An appeals court on Monday denied a petition by the founder of a Montana resort for the ultra-rich to be released from jail while the court reviews a judge's decision to hold him in contempt for failing to explain how he spent $13.8 million.
Two judges on the 9th U.S. Circuit Court of Appeals denied former billionaire Tim Blixseth's request for immediate release and gave the Yellowstone Club Liquidating Trust 14 days to respond to his petition.
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Creditors have judgments against Blixseth for more than $250 million, and authorities say he and his ex-wife, Edra, drained from the club for personal use. The club filed for bankruptcy in 2008, shortly after Blixseth gave up control of the private ski and golf resort near Big Sky that boasts a $300,000 entry fee.
The judgments, which Blixseth has not paid, include the proceeds from the 2011 sale of a resort property in Mexico that was completed in defiance of a bankruptcy judge's order.
Blixseth attorney Philip Stillman argued last week that U.S. District Judge Sam Haddon "ambushed" his client with the pre-written incarceration order after an April 20 contempt hearing.
Haddon "sprung this order at the end of the hearing so there was no opportunity to address specific concerns the court had," Stillman argued.
Haddon, who sounded frustrated at times during the hearing, said Blixseth had been given precise, detailed instructions on what information the court needed and that he had more than a year to provide it, but what he had turned in was incomplete, incomprehensible and didn't include Blixseth's personal bank records.
Blixseth, 64, was taken into custody.
Haddon said Blixseth would remain jailed until he provides a full accounting of the $13.8 million in compliance with three previous court orders. The trustee for the club's remaining creditors said it appears Blixseth spent the money to support his family's lavish lifestyle and to pay for his legal defense.
Haddon seemed particularly irritated that two of Blixseth's attorneys had sworn in February that Blixseth had provided to the court all the documents it had available, and it was not holding any others back, but then filed more than 200 pages of documents April 18.
He ordered attorneys Michael Ferrigno and Phillip DeFelice to appear before him Tuesday to explain why the documents produced two days before the contempt hearing had not been given to the court earlier.
Blixseth has also requested that his case be assigned to another judge.
The appeals court said the liquidating trust also could address Blixseth's request for a new judge. It gave Haddon 14 days to address the petition if he wants to.
Blixseth of Medina, Washington, spent seven days in jail in December, also for failure turn over an accounting of the proceeds of the resort sale.