Helena, Mont. ( Associated Press) — A former billionaire has filed a lawsuit against the Montana Department of Revenue seeking attorneys’ fees as well as millions of dollars in damages after a federal judge found the state wrongfully insolvent. Tried to coerce, the state said he owed .
The department’s communications director, Jason Slade, said Thursday that agency attorneys were aware of Tim Blixseth’s complaint, but did not see it or comment.
Blixseth and his third wife, Adra, founded the exclusive Yellowstone Club resort near Big Sky in the late 1990s. Private ski hills and golf courses in the mountains near Yellowstone National Park attract celebrities and other wealthy members.
The club went bankrupt after the couple divorced in 2008. This started a legal saga that pitted Blixseth against the club’s creditors, the Montana tax authorities, and banking giant Credit Suisse, which owed the club a $375 million loan it was unable to repay in full.
Much of the 2005 loan went to Blixseth, who used it to bolster the jet-setting lifestyle they said was part of efforts to create an international luxury leisure club after their Montana resort, which would eventually become a new owner. Under emerged from bankruptcy in 2009.
In 2006, Blixseth bought the Tamarindo Resort in Mexico for $40 million and a residence on a private island in Turks and Caicos for $28 million, his complaint said, to pay his legal fees. In the list of financial losses suffered by them on account of the sale.
Blixseth has consistently denied wrongdoing, despite several court rulings that found he fraudulently transferred loans to enrich himself.
Creditors of the Yellowstone Club suspected that Blixseth had hidden assets. They spent years pursuing him, but he collected only a tiny fraction of the $286 million he once asked for. Federal courts issued judgments against Blixseth for a total of $525 million.
The club’s creditors settled for $3 million in 2018. Oregon real estate developer Martin Kehoe paid Blixseth to Kehoe in exchange for transferring the rights to the proceeds of his planned lawsuit against the Montana Department of Revenue. Blixseth’s attorney, John Doubeck, said Thursday that Blixseth has repaid Kehoe, but declined to say how.
In June, a U.S. bankruptcy court judge in Nevada upheld the lower court’s rulings, holding that the state of Montana did not have the legal position to file its involuntary bankruptcy petition against Blixseth in 2011. Montana was seeking to collect $219,000 in taxes, but also hoped to force the payment of $56 million in taxes that Blixseth had opposed in 2011. To use for bankruptcy filing.
Under federal law, involuntary bankruptcy can be pursued for taking a loan if at least three entities file a petition and the amounts owed are not in dispute. California and Idaho initially joined the petition, but settled with Blixseth about two weeks after the case was filed.
Montana refused to settle, lawyers for Blixseth have said.
Blixseth argued that the amount owed was in dispute, noting that California and Idaho settled for less payments, and that he was still disputing the amount when seeking a hearing before the Montana State Tax Appeals Board. when the petition was filed.
Blixseth filed the suit in US Bankruptcy Court in Nevada on December 23, and was first reported by Independent Records., seeks a jury trial and argues for $300 million in damages from Montana because he was forced to sell resorts and other properties, including an airplane and a yacht, at financial loss for his legal battle. Doubeck said he is seeking $500 million in damages for lost financial opportunities.
Doubeck said his attorney’s fees on involuntary bankruptcy amounted to about $10 million. The complaint states that the ongoing legal battle damaged Blixseth’s personal and professional reputation and also his health, which led to his imprisonment and harm to his philanthropic efforts.
Beginning in 2015, Blixseth was jailed for 14 months, for violating a bankruptcy judge’s order not to sell the Tamarindo Resort, and then refusing to say that he had raised $13.8 million in proceeds. What did you do with A federal appeals court eventually ordered his release.
Blixseth is also seeking punitive damages and sanctions against the state.
Associated Press reporter Matthew Brown in Billings, Montana contributed to this story.