Filed under: Real Estate Developments
Should a lender be held accountable for a resort's failure? A class action suit may bring one answer. The Wall Street Journal reports on a suit filed by property owners at four resorts. The suit accuses Credit Suisse Group AG of predatory lending. The $24 billion suit was filed on behalf of over 3,000 homeowners and investors and includes Beau Blixseth, the son of former Yellowstone club owners Tim and Edra Blixseth. Yellowstone Club is one of the properties named in the suit, the others are Ginn Sur Mer in the Bahamas, the Lake Las Vegas resort in Nevada and the Tamarack Resort in Idaho. So far all of these properties except for Ginn Sur Mer have wrestled with bankruptcy. The plaintiffs have lost more than $8 billion in their investments.
Court papers accuse Credit Suisse and related corporations of wire and mail fraud, racketeering, money laundering and conspiracy all in the name of coercing developers to take out huge loans. The suit also takes on real-estate adviser Cushman & Wakefield Inc., saying that the firm aided the bank by creating property appraisals that inflated the value of the properties for sale. The suit says that the bank knowingly drove up the value of the properties, made massive loans and then charged exorbitant loan fees that it knew the resorts wouldn't be able to pay. The suit alleges that all this was done so the banks could take control of the resorts.