updated 4/13/2008 7:21:31 PM ET 2008-04-13T23:21:31

For the ultra-rich, the Yellowstone Club is a private retreat like no other. It boasts its own ski resort, security provided by ex-Secret Service agents and a deep-pocketed membership that includes Bill Gates and former Vice President Dan Quayle.

However, a bitter divorce fight between the club's billionaire founders as well as a lawsuit by a group of investors led by cycling legend Greg LeMond have revealed all is not well behind the tony club's gated entrance in southwestern Montana's Gallatin Mountains, according to recent court testimony and documents reviewed by The Associated Press.

Since the recent collapse of a bid to sell the club for a reported $455 million, founders Tim and Edra Blixseth are feuding over who gets control of the enterprise. She asked a judge last week to strip her husband of control of the club and reinstate her as chief operating officer. A ruling is pending.

"It's the perfect storm for them," said Jim Goetz, an attorney for LeMond and other investors who sued the club over a property dispute. "(Tim Blixseth) was up against it, so he was going to sell the assets of the club. That sale fell through and all of a sudden he's looking around with his pants down."

Goetz's clients still are awaiting payment of $20 million in a settlement of their lawsuit, while documents show Tim Blixseth has spent tens of millions of dollars buying overseas properties in recent years in a attempt to take the club concept worldwide. They own just over 4 percent of the Yellowstone Club.

The dispute is taking place in a rarified world of luxury yachts, multimillion-dollar homes and private jets.

Two jets, six boats in battle
A list of Blixseth assets submitted in a California divorce court lists a pair of Gulfstream jets (one his, one hers), six boats, 15 vehicles and more than two dozen homes, condos and other properties from Montana to Tennessee. His fortune was pegged by Forbes magazine last year at $1.3 billion.

Who gets control of the most valuable asset, the Yellowstone Club, could be decided in more humble environs: the 132-year-old courtroom of state District Judge Loren Tucker in Virginia City, population 130.

When the Blixseths entered the courtroom last week, they were accompanied by a phalanx of lawyers.

The judge joked he'd never seen so many suits in Virginia City, a former mining town that has refashioned itself as a "living ghost town" for tourists. Presiding over what he characterized as one of the legal world's smaller ponds, Tucker was self-deprecating and called himself a "provincial judge" and "country bumpkin."

But he also made clear who was in charge, repeatedly interrupting Edra Blixseth's Los Angeles lawyer.

Edra Blixseth is seeking an emergency restraining order to bar her husband from oversight of the club. She claims many of its members were alienated by his absence over the last year. She said he was traveling overseas to the properties he'd acquired with money borrowed from the club — while some of the club's creditors went unpaid.

"Quit diverting money and take care of the overhead," she said in an interview during a break in the proceedings.

In 2005, after the club received a $375 million loan from Credit Suisse, Tim Blixseth persuaded the club to pass $209 million directly to him and his corporate alter-ego, Blixseth Group Inc., according to court documents.

He had decided to branch out with Yellowstone Club World — an international replica with a $1.5 million buy-in fee. Over the next two years he bought a chateau in France, a golf resort in Scotland, a villa in Mexico and an estate in the Caribbean.

Last month, about the time the deal to sell the Montana club fell through, Blixseth announced the sale for $10 million of a 160-acre club parcel, on which he had previously announced an ambitious plan to build the world's most expensive private home. Another 160-acre parcel is up for sale for $56 million.

Edra Blixseth's attorney depicted the sales as part of a failing effort to stem a "liquidity crisis" that has prevented the club from paying some of its creditors.

Robert Sumpter, the club's vice president for real estate development, dismissed the claims: "We sell property. It's what we do."

Do billionaires need a club?
Jamie Cheng, chief analyst with Halogen Guides, which tracks the movements of America's extremely wealthy, characterized Yellowstone Club World as "a vanity play" unlikely to pan out. Billionaires don't need to join a club to live in a castle when they can simply buy their own, he explained.

And he said Blixseth's desire to expand appeared to be partly to blame for the problems with the Yellowstone Club. Court testimony revealed Tim Blixseth has yet to pay back the $209 million used to bankroll the overseas properties.

"When you're battling your wife on one front and Greg LeMond on another front and you're trying to build a vanity club, that kind of takes your attention off your core business, which is the Yellowstone Club," Cheng said.

But Blixseth — a self-made timber and real estate tycoon — insisted in an interview and e-mails that he will emerge on top.

"I'm going to keep it," he said of the club. "I am confident that the next 10 years will be the best in the club's life."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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