Thursday, December 14, 2017

Island Issues

Caribbean: Turks and Caicos Loses Case against Island Owner

During the 2008 financial crisis, the billionaire behind an exclusive club for America’s wealthy had a collapse of his own. In a new development, the TCI government has lost a lawsuit against Emerald Cay’s embattled former owner.

(Image Courtesy of Vladi Private Islands)

 

UPDATE: In a later ruling, the government was, in the end, awarded US $1.25M in unpaid stamp duty: Link

There are a rare few properties where even the term “private island” just doesn’t do justice to their extravagance. The Turks and Caicos’ Emerald Cay may be a minute 2.32 acres, but across this tiny tropical island sprawls an incredible 30,000 acre mansion – 10 large bedroom suites, a spa, tennis courts, and infinity pools are a few of the island’s myriad of amenities.  It’s arguably the most luxurious home in this small country, with a population of less than 50,000 – in fact, it would be difficult to find a superior home in all of the Caribbean.  Or a more intriguing scandal.

In the early days of the new millennium – that heady time where real estate values did nothing but go up, and thriving industries were based around offering newer and more exciting luxuries to dot-com and hedge fund billionaires – rags-to-riches timber baron Timothy Blixseth was cashing in. After starting the Yellowstone Club, an invitation-only ski and golf resort in Big Sky, Montana, Blixseth was able to count prominent businessmen, celebrities, and politicians among his membership. Ranking on the list of the wealthiest people in America, he purchased numerous properties around the world, including a French castle, a Mexican beach resort, and the spectacular Emerald Cay.

(Image Courtesy of Vladi Private Islands)

In 2006, however, it all began to fall apart. Accusations that he and his then-wife had misappropriated more than $200M from a Credit Suisse loan led to a lawsuit from Yellowstone Club investors, ending with a settlement – and by the time the financial crisis hit in 2008, there were many more legal challenges to fight. The Yellowstone Club was purchased out of bankruptcy protection, but burned investors are still after Blixseth. He, in turn, blamed predatory lending tactics by Credit Suisse for the insolvency of the club, in an interview in the Wall Street Journal; “We did borrow the money. I’m the first to admit that,” Blixseth said. “(But) they had no regard for whether the borrower would ever pay this money back.”

(Image Courtesy of Vladi Private Islands)

He, his former wife, and his children are named in more than 100 combined cases across the US alone, and in some situations, the lawsuits are even amongst themselves. In the Turks and Caicos suit, the government claims that in 2006, Blixseth sought to avoid paying full stamp duty by understanding the price paid for the property in registered documents. Since the time when the suit was filed, the government has tried to impose restrictions on dealing with the property, which were then challenged by Yellowstone’s bankruptcy trustee. The government’s claims have been quashed on technical details for now, however – the court ruled in favour of Yellowstone on June 20th, 2011. The government says it may appeal the decision.

As it stands, the empire that Blixseth had once built is in shambles, lawsuits involving what remains of his assets continue to mount, and he is most certainly no longer on the list of America’s highest net worth. Emerald Cay, the jewel of the TCI, is being sold to pay creditors, currently on the market for just under US $50M. However, despite his many battles, Blixseth’s definition of success may still hold for him; “It is once your ideas have been transformed into enough money, and if all failed, you would still live your lifestyle, and you understand that just because you have made more money than most, you are not better than the common person. We are all going to die broke.”

Read the legal decision here: TCI SUN Link

View the listing for Emerald Cay: Link

1 comment to Caribbean: Turks and Caicos Loses Case against Island Owner

  • Doesn’t sound like the TCIG lost this case, Blixseth is being forced to pay the taxes he and the lawyers schemed to avoid, and the government is going to pursue the damages (hopefully) next – http://tcweeklynews.com/govt-wins-m-in-evaded-taxes-p2432-1.htm

    This guy Blixseth’s days of getting away with schemes like this appear to be ending. He appears to want to prevent that through lawyers as long as he’s able, but that can only go so far. The sad thing is all the debtors (like TCIG) who were defrauded by his various deals and associated bankruptcies will have to fight over the scraps after he’s paid whatever money he has left to all the lawyers he’s hired.

    Note from the Editor: After the article was published on PIN, the TCI government was finally awarded US $1.25M in unpaid stamp duty and an update and link to the latest article appears in bold at the beginning of the article on PIN.

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