Last updated: September 11. 2013 4:41PM - 493 Views
Associated Press

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(AP) Montana revenue authorities are trying to block former billionaire Tim Blixseth from collecting $3.3 million in attorney fees he racked up during the state's frustrated efforts to force him into bankruptcy.

Officials said Wednesday that Blixseth should be barred from pursuing the fees while they appeal a July ruling that dismissed the forced bankruptcy case.

The state has alleged the founder of Montana's ultra-exclusive Yellowstone Club owes $57 million in back taxes. But Blixseth, a resident of Washington state, has twice gotten the case dismissed by a now-retired federal judge.

Under federal law, that allowed Blixseth to seek attorney fees against the plaintiffs in the case.

In addition to the state, Blixseth also wants to recover fees from the Yellowstone Club Liquidating Trust. That's a group of creditors who sided with the state as part of the creditors' efforts to collect on a $41 million judgment against Blixseth in the club's 2008 bankruptcy case.

Blixseth gave up the club to his ex-wife shortly before it went into bankruptcy. He's since placed many of his assets in a family trust based in Nevada as a means of shielding it from creditors, according to court records.

Attorneys for the state contend that the money sought by Blixseth reflects charges from 65 different attorneys employed by Blixseth at hourly rates of up to $750. The state characterized the request as "breathtakingly large" for a bankruptcy case.

Blixseth wrote in a Wednesday email to the Associated Press that "the fees are in line with the national average that lawyers charge, so thus reasonable."

A Friday hearing is scheduled before U.S. Bankruptcy Judge William Thurman in Nevada on the state's bid to stop proceedings related to the attorney fees.

Attorneys for the state said in court filings that Montana would suffer irreparable harm if forced to pay Blixseth since because it would be all but impossible to recover the money if the state prevails on appeal.

The state's claim against Blixseth, which already has been pending for several years, came after a court ruling that he fraudulently transferred a 2005 loan meant for the Yellowstone Club to his personal use.

The state contends the money he got from the loan was taxable personal income. Blixseth has maintained it was a legitimate business loan intended to finance his creation of an international version of the Yellowstone Club.

Associated Press
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