Lake Las Vegas Ex-Owners Settle Suit for $115 Million

By Patrick Fitzgerald 

The former owners of Lake Las Vegas, including two of Texas' billionaire Bass brothers, paid $115 million last month to quietly settle a long-running lawsuit tied to the luxurious golf community and resort's collapse into bankruptcy in 2008, according to confidential settlements viewed by The Wall Street Journal.

The lawsuit was brought by Larry Lattig, a court-appointed bankruptcy trustee, who sued the initial backers of Lake Las Vegas for the $470 million they took out of the project--a 3,600-acre resort community centered on a man-made lake about 20 miles from the Las Vegas Strip--before it tumbled into bankruptcy.

The ex-owners--billionaire brothers Sid and Lee Bass and the estate of the late California developer Ron Boeddeker--were able to cash out of their investments in the resort community, due to a syndicated loan arranged by Credit Suisse Group.

The Credit Suisse loan was similar to a home-equity loan, allowing the resort's backers to cash out their investments. The Swiss bank later marketed similar loans to a number of other owners of western luxury resorts--including Yellowstone Club in Montana, the Promontory Club in Utah and the Tamarack Resort in Idaho--that eventually ended up going bust when property values cratered.

Lake Las Vegas had three golf courses, two luxury hotels, a casino and a lake in the middle of the Nevada desert. It filed for bankruptcy in 2008 in the midst of the nation's housing market collapse. By that time, Mr. Boeddeker and the Bass brothers had given up their ownership stakes after defaulting on another loan from a group of Credit Suisse-led lenders.

Two years later the project emerged from Chapter 11, and Mr. Lattig sued the Basses, Mr. Boeddeker's estate and a company owned by Bill Hallman, a longtime Bass family attorney. The suit looked to recover the money the ex-owners had taken out of the project via the Credit Suisse loan. Bankruptcy law allows a trustee to seek to unwind so-called fraudulent transactions within two years of a bankruptcy filing if they provided no benefit to the business.

The Lake Las Vegas suit, which had been working its way through federal court, was settled earlier this year but its terms had remained under wraps. Representatives for the Basses, the Boeddekers and Messrs. Hallman and Lattig didn't respond to requests for comment.

Write to Patrick Fitzgerald at [e-mail]

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