HELENA – Montana’s destruction of government emails violated state law and the order of a federal judge, Tim Blixseth argued in court filings Wednesday that are part of the involuntary bankruptcy case against the Yellowstone Club founder.
Blixseth and the State of Montana have been embroiled in a legal battle since 2011. The Yellowstone Club filed for bankruptcy in 2008 after Blixseth was accused of pocketing a loan made to the resort. The club’s creditors have sought millions from Blixseth personally. Montana has so far failed to recover $57 million in alleged back taxes from Blixseth through involuntary bankruptcy.
In an ongoing appeal, Montana had requested and received a stay order that, in effect, froze the case as is. It barred any new discovery of evidence for the case. State law also requires all related records to be preserved whether or not they have yet been entered in court.
Blixseth’s attorneys now argue in federal bankruptcy court that the destruction of email accounts for several state officials violated that order. A related motion questions whether trustees tasked with dissolving the Yellowstone Club have similarly destroyed relevant emails. In those motions, Blixseth says the case against him should be dismissed and the state should pay damages and penalties of more than $700 million.
“When Montana originally requested the stay, they argued … ‘the evidence would still be there, there’s no dissipation of evidence.’ Those assurances have proven to be empty and potentially diabolically made in an attempt to buy time to destroy the very evidence Montana promised this Court it would preserve,” read the filing.
After making several public records requests last year, Blixseth and his attorney learned that the State of Montana had destroyed all the emails from Gov. Steve Bullock’s time as attorney general, along with the accounts of dozens of others. Lee Newspapers has previously reported that state law requires records to be preserved for longer periods of time depending on their content, but Montana has instead routinely treated emails, regardless of their content, as transitory records that need only be saved for 30 days, if at all.
Bullock has previously defended the destruction of his emails as a longstanding state practice. When asked about the new Blixseth motions and accusations of corruption, Bullock told reporters Wednesday to reference his earlier remarks.
“We have talked about that a lot,” he said. “Look, here’s a guy who went bankrupt, he spent 14 months in jail, I think for not turning over materials. Presumably he’s trying to get his life back together, but there’s judicial proceedings going on. … I haven’t seen anything that he filed. I know he files a lot of documents in court, so I’ll take a look at it, but I’m not going to engage him.”
Blixseth takes issue with Bullock’s explanation, saying that, as the state’s top law enforcement officer and an attorney, he knew what the laws were.
“I don’t buy that,” he said.
He said his filings Wednesday were, in part, to prevent the destruction of such records in the future. He said the “everyone else did it” excuse gives state leaders cover to violate public records and legal proceeding laws.
Blixseth has argued that the involuntary bankruptcy proceeding against him is the result of corruption and was filed in bad faith, which he has argued would be grounds enough for the judge to dismiss the ongoing appeal.
“Mr. Blixseth believes this case was filed in bad faith, as a political favor by Bullock and his predecessor, Brian Schweitzer, to thwart Mr. Blixseth’s effort to bring to light the Montana corruption,” read the filing. “One of the keystones of proving this bad faith and the corruption that led up to the filing of this case are the communications of those highest officials in Montana who were involved in and used as pawns to silence Blixseth.”
In the motions, Blixseth has requested the judge to dismiss the case on the grounds that the truth of the matter cannot be found with such a critical piece of evidence having been destroyed and also asks that the state pay at least $700 million in damages for his lost business as well as punitive damages for ignoring a court order.
The chief legal counsel for the Department of Revenue, which is handling the case with Blixseth, could not immediately be reached for comment about the new motions.
The motions are scheduled for a hearing on May 24 at the United States Bankruptcy Court for the District of Nevada.