January 4, 2010 in Idaho

Resorts accuse Swiss bank of ‘naked greed’

By The Spokesman-Review
 

BOISE - A group of property owners from four failed 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.

Tamarack, near Donnelly, Idaho, was touted as the first new four-season resort developed in the U.S. in decades, with extensive skiing, golf, hiking and mountain biking trails, hotels and high-end real estate. But its financial failure left unfinished buildings and unpaid contractors. This year, Tamarack’s ski lifts never opened for the season.

Duncan King, a spokesman for Credit Suisse in New York, told The Spokesman-Review, “We believe the suit to be without merit, and will defend ourselves vigorously.” He had no further comment.

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.

The the “naked greed” phrase in the group’s 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.”

The plaintiffs charged that the bank set up its Cayman Islands Branch, which was “little more than a mail drop,” to operate the scheme.

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 suit seeks $8 billion in actual damages and $16 billion in punitive damages, including the millions for the states.

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.

Credit Suisse is the second-largest bank in Switzerland.


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