- The Washington Times - Thursday, April 30, 2009

MISSOULA, Mont. (AP) | The founders of the Yellowstone Club are trading blame over who is responsible for the financial collapse of the Montana haven for the rich that has fallen more than $400 million into debt.

Members of the private ski resort, including former Vice President Dan Quayle and Microsoft Corp. co-founder Bill Gates, pay substantial sums for the privilege of building expensive homes in the gated resort, but they do not own the club.

Its founders, recently divorced Tim and Edra Blixseth, blame one another for the problems that led the club to file for federal bankruptcy protection.

Mrs. Blixseth has owned the club outright since August. But Mr. Blixseth was in control in 2005 when the Yellowstone Club took a $375 million loan through the firm Credit Suisse.

Most of that money went to the Blixseths’ private accounts, to be spent on luxury jets and estates in California, France, the Caribbean, Mexico and Scotland.

The club’s creditors and members accuse Mr. Blixseth of “looting” the resort. They say the loan was fraudulent and should be voided because Credit Suisse knew it would not benefit the club.

Mrs. Blixseth’s attorney latched onto that claim during opening statements in Wednesday’s bankruptcy trial.

“The corporate greed of Credit Suisse coupled with Mr. Blixseth’s sense of entitlement is a very, very bad situation,” attorney Troy Greenfield said.

Mr. Blixseth’s attorney, Mike Flynn, said the fact that some of the money went to his client was a red herring. “If anyone in America builds a business and wants to take money out of the business … they’re absolutely entitled to do so,” Mr. Flynn said.

Last month, Mrs. Blixseth declared personal bankruptcy. Her former husband said the club was making money when she took it over and that she drove it into the ground.

But attorneys for the creditors have cast Mr. Blixseth as the engineer of the 2005 loan that makes up most of the club’s debts. And despite the millions she made off the loan, Mrs. Blixseth said she objected to the deal at the time.

A Boston real estate investor has offered to buy the resort for $100 million. The price could be driven higher during an auction set for May 13.

Mr. Blixseth, who hopes to regain control of the club, developed the 13,600-acre resort with his former wife in the late 1990s, after making his riches in the timber industry.

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