Credit Suisse sued over resorts, $24 billion sought

The lawsuit filed on Sunday in federal court in Boise, Idaho, seeks $24 billion of damages against Credit Suisse and commercial real estate firm Cushman & Wakefield Inc, and class-action status for more than 3,000 investors who bought land or homes.

The alleged losses relate to Yellowstone Club, a Montana ski resort whose members have included Microsoft Corp Chairman Bill Gates, as well as to Lake Las Vegas resort in southern Nevada, the Tamarack resort in central Idaho and Ginn sur Mer on Grand Bahama Island in the Bahamas.

Lake Las Vegas and Tamarack have also been the subject of bankruptcy proceedings, court records show. The four resorts are among many high-end properties that have struggled with falling real estate values and the credit crisis.

Credit Suisse spokesman Duncan King and Cushman & Wakefield spokesman Dwayne Doherty each said the lawsuit lacks merit, and that their companies will defend themselves vigorously.

Robert Huntley, an Idaho lawyer representing the plaintiffs, did not return calls seeking a comment.

According to the complaint, Credit Suisse violated federal racketeering laws by concocting a loan to own scheme that inflated the value of resorts and burdened the resorts and purchasers of homes there with too much debt.

Using appraisal methods provided by Cushman & Wakefield, this scheme allowed Credit Suisse to win enormous fees and ultimately foreclose on or take control of the resorts at well below market value, the complaint said.

The scheme has been a financial heist for Credit Suisse with no risk, the complaint said.

Credit Suisse knew at the time the lending advice and authorizations were given that its scheme and tactics would cause the developers and the resorts financial ruin, resulting in the ultimate takeover by Credit Suisse, it added.

The complaint seeks $8 billion of actual damages, including alleged losses of property, business interests and reputation, plus $16 billion of punitive damages.

Beau Blixseth, one of the plaintiffs, is suing for losses on his property at Yellowstone, which was developed by his father Tim, a timber baron and former billionaire. Yellowstone borrowed $375 million from Credit Suisse in 2005.

The other plaintiff, L.J. Gibson, owns property at the other three resorts, the complaint said.

Last May, a federal judge overseeing Yellowstone's bankruptcy faulted Credit Suisse in an interim order for predatory lending practices that he said caused financial ruin for several resorts.

The naked greed in this case, U.S. Bankruptcy Judge Ralph Kirscher wrote, shocks the conscience of this court. The judge later approved the sale of Yellowstone to CrossHarbor Capital Partners LLC.

Yellowstone filed for bankruptcy in November 2008, three months after Edra Blixseth, who had been married to Tim Blixseth, gained control of the resort in divorce proceedings.

The case is Gibson et al v. Credit Suisse AG et al, U.S. District Court, District of Idaho, No. 10-00001.

(Reporting by Jonathan Stempel; editing by Dave Zimmerman and Tim Dobbyn)