BOISE, Idaho (CN) – A RICO class action claims Credit Suisse, “a foreign banking leviathan,” extracted billions of dollars from the Idaho, Montana and Nevada economies by operating a loan scheme to defraud more than 3,000 investors in four high-end golf and ski resorts. The class seeks $24 billion in damages, claiming Credit Suisse caused catastrophic damage to interstate commerce, the real estate market and the investors.
The two named plaintiffs sued on behalf of members of Tamarack Resort in Idaho, the Yellowstone Club in Montana, Lake Las Vegas in Nevada, and Ginn Sur Mer in the Bahamas.
Named plaintiffs L.J. Gibson and Beau Blixseth claim Credit Suisse worked with “the world’s most trusted” real estate appraisal firm, co-defendant Cushman & Wakefield, in a “loan to own” program.
The class claims Credit Suisse used Cushman & Wakefield’s appraisals to inflate the value of the resort properties. This gave Credit Suisse an opportunity to earn enormous up-front fees and eventually to force foreclosure or take control of the properties at prices significantly below market value, according to the 81-page complaint.
The class claims that during Yellowstone’s bankruptcy proceedings in May 2009, U.S. Bankruptcy Judge Ralph Kirscher commented that “the naked greed in this case combined with Credit Suisse’s complete disregard for the [developer] or any other person or entity who was subordinated to Credit Suisse’s first lien position, shocks the conscience of this Court.”
Still quoting the bankruptcy judge, the plaintiffs add, “While Credit Suisse’s new loan product resulted in enormous fees to Credit Suisse in 2005, it resulted in financial ruin for several residential resort communities. Credit Suisse lined its pockets on the backs of the unsecured creditors.”
The class claims that the real losers were not with the “unsecured creditors” but the would-be homeowners and developers.
And the class claims that Credit Suisse’s “loan to own” scheme was allegedly funded in part by another scheme it ran assisting Iranian agencies to avoid international economic sanctions.
The class seeks $8 billion in economic damages and $16 billion in punitive damages. Its lead counsel is Robert Huntley.