Walters case reached impasse

Golf course developer Bill Walters' money is apparently no good - at least when it comes to closing the litigation over the failed sale of the Stallion Mountain Country Club.

In March, Walters cut a cashiers check for a confidential amount as part of a settlement. But attorneys for 26 buyers in the 2006 deal have refused to take the money.

It took an order by Clark Country District Court Judge Mark Denton on Monday to force the law firm of Drinker Biddle & Reath to provide an employer identification number to the Bank of Nevada, where a client trust account was created to hold the money. By law, banks must have the number as part of a commercial account.

"This is really silly, in our view," said Walters attorney Dennis Kennedy.

According to court papers, Christopher Wong, a Drinker Biddle attorney in Los Angeles, refused to touch the money because the firm did not want to pay taxes on any interest earnings. He took the position that the firm had never received the money.

But this episode was played out against a larger and complex backdrop, as Kennedy has gone to federal court to try to force buyers to dismiss their case against Walters as part of the settlement.

The buyers claimed that Walters misrepresented the financial condition and prospects of the club to smooth the $24.5 million sale. Walters, on the other hand, contended that the plunge in the real estate and golf markets, combined with the buyers' mismanagement, ultimately sent the club into foreclosure and shut it down. The day after jury selection in January, the two sides reached a deal that was finalized on Feb. 9.

However, Federal Deposit Insurance Corp. has pursued Walters in state court to collect a $7.35 million deficiency claim on the Stallion Mountain deal. As part of that action, the FDIC has moved to attach the money paid to the buyers, who could get nothing from their case.

As a part of the Stallion Mountain deal, Walters provided a personal guarantee on a $15.3 million loan from the now-failed Community Bank. The deficiency represents the difference between the $10 million value Denton put on the club after a hearing earlier this year and the amount now owed on the loan, including accumulated interest.

U.S. Magistrate Judge Peggy Leen has scheduled a June 6 bargaining session to try to put the settlement in the federal case back on track.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.