This is the one time you might be happy if you don’t own a vacation home. On January 3, 2010, a $24 billion (£14.9) lawsuit filed against Swiss Bank Credit Suisse and real estate group Cushman & Wakefield, accuses both of running a loan-to-buy scheme to defraud investors in four luxury holiday developments.
The lawsuit alleges that Credit Suisse operated a scheme to inflate the values of the resorts and burden the owners with too much debt. The bank was then able to seize the properties when the owners defaulted on their debts. The resorts in question are the Lake Las Vegas resort in Nevada, the Tamarack resort in Idaho, Ginn sur Mer on Grand Bahama Island and Yellowstone in Montana, the ski resort which Microsoft’s Bill Gates was once a member. At the time of this report Ginn sur Mer was the only resort which had not filed for bankruptcy.
It was May of 2009 when Credit Suisse first came under scrutiny after U.S. Judge Ralph B. Kirscher oversaw Yellowstone’s bankruptcy. He said the bank had devised a “predatory” loan scheme. Judge Kirscher later said he would vacate the order after settlement saw the resort taken out of bankruptcy.
The lawsuit was by property owners LJ Gibson and Beau Blixseth in a U.S. district court. The claiments are seeking $8 billion in losses and $16 billion in punitive damages, as well as the award of class-action status for their own claim.
“The scheme has been a financial heist for Credit Suisse with no risk,” the lawsuit alleges. “Credit Suisse knew at the time the lending advice and authorisations were given that its scheme and tactics would cause the developers and the resorts financial ruin, resulting in the ultimate takeover by Credit Suisse.” Telegraph.co.uk reported that Credit Suisse spokesman Duncan King believes the suit to be without merit. King said: “We will defend ourselves vigorously.”
Cushman & Wakefield declined to comment.
