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Founder of club for ultra rich jailed after selling Mexican resort

FILE - In this April 29, 2009, file photo, Tim Blixseth arrives at the federal courthouse in Missoula, Mont. Montana revenue officials say the one-time billionaire and Yellowstone Club founder owes almost $74 million in back taxes, penalties and interest, primarily on a $375 million loan to the luxury resort near Big Sky that he diverted for personal use. Department of Revenue officials announced Tuesday, March 24, 2015, that a tax board had sided against the real estate mogul in a series of recent rulings after Blixseth challenged the stateâs tax claims. Blixseth says he will appeal the tax board decisions in state court. (AP Photo/Mike Albans, File)

FILE - In this April 29, 2009, file photo, Tim Blixseth arrives at the federal courthouse in Missoula, Mont. Montana revenue officials say the one-time billionaire and Yellowstone Club founder owes almost $74 million in back taxes, penalties and interest, primarily on a $375 million loan to the luxury resort near Big Sky that he diverted for personal use. Department of Revenue officials announced Tuesday, March 24, 2015, that a tax board had sided against the real estate mogul in a series of recent rulings after Blixseth challenged the state√Ęs tax claims. Blixseth says he will appeal the tax board decisions in state court. (AP Photo/Mike Albans, File)

Attorneys for the founder of Montana's Yellowstone Club for the ultra-rich planned Tuesday to file an emergency request with the 9th U.S. Circuit Court of Appeals seeking to free their client after he was jailed by a federal judge for contempt.

U.S. District Judge Sam Haddon ordered 64-year-old Tim Blixseth into custody after finding that the Washington state resident failed to disclose what happened to $13.8 million from the sale of a resort in Mexico.

The case emerged from the 2008 bankruptcy of the Yellowstone Club, a private ski and golf resort near Big Sky that boasts a $300,000 entry fee.

Authorities say Blixseth misappropriated $270 million from the club before he gave up control as part a 2008 divorce, and that he purchased the Tamarindo resort in the Mexican state of Jalisco with some of the money.

After a bankruptcy judge ordered him not to sell it, Blixseth sold the property anyway, for $13.8 million. Haddon has said that money should go to creditors in the bankruptcy case.

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Creditors, however, allege Blixseth used the money to pay for trips to Europe, luxury aircraft and boats, and tens of thousands of dollars in fine wine.

Haddon said Blixseth would remain jailed until he provides a full accounting in compliance with three previous court orders. He said he would not entertain any requests for variances or petitions for release.

Blixseth attorney Philip Stillman said Blixseth "has produced every single scrap of paper he was ordered to produce and could produce."

He planned to file an emergency motion Tuesday seeking his client's release, and claimed that Haddon had not made clear what else Blixseth needed to do to comply with the judge's prior orders.

Haddon previously jailed Blixseth for a week in December after finding him in contempt for not giving up details on his sale of the Tamarindo resort in the Mexican state of Jalisco. Blixseth was freed after seven days by an appeals court.

Haddon noted Monday that Blixseth's attorneys made a "document dump," on Saturday night, filing more than 200 more pages that "left it entirely for this court to figure out what it all means." He noted that Blixseth still hasn't provided records from his personal bank accounts.

The trustee for the club's remaining creditors said the documents produced so far confirm that Blixseth spent the money to support his family's lavish lifestyle and to pay for his legal defense.

That includes $2 million transferred by Blixseth to another company, whose only assets were private aircraft, a 156-foot yacht and a 58-foot fishing boat; nearly $42,000 a month for his wife's personal expenses; trips to Athens, Rome, Paris, Nice and Istanbul with members of his family; $2,000 for massages and $21,000 for wine, according to the trustee.

"It seems to be a game for Mr. Blixseth to see what he can get away with, without saying what is going on," said Kevin Barrett, an attorney for the trustee.

The Yellowstone Club went bankrupt right after Blixseth turned it over to his ex-wife in 2008. It's been under new ownership since 2009.

Montana revenue officials say the Blixseths owe almost $74 million in back taxes, penalties and interest for failing to count as income the money that was diverted from the club for their personal use.

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