Tim Blixseth - Edra Blixseth - Michael Flynn - Dennis Montgomery, Bankruptcy Judge Ralph Kirscher

"BUTTE, Mont. (AP) — The founder of Montana's ultra-exclusive Yellowstone Club, Tim Blixseth, on Tuesday alleged that his ex-wife pursued fraudulent dealings with the U.S. government as he attempted to discredit testimony she offered in support of a $40 million judgment against him last year.

Appearing in federal court in Butte, attorneys for Tim Blixseth laid out a complex scheme in which they said Edra Blixseth used her political connections to seek a $100 million intelligence contract for bogus computer software.

Tim Blixseth stated in an affidavit that the software also was offered for sale to government officials in Israel and Bahrain, by Edra Blixseth and an associate, Dennis Montgomery.

The allegations were made in support of Tim Blixseth's efforts to disqualify U.S. Bankruptcy Judge Ralph Kirscher, who is overseeing the Yellowstone Club's 2008 bankruptcy case and dozens of related lawsuits.

Kirscher has been generally sympathetic toward Edra Blixseth through the Yellowstone Club's protracted bankruptcy case, blaming the resort's 2008 collapse largely on her ex-husband.

The judge last year awarded the club's creditors a $40 million civil fraud judgment against Tim Blixseth.

Edra Blixseth could not be reached immediately for comment. Court documents indicate she has been the target of a Federal Bureau of Investigation probe into a series of loans she took out in the months surrounding the bankruptcy.

Allegations related to the alleged software scheme with Montgomery date back several years, but Tuesday was the first time the issue took center stage in the Yellowstone Club's bankruptcy. Montgomery was indicted in November for allegedly passing $1.8 million in bad checks at Nevada casinos.

FBI spokeswoman Debbie Bertram declined comment Tuesday.

The Blixseths founded the Yellowstone Club a decade ago and built it into a haven for the ultra-rich with a membership roster that includes Bill Gates and former Vice President Dan Quayle. It spiraled into bankruptcy within months of their divorce, when Edra Blixseth took control of an enterprise soon discovered to be hundreds of millions of dollars in debt.

But Tim Blixseth has said the club's problems were manufactured by his ex-wife and the man who later bought the resort, Sam Byrne with Boston-based CrossHarbor Capital. He now charges that Kirscher overlooked the collusion between his ex-wife and Byrne, demonstrating a bias for which the judge should recuse himself.

"Judge Kirscher took the scarf off the blind lady of justice. Somebody needs to put it back on," Tim Blixseth said following a Tuesday hearing in the case.

A lawyer for the original debtors in the case — the pre-2009 Yellowstone Club — said Blixseth appeared to be "judge shopping."

"He just wants to get another bite at the apple," said attorney Andy Patten.

Tim Blixseth's attorney, Michael Flynn, spent more than an hour at the Butte federal courthouse detailing his client's grievances — a wide-ranging argument that included the bogus software allegations, claims that Kirscher had blocked Tim Blixseth's rights to due process and that the judge and his staff engaged in inappropriate communications with other attorneys in the case.

Kirscher sat mostly silent through it all before declaring the hearing in recess once Flynn had finished. The judge gave no indication of when he might rule on the motion for disqualification.

Tim Blixseth said that if Kirscher stays on the case — and it's up to the judge to decide — he would appeal to a higher court. "

Source of Post
http://www.bloomberg.com/news/2011-01-19/club-founder-blasts-ex-wife-says-judge-is-biased.html

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