Ginn Sur Mer Investors Sue Credit Suisse

NEW YORK CITY-Claiming that the two companies conspired to inflate values with the idea of eventually taking over the properties, investors in four high-end resorts in the US and the Bahamas have filed a class-action suit against Credit Suisse and Cushman & Wakefield, according to published reports. The complaint, filed Sunday in federal court in Boise, ID, seeks up to $24 billion in damages, including $16 billion in punitive damages.

The New York Times says the suit alleges a "loan-to-own" scheme that involves racketeering, breach of fiduciary duty, mail and wire fraud, money laundering and negligence. It was brought on behalf of at least 3,000 investors in the four resorts, including the Yellowstone Club in Montana, the Tamarack in Idaho, Lake Las Vegas in Nevada and Ginn sur Mer in the Bahamas. All four have defaulted on loans or filed for bankruptcy. Involvement of 4,000 to 5,000 more litigants at 10 other resorts, including the Promontory Club in Utah, is pending, according to the Times.

Lawyers for the plaintiffs say that Credit Suisse and C&W conspired by setting up a Cayman Islands branch to bypass federal law on real estate appraisals, and then inflating the value of the resorts. The two companies allegedly made millions of dollars in fees on loans against the properties, according to reports in the Times and the Financial Times. Credit Suisse was aware that the resorts would most likely default amid inflated values, thus allowing the bank to take ownership on behalf of the creditors, the suit alleges.

Spokesmen for both Credit Suisse and C&W were quoted as saying the allegations were "without merit."