Expert: $375M loan to exclusive Yellowstone Club in Montana was based on faulty projections

Expert: Club’s loan based on faulty projections

MISSOULA, Mont. — A real estate expert says a $375 million loan to the Yellowstone Club before it sought bankruptcy protection was based on faulty assumptions that sales at the exclusive Montana club would be brisk.

Credit Suisse is accused of making a bogus loan to the club in 2005.

The club’s creditors have sued in federal court for the loan to be voided because most of the money was transferred to founder Tim Blixseth and his former wife, Edra. That would wipe out most of the club’s more than $400 million in debts.

John Hekman, a former Federal Reserve economist called by the creditors, says at the time of the loan, Credit Suisse projected that the pace of sales of lots on club land would double.

But the credit crisis and a failed expansion plan have left it in debt.