Lawyers plan to ask US appeals court to release founder of ultra-rich club jailed for contempt
Attorneys for the founder of a luxury Montana club planned Tuesday to file an emergency request with a federal appeals court seeking to free him after he was jailed for failing to disclose what happened to $13.8 million from the sale of a Mexican resort.
U.S. District Judge Sam Haddon ordered Tim Blixseth, 64, into custody Monday after a contempt hearing. The case emerged from the 2008 bankruptcy of the Yellowstone Club, a private ski and golf resort 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 the property, Blixseth sold it anyway, for $13.8 million. Haddon has said that money should go to creditors in the bankruptcy case.
Creditors allege Blixseth used the money to pay for trips to Europe, luxury aircraft and boats, and tens of thousands of dollars in fine wine.
The judge said Blixseth would remain jailed until he provides a full accounting in compliance with three previous court orders. Haddon said he would not entertain any requests for variances or petitions for release.
Blixseth attorney Philip Stillman said his client "has produced every single scrap of paper he was ordered to produce and could produce."
Stillman planned to file an emergency motion Tuesday with the 9th U.S. Circuit Court of Appeals seeking Blixseth's release and claimed that the judge had not made clear what else Blixseth needed to do to comply with 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 resort in Mexico. Blixseth was freed by an appeals court after seven days.
Haddon noted Monday that Blixseth's attorneys made a "document dump" on Saturday night, filing more than 200 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 he transferred 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 Greece, Italy, France and Turkey with 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 after Blixseth turned it over to his ex-wife in 2008. It's been under new ownership since 2009.
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, Montana revenue officials say.
Brown reported from Billings.