Ex-billionaire due in federal court in Montana for contempt hearing as creditors seek payment

Associated Press

One-time billionaire Tim Blixseth is due in federal court Thursday to explain why he failed to comply with an order to pay $13.8 million to the creditors of an ultra-luxury Montana resort.

U.S. District Judge Sam Haddon last year found the embattled real estate mogul in contempt of court for selling a property in Mexico in defiance of another judge's instructions.

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Blixseth delayed potential court sanctions for months with an unsuccessful appeal to the 9th Circuit U.S. Court of Appeals.

Creditors' attorneys want him incarcerated for not abiding Haddon's order that Blixseth turn over the money from the sale or post a bond in an equal amount.

The case stems from the 2008 bankruptcy of the Yellowstone Club, a members-only ski and golf resort near Big Sky founded by Blixseth and his ex-wife, Edra. The club emerged from bankruptcy in 2009 under new ownership. But its creditors have spent years trying to collect on $241 million that courts have ruled Blixseth fraudulently drained from the club for his and Edra's personal use.

Tim Blixseth claims he no longer has the $13.8 million from the 2011 sale of the El Tamarindo resort, which included hotels and condominiums in the state of Jalisco. He originally paid $40 million for the property.

A federal judge earlier ordered that the property not be sold or transferred while the bankruptcy proceedings were pending.

In a declaration filed earlier this month, Blixseth told the court he received only about $9.5 million for the Mexico property after various expenses were factored in. That money was later spent or transferred, he said.

Blixseth also submitted hundreds of pages of financial documents — many of them in Spanish — to back up his claims.

His assertions are likely to be met with skepticism by Haddon, who blasted Blixseth during an earlier proceeding for deliberately withholding information about the sale from the court.

Haddon described Blixseth's actions as a "deliberate pattern of conduct attempting to deceive the court" and said he would refer the matter to a magistrate judge for sanctions.

The judge has ordered Blixseth to appear in person for Thursday's hearing in Butte.

Attorneys for the club's creditors, known as the Yellowstone Club Liquidating Trust, said Blixseth's attempt to explain where the money went amounted to an incomplete "document dump." They said he left $8.7 million still unaccounted for, and asked that Blixseth be incarcerated until he fully complies with the court's earlier order.

Judges have broad discretion in how they police those who come into their courtrooms for civil proceedings, including sending them to jail.