Unless the Ninth Circuit takes pity on Timothy Blixseth, April 20 will mark the first anniversary of his jailing for civil contempt. The former owner of the bankrupt Yellowstone Mountain Club LLC is becoming the poster boy for the consequences that can ensue from violating a bankruptcy court order, at least in Montana.
Blixseth’s nemesis is District Judge Sam E. Haddon of Butte, Mont. He sent Blixseth to jail last year after finding him in civil contempt of a prior order directing him to account for how he spent $13.8 million from the sale of a Mexican resort in violation of a bankruptcy court order.
Blixseth remains in jail, but not for want of trying to bust himself loose. In response to one of his six appeals, the circuit court told Judge Haddon to specify more clearly what Blixseth must produce to explain where the money went.
In late December, Judge Haddon responded with a 40-page opinion concluding that Blixseth “still fails to effectively trace the proceeds through his various entities and accounts,” leaving “major gaps that prohibit meaningful reliance on the accounting.”
Refusing to grant a writ of mandamus in January, the Ninth Circuit told Judge Haddon to explain how Blixseth has the capacity to comply with the order directing an accounting. If Blixseth cannot comply, further jailing amounts to criminal contempt and is amenable to appeal, the circuit court said last month.
Judge Haddon spoke again on Feb. 19, saying it “rings hollow” for Blixseth to contend that “he has done all he can.” The judge said that hundreds of thousands of dollars paid to various Blixseth family members “simply vanished without adequate or even plausible explanation.”
The judge believes that continued “confinement” still has a coercive effect. The ball is back in Blixseth’s court because Judge Haddon directed the U.S. Marshalls to hold him in custody “pending further order of this Court.”
Phillip DeFelice, one of Blixseth’s lawyers, did not return a call seeking comment.