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Former billionaire takes on Montana tax authorities

Fri., May 20, 2011

BILLINGS – After beating Montana authorities in a $57 million tax dispute, former billionaire Tim Blixseth is going on the offensive against officials and business adversaries he says conspired to force him into bankruptcy.

The founder of the ultra-posh Yellowstone Club on Thursday said his attorneys intend to depose Montana Gov. Brian Schweitzer and others in pursuit of sanctions in the case.

A federal judge in Las Vegas threw out Montana’s forced bankruptcy petition against Blixseth on Wednesday, saying it was not filed in the proper venue. A September trial is scheduled for sanctions sought against the state and its attorneys.

The petition could have forced Blixseth to liquidate his assets if it had been successful.

“The state of Montana, the Montana Department of Revenue and their partners were in cahoots,” Blixseth said in a Thursday interview. “It’s completely and absolutely provable, and we will be bringing all the facts out shortly.”

Blixseth said that the petition was nothing more than a “desperate move” to derail pending litigation related to the Yellowstone Club’s 2008 bankruptcy and a separate lawsuit Blixseth is pursuing against Credit Suisse. The latter case involves a $375 million loan the banking industry giant made to the club in 2005.

Montana Department of Revenue’s attorney in the case, Lynn Butler said the move for sanctions would be fought “tooth and nail.” He characterized Wednesday’s ruling from U.S. Bankruptcy Judge Bruce Markell as a narrow one that did not directly address the state’s legitimate tax claims.

Schweitzer spokeswoman Sarah Elliot said the governor had no involvement in the bankruptcy petition because of tax confidentiality laws. Elliot did not directly address whether the governor would willingly submit to a deposition.

Under federal bankruptcy law, sanctions against the state could include a monetary award. The 60-year-old Blixseth is a resident of Washington state.

Last month, he paid $1.9 million in back taxes to California and Idaho to get them to withdraw as co-plaintiffs with Montana in the forced bankruptcy petition. As a condition of those settlements, Blixseth agreed not to seek sanctions against authorities in the two states.

Montana authorities led the petition against Blixseth, going after him in Nevada because he put most of his assets into a family trust registered in that state several years ago.

He still faces a $40 million civil judgment handed down last year by federal bankruptcy judge in Montana over claims related to the Yellowstone Club’s 2008 bankruptcy. That order is on appeal.

There’s also an outstanding case against Blixseth before the Montana State Tax Appeals Board.

Authorities and creditors claimed he took hundreds of millions of dollars from the Yellowstone Club, leading to its bankruptcy. The club emerged from bankruptcy under new owners.

Most of the money that Blixseth took out of the private ski and golf resort near Big Sky came through the 2005 Credit Suisse loan.


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