HELENA – Millionaire real estate mogul Tim Blixseth, who won a key tax ruling against the Montana Revenue Department this week, said Thursday he plans to sue the state and others for hundreds of millions in damages.
Blixseth, in a teleconference with reporters, also repeated his allegation that Montana’s $57 million tax claim against him was orchestrated by former Gov. Brian Schweitzer, to aid owners of the exclusive Yellowstone Club in their legal battle with Blixseth.
“We intend on holding Montana and the Yellowstone Club Liquidating Trust, which is side by side and shoulder to shoulder with Montana, responsible,” he said. “We intend on going after damages. …
“This is a high-stakes game. There are billions on the line. They did what they did, and they were not successful.”
State revenue officials said they plan to appeal Wednesday’s ruling by a federal bankruptcy judge in Las Vegas that Montana cannot use a tax debt to force Blixseth into bankruptcy.
State Revenue Director Mike Kadas also rejected Blixseth’s claims that the state or Schweitzer colluded with the Yellowstone Club owners.
“Mr. Blixseth has alleged this conspiracy theory before numerous tribunals and has never received a ruling in his favor,” he said. “(His) allegations are, and have always been, only that: Unsubstantiated allegations, stories without any foundation in reality.”
Blixseth, 62, was the founder of the Yellowstone Club, a private ski and golf resort near Big Sky.
In the mid- and late 2000s, Blixseth, other club members and their financers became entangled in a messy legal battle for control of the club. A Boston-based group of investors eventually bought the club out of bankruptcy in 2009, for $115 million, and later won a $41 million judgment against Blixseth.
Blixseth, as club owner, also got a $375 million loan from bank Credit Suisse in 2005 and used much of the money to buy expensive properties around the world and other items for his personal use, according to court rulings.
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Montana revenue officials said Blixseth had “misappropriated” the loan proceeds from Credit Suisse and therefore owed incomes taxes on the amount, totaling $57 million by 2010. Interest on the taxes owed has accumulated at 8 percent a year since then, the agency said.
In April 2011, the state filed a petition with U.S. Bankruptcy Court in Nevada, attempting to force Blixseth into bankruptcy so it could collect the money it said Blixseth owed.
On Wednesday, U.S. Bankruptcy Judge Bruce Markell ruled the petition invalid, because the tax amount is still in dispute.
Blixseth said the ruling clears the way for him to sue Montana and the Yellowstone Club’s owners for damages, and that he intends to do so soon.
Blixseth also alleged that Schweitzer, Montana’s governor from 2005 to 2012, orchestrated the 2011 filing of the petition as a favor to the new owners of the Yellowstone Club. If the petition had succeeded and forced him into bankruptcy, his counter-lawsuits against the Yellowstone Club owners and Credit Suisse would be blocked until the bankruptcy was settled, he said.
Schweitzer had a close relationship with the new club owners because in 2007 they had donated large sums to the Democratic Governors Association, which Schweitzer chaired and which later transferred funds to the Montana Democratic Party to help Schweitzer’s 2008 re-election, Blixseth alleged.
Neither Schweitzer nor the Yellowstone Club owners could be reached for comment Thursday.
Kadas, appointed as state revenue director by Gov. Steve Bullock, who succeeded Schweitzer this year, said the petition was filed as an attempt to recover the substantial tax debt owed by Blixseth.
Forcing Blixseth into bankruptcy appeared to be the “only foreseeable avenue” for the state to get payment from him, Kadas said.