Trustee for Lake Las Vegas creditors faces lawsuit

Texas billionaires Sid and Lee Bass and developer Ronald Boeddeker's family trust are suing the trustee for creditors of Lake Las Vegas who sued them over a $560 million loan secured by the Henderson resort community.

The Bass brothers and the Boeddeker trust filed separate third-party lawsuits in bankruptcy court against Larry Lattig, the trustee for creditors of Lake Las Vegas, a 3,600-acre development 14 miles east of the Strip.

Their lawsuits, which were filed on Tuesday, follow a lawsuit Lattig filed over the 2004 loan.

Lattig's lawsuit complains that the Bass brothers and the late Ronald Boeddeker "immediately paid themselves" $470 million of the loan proceeds and seeks that amount, plus damages and interest.

In his lawsuit, attorneys for Lattig said the withdrawal of the $470 million caused a "mortal wound" to the Lake Las Vegas development, which filed for bankruptcy in 2008. According to the third-party lawsuits, however, the loan documents made it clear that the borrowers would use the loan proceeds to distribute to the Lake Las Vegas investors.

In addition, the third-party lawsuits said the loans were nonrecourse, meaning the lenders couldn't seek money from the Bass brothers and Boeddeker interests if the loan became delinquent.

The third-party lawsuit suggests that Credit Suisse and other third-party defendants are responsible for the losses and should not be allowed to get a judgment against the Bass brothers and the Boeddekers.

The lawsuits ask the judge to uphold the validity of the 2004 loan contract and a loan amendment in 2007, declare the loans nonrecourse, award the Bass brothers and Boeddeker parties compensatory damages and let them recover legal expenses caused by the lawsuit.

Lattig's lead attorney, Lewis LeClair of Dallas, said he would refer a request for comment to Lattig, who didn't respond Friday.

The third-party lawsuits trace the history of Lake Las Vegas. The Bass family interests and Ron Boeddeker in 1987 formed the Lake Las Vegas Joint Venture. The Bass brothers and Boeddeker interests invested $594 million in Lake Las Vegas.

Investment bank Credit Suisse in 2004 led a loan syndication that made two loans totaling $560 million, which had Lake Las Vegas as collateral. Commercial real estate firm Cushman & Wakefield appraised Lake Las Vegas at $1.1 billion.

The national financial crisis that started in 2006 eroded the project's value, however. In 2007, commercial real estate brokerage CB Richard Ellis appraised the project at between $510 million and $808 million. The Bass brothers and Boeddeker signed an amended loan agreement, which also said the developers had no personal obligation to repay the loan, according to the third-party lawsuits. The amended loan said that the lenders would take over Lake Las Vegas if the project failed to generate more than $90 million in sales by Sept. 30, 2007. The lenders took over the project after Lake Las Vegas sales came in below $90 million.

Contact reporter John G. Edwards at jedwards@reviewjournal.com
or 702-383-0420.