A group of property owners from four luxury resorts - including Tamarack Resort in Idaho - has filed a $24 billion class-action lawsuit against Credit Suisse, alleging that the big Swiss bank engaged in a "predatory" lending scheme designed to force all four resorts into foreclosure and acquire the pricey properties for pennies on the dollar, while raking in "enormous" fees. The lawsuit, filed in federal court in Boise, alleges racketeering, conspiracy, fraud, money laundering and more, and seeks billions in damages, including $150 million each for the states impacted by the failed resort projects. The resorts, in addition to Tamarack, are Lake Las Vegas in Nevada; the Yellowstone Club in Montana; and the Ginn Sur Mer resort in the Bahamas.

Seven attorneys from California, Nevada, Texas and Idaho are listed in the complaint; none are commenting on the case, but the group issued a press release accusing Credit Suisse of "naked greed," and said the bank's scheme artificially inflated the value of the resort properties with the intention of then foreclosing on the debt-saddled owners. Also named as a defendant is Cushman & Wakefield, the real estate services firm that appraised properties for Credit Suisse, using a "total net value" appraisal methodology. Incidentally, the "naked greed" phrase in the press release is a quote from a federal bankruptcy judge in Montana, who wrote in a May 2009 court order that the bank's actions in the Yellowstone Club case "shocks the conscience of this court," adding, "Credit Suisse lined its pockets on the backs of the unsecured creditors."

You can read the full federal court complaint in the class action suit here - it's 81 pages long - or click below to read the press release from the plaintiffs. The two named plaintiffs, L.J. Gibson and Beau Blixseth, represent a group of about 3,000 homeowners, landowners and investors in the four resorts, according to the complaint.

The Boise attorney involved in the lawsuit is former Idaho Supreme Court Justice Robert Huntley, who has been involved in two previous national class-action lawsuits. One of those, on behalf of 19,000 hemophiliacs who contracted the AIDS virus from the nation's blood supply decades ago, resulted in a $640 million settlement from drug companies. The other, regarding people who got hepatitus C from an immunoglobulin product, represented about 6,000 patients who each received significant settlements, including a Boise plaintiff who won a $2.34 million verdict.

PROPERTY OWNERS FILE $24 BILLION LAWSUIT AGAINST CREDIT SUISSE CLASS-ACTION SUIT ACCUSES BANK OF FRAUD AND RACKETEERING

BOISE, IDAHO, January 4, 2010 – Property owners at four luxury resorts have filed a $24 billion class-action lawsuit against Credit Suisse, the giant Swiss bank. The suit, filed in federal court in Idaho, accuses Credit Suisse AG and related corporations of wire and mail fraud, racketeering, money laundering, conspiracy and other charges.
The suit was filed on behalf of homeowners, property owners and other investors who lost billions of dollars at luxury resorts including the Tamarack Resort in Idaho, the Yellowstone Club in Montana, the Lake Las Vegas resort and development in Nevada and the Ginn Sur Mer Resort in the Bahamas.
The suit proposes creation of a $600 million fund to help the creditors, laborers and small businesses harmed by the Credit Suisse loan scheme, or $150 million for each of the four affected communities.

The property owners accuse Credit Suisse of operating a “predatory” loan scheme that artificially inflated the value of resorts to saddle them with enormous and unsustainable debt. The bank earned tens of millions of dollars in fees in the process, “with the expectation that Credit Suisse would foreclose on, or use the non-performing loan to obtain ownership of the Resort at a cost significantly below market value,” the suit states. All four resorts defaulted on their loans, and Credit Suisse tried to buy the properties at massive discounts.
“Naked Greed”
Credit Suisse set up a Cayman Islands branch to market its syndicated resort loans. As U.S. Bankruptcy Judge Ralph Kirscher observed, Credit Suisse used the island branch--little more than a mail drop--to appraise the private resorts at grossly inflated values. The bank used a “total net value” appraisal method that Judge Kirscher ruled did not comply with the Financial Institutions Recovery Reform Act of 1989, or FIRREA.  

“The naked greed in this case combined with Credit Suisse's complete disregard for the Debtors or any other person… shocks the conscience of this Court,” Judge Kirscher wrote last year in a blistering rebuke. “While Credit Suisse's new loan product resulted in enormous fees to Credit Suisse in 2005, it resulted in financial ruin for several residential resort communities. Credit Suisse lined its pockets on the backs of the unsecured creditors.”

The investors also have sued Cushman & Wakefield, the appraisers who used the “total net value” method.

“Ill-Gotten Financial Gains”
Credit Suisse, the second largest bank in Switzerland, has a long history of wrongdoing. It refused to release the assets of Nazi Holocaust survivors until decades after the end of World War II. And just several weeks ago, the bank admitted to the U.S. Justice Department that it had illegally helped Iran, Sudan, Libya and other sanctioned nations move hundreds of millions of dollars, for more than a decade, in violation of federal and state banking laws.

Credit Suisse forfeited a record $536 million as part of deferred prosecution agreements. “The criminal misconduct perpetrated by Credit Suisse in this case is simply astounding,” Attorney General Eric Holder said. “This case offers a stark and disturbing example of the lengths to which some corporate wrongdoers are willing to go in seeking ill-gotten financial gains.”

For more information, please contact:
Jim Popkin, Seven Oaks Media Group