BILLINGS, Mont. (AP) — Montana revenue authorities are trying to block former billionaire Tim Blixseth from collecting $3.3 million in attorney fees he's claiming from 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. If Blixseth goes into bankruptcy and the tax claim holds up, he could be forced to liquidate his assets.
Blixseth, a resident of Washington state, has twice gotten the case dismissed by a now-retired federal judge. That allowed him to seek attorney fees against the plaintiffs in the case under federal bankruptcy law.
In addition to the state, Blixseth also wants to recover the 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 dozens of attorneys he employed at hourly rates of up to $750. The state characterized the request as "breathtakingly large" for a bankruptcy case.
The Revenue Department has spent an estimated $800,000 on outside attorneys since the case began in 2011 and has one in-house attorney working on it, officials said Wednesday.
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