BILLINGS, Mont. — Attorneys for Credit Suisse are due in federal court Thursday over accusations that the international banking giant arranged hundreds of millions of dollars in predatory loans with the goal of taking over luxury resorts in Montana, Idaho, Nevada and the Bahamas.
Plaintiffs backed by the founder of Montana's ultra-exclusive Yellowstone Club, Tim Blixseth, are seeking billions of dollars in damages.
They claim Credit Suisse set up an offshore branch to skirt U.S. lending rules as part of a "loan to own" scheme, in which resorts were appraised at inflated prices then given loans they could not repay to force them into foreclosure.
Credit Suisse contends the lawsuits are baseless — and motivated in part by Blixseth's attempt to escape blame for the Yellowstone Club's financial problems.
"We continue to believe that these allegations have no merit and we look forward to the opportunity for arguments to be heard in front of the judge," the firm said in a prepared statement.
The predatory loan lawsuit also targets real estate consulting firm Cushman & Wakefield. The New York-based firm provided Credit Suisse with the disputed property appraisals. As with Credit Suisse, the firm is seeking to have the case dismissed.
The other properties were Idaho's Tamarack Resort, Nevada's Lake Las Vegas and Ginn Sur Mer in the Bahamas. All four went bankrupt after they received a combined $1.8 billion in loans through Credit Suisse.
Thursday's hearing in the case will be in U.S. District Court in Boise, Idaho, before Magistrate Judge Ronald Bush.
A federal judge in a separate case has said Blixseth bears much of the blame for the Yellowstone Club's collapse, and last year issued a $41 million civil fraud judgment against the 61-year-old developer. Blixseth, who lives in Washington state, pocketed more than $200 million from a $375 million loan arranged by Credit Suisse in 2005.
Blixseth has gone to lengths to get the judgment against him reversed or thrown out, including several failed attempts to remove the federal judge in the club's still-lingering bankruptcy case. His assertion that the judgment is invalid remains on appeal.
The presiding judge in the Boise case, U.S. District Judge Edward Lodge, last year threw out most of the original claims against Credit Suisse, including allegations of racketeering, fraud and negligence. All of the claims against Cushman & Wakefield were dismissed.
But Lodge ruled that the case could proceed and the plaintiffs have since amended their lawsuit to take another shot at the defendants.
The lawsuit was first filed in 2010 on behalf of a group of resort homeowners, including Blixseth's son, Beau. Tim Blixseth was not among the original plaintiffs but has acknowledged he is behind the litigation. The case is being fought by a team of his attorneys.
Blixseth and Tamarack developer Alfredo Miguel are attempting to intervene in the case in a bid to undercut defense arguments that there was no direct harm to the homeowners from the resort loans because they were issued to the developers.
"Nobody was standing up for the 3,000 homeowners in the four resorts," Blixseth said. "They were severely damaged by Credit Suisse and Cushman Wakefield. The least I could do as one of the developers was stand up for those people."
Blixseth also wants to bring back the racketeering claim that was rejected by Lodge.
The plaintiffs have alleged damages of $8 billion. That amount could be tripled under federal law, to $24 billion, if the racketeering claim is revived.