Ski in, bail out

6 January 2010 By Antony Currie Follow @AntonyMCurrie

The $24 bln lawsuit Credit Suisse faces for funding nowbankrupt winter venues looks a stretch. But it offers a timely reminder to financiers heading off to the piste: being a fan of the slopes doesn’t make you an expert at picking the next big ski resort investment.

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Investors in four highend resorts have filed a $24 billion classaction lawsuit against Credit Suisse and real estate services company Cushman and Wakefield. They allege the two firms conspired to take over the properties using the loans they made to finance them. Credit Suisse and Cushman and Wakefield have said the suits are without merit.

The properties include two ski resorts the Yellowstone Club at Big Sky in Montana and the Tamarack Resort in Idaho Lake Las Vegas in Nevada and Ginn Sur Mer in the Bahamas.

The suit accuses Credit Suisse and Cushman and Wakefield of racketeering, money laundering, mail and wire fraud, breach of fiduciary duty and negligence. It alleges the two firms set up a branch in the Cayman Islands to circumvent federal laws on real estate appraisals, inflated the value of the resorts, knew the resorts would be unable to service the debt raised based on those inflated values and that the ensuing bankruptcy would allow them to take control of the resorts on behalf of the investors.

The suit seeks damages of $8 billion and argues that under federal racketeering laws the amount should be tripled.

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