ski resort for the ultra-wealthy near Big Sky, Montana, spiraled into bankruptcy.

While the bankruptcy case was pending, another judge prohibited the sale of Tamarindo, which Blixseth originally bought for $40 million. Its sale led to a civil contempt charge from Haddon and months of courtroom wrangling over what happened to the proceeds.

Criminal contempt charges typically are reserved for cases where someone directly violates a judge’s order, said Stephen Saltzburg, a professor of criminal law at the George Washington University School of Law.

“If this fellow would provide the information that the court requires, then the judge would let him out of jail,” Saltzburg told The Associated Press. “The more obstructionist someone is, the more likely a judge is to start thinking about criminal contempt.”

Since Haddon ordered him jailed, Blixseth has spent most of the past six months in solitary confinement, according to his attorneys. They say Blixseth requested that he be kept apart from other inmates at the Cascade County Regional Detention Center in Great Falls out of concerns for his safety.

Those attorneys have said repeatedly that their client gave a full accounting of the funds from Tamarindo and there’s no other information he can provide. But Stillman says if Haddon still is not satisfied following this week’s trial, the judge could refer the matter to the U.S. Attorney’s Office for potential prosecution.

“I’m hoping Judge Haddon has simply put his faith in the word of the lawyers (for the Yellowstone Club’s creditors) and will soon realize he has been misled by them as to the facts,” Stillman said. “(Blixseth’s) He’s been in jail longer than a lot of violent criminals. He hasn’t received a hearing and he doesn’t have a right to bail. It’s just bizarre.”

Creditors, represented by the Yellowstone Club Liquidating Trust, said Blixseth distributed money from the Tamarindo sale to family members, his attorneys and various corporate entities.

Those other parties have denied any complicity. An attorney for Blixseth’s wife, Jessica, said in court filings that she was only “vaguely aware” of the prohibition on the sale of the Tamarindo resort.

Attorneys for the liquidating trust have argued for Blixseth continued incarceration in court documents filed in recent weeks.

That’s another option available to Haddon: Simply keep Blixseth in jail until he abides by the judge’s prior orders. Such a decision would be in line with precedents set in other civil contempt cases, University of Montana law school professor Cynthia Ford said.

“Six months isn’t very much in the big pictures of these cases. Years is what we measure by,” she said.