Is there justice in the world?
The answer to that question is a bit complex but the answer is “Yes.” We know of many victims of Ponzi schemes that are still waiting for their money. Victims of Carlton Cabot who not only lost their life savings, but also find themselves as signatories on personal guaranties potentially owing millions more. And whistleblowers like “Paul” who put it all on the line and wound up with nothing except an unemployment check. These folks may argue about whether there is “justice” but we still believe that in the end, justice prevails.
Our job as fraud recovery and whistleblower lawyers is to insure that justice is swift and certain.
For several years we have been following the story of former billionaire Tim Blixseth. Today, we have a bit of good news. While millions of Americans are feasting on ham and turkey today with friends on this Christmas day, Blixseth is sitting in a concrete cell at the Missoula County (Montana) Jail eating bologna sandwiches. That may be of some comfort to some of Blixseth’s many victims but most would also like their money back.
Blixseth is being held indefinately on civil contempt charges. He has been convicted of no crimes. How he wound up in jail is an interesting story worth telling.
Blixseth and his now ex-wife are the masterminds behind the ultra luxury Yellowstone Club located near Yellowstone National Park in Montana. The club counts as members Bill Gates and Dan Quayle.
Blixseth’s legal woes began in 2008 when the Yellowstone Club filed for bankruptcy protection. A court later ruled that Blixseth siphoned $241 million of the Club’s money for his personal use. Since that ruling in 2009, investors and creditors have been trying to get him to explain where the missing money went. Efforts to recover the money have been mostly unsuccessful. Investors claim that’s because Blixseth is stonewalling them.
Evidently, the court agrees.
According to published reports, Blixseth was first found in contempt last year for selling real estate in defiance of a judge’s order. He avoided jail while he appealed that contempt sanction. Now Blixseth has been found in contempt. Again.
The Missoulian reports that at a contempt hearing last week an exasperated judge said that Blixseth “offered no proof to back up claims that he spent all the money.” U.S. District Court Judge Sam Haddon ruled that Blixseth’s actions were made with intent “to thwart or delay compliance with a court order.” That ruling paved the way for his immediate incarceration.
Under civil contempt rules, a state or federal judge can hold a person in jail in jail until he or she complies with the court’s order. In this case, the court wants Blixseth to account for the missing millions. According to his lawyers, that might not be so easy because the records are allegedly in Mexico.
Fraud recovery is a complex area of law. Some fraudsters spend all the money on gambling, drugs and exotic trips. Others buy expensive toys like Ferraris and private jets. And some hide their ill gotten gains. Wherever the money, the job of a fraud recovery lawyer is to find it and if located outside the United States, repatriate it. That is where a court’s contempt powers are useful.
A judge may not have jurisdiction over assets in a foreign country such as Mexico but as long as the court can find the debtor or fraudster, the court can order that person to bring their assets back. And if they refuse, the court’s inherent contempt power allows the court to incarcerate the fraudster until they comply.
We are continuing to follow this story closely. Will Christmas in jail convince Blixseth to cooperate? Did he really “spend” all thye money? Time will tell.
The fraud recovery lawyers at Mahany & Ertl pursue all types of fraud cases. Our minimum loss amount is generally $1 million but if you are close or have a case in our back yard, we may still be able to help. Need more information? Contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct).
Mahany & Ertl – co-counsel in the recent $16.65 billion Bank of America False Claims Act and whistleblower case.
(image courtesy of freedigitalphotos.net)