Man is accused of illegally draining more than $200 million from luxury resort
By Matthew Brown
Associated Press
BUTTE, Mont. (AP) - Embattled real estate mogul Tim Blixseth was taken away in handcuffs on Thursday after a federal judge ordered the onetime billionaire jailed until he accounts for millions of dollars he owes his creditors.
Blixseth's lawyers said they were uncertain how long it would take for them to come up with the answers sought by the court, meaning he could remain in jail for some time.
The incarceration of the 64-year-old Blixseth marks a dramatic turn in his six-year legal struggle against accusations that he illegally drained more than $200 million from Montana's Yellowstone Club, the ultra-luxury resort that Blixseth created with his former wife near Yellowstone National Park.
Before he was taken into custody, Blixseth spent more than two hours on the witness stand trying to explain what happened to a just a fraction of that money - $13.8 million in proceeds from the sale of another property that he owned in Mexico.
A clearly-exasperated U.S. District Judge Sam Haddon said Blixseth had offered no proof to back up claims that he spent all the money.
The judge rejected as insufficient the hundreds of pages of financial records presented by Blixseth's attorneys. Many of those documents were in Spanish and had been submitted just two days before Thursday's long-scheduled hearing.
"You are missing the boat here," Haddon told Blixseth's attorneys at one point. "The whole of this man's presentation is substantively based on hearsay."
He later said Blixseth appeared to have made a deliberate effort "to thwart or delay compliance with a court order."
After finding Blixseth in contempt of court, Haddon said the Washington state resident will remain jailed until he can provide a full accounting of the money. Haddon also held open the possibility of further sanctions but gave no specifics.
Blixseth showed little reaction as Haddon handed down his order. Moments later, two U.S. Marshals asked Blixseth to hand over his wallet, belt, watch and tie before they placed him in handcuffs and led him away.
Blixseth attorney Michael Ferrigno said many of the documents that could show where the money went are in Mexico, with no easy way for them to be retrieved.
"We are really in a tight spot," Ferrigno said. "The judge is taking this seriously, and we are, too."
Attorneys for his creditors had asked in recent court filings for Blixseth to be jailed. That came after they had been repeatedly stonewalled by Blixseth on the issue for more than a year, obtaining only "bits and pieces" of what happened to the money from the Mexico property, according to Charles Hingle, an attorney for the Yellowstone Club Liquidating Trust, which represents the Yellowstone Club's creditors.
Hingle declined comment after Thursday's court hearing in Butte.
Haddon last year found Blixseth in contempt of court for selling the property in Mexico in defiance of another judge's instructions. Blixseth delayed potential court sanctions for more than 10 months with an unsuccessful appeal to the 9th Circuit U.S. Court of Appeals.
The case stems from the 2008 bankruptcy of the Yellowstone Club, a private ski and golf resort with a membership that has included Microsoft co-founder Bill Gates and former Vice President Dan Quayle.
The club emerged from bankruptcy in 2009 under new ownership. Its creditors have spent the years since trying to collect on $241 million in civil judgments from courts that ruled Blixseth fraudulently drained money from the club for his and ex-wife Edra's personal use.
Blixseth claims attorney fees and other expenses consumed all of the $13.8 million he received from the 2011 sale of the Tamarindo resort, which included hotels and condominiums in the state of Jalisco. He originally paid $40 million for the property.
Judges have broad discretion in how they police those who come into their courtrooms for civil proceedings, including sending them to jail.
Published: Mon, Dec 22, 2014
