January 5, 2010 in Idaho

Failed luxury resorts suing Credit Suisse

Owners allege ‘predatory’ plot to force foreclosures, buyouts
By The Spokesman-Review
 

Four plaintiffs

The four resorts suing Credit Suisse are the Tamarack Resort in Idaho; the Yellowstone Club in Montana; Lake Las Vegas in Nevada; and the Ginn Sur Mer resort in the Bahamas.

BOISE – A group of property owners from four failed luxury resorts – including the 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 four communities impacted by the failed resorts. In addition to Tamarack, they are the Yellowstone Club in Montana; Lake Las Vegas in Nevada; 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 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, said, “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 prepared statement accusing Credit Suisse of “naked greed,” and said the bank’s scheme artificially inflated the value of the resort properties with the intention of 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.

The “naked greed” phrase in the owner group’s statement 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 two named plaintiffs, L.J. Gibson and Beau Blixseth, represent 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 affected communities.

The lawsuit comes three weeks after Credit Suisse agreed to pay a $536 million fine to avoid prosecution by U.S. and New York state authorities over hundreds of millions in prohibited transactions with Iran, Libya, Sudan, Burma and Cuba. The transactions funneled money through U.S. banks while masking its origins, according to the U.S. Justice Department.

The Boise attorney involved in the resort lawsuit, which seeks class-action status, 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 hepatitis 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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