A settlement has quietly been reached in a long legal fight over hundreds of millions of dollars involving two of Fort Worth’s billionaire Bass brothers and a big Las Vegas development that went bust.
Lake Las Vegas, a 3,500-acre site 20 miles outside Las Vegas, was designed as a high-end resort development with all the glitz one would expect of Sin City: upscale homes, high-end hotels like the Ritz-Carlton, a re-created Mediterranean village, golf courses and, of course, a casino, all built around a large artificial lake with impressive mountain views.
But the ambitious project was star-crossed after a strong start in the late 1990s — singer and Vegas headliner Celine Dion bought a home there — and it went bankrupt in 2008. Even the Ritz-Carlton went bankrupt and closed.
The project emerged from bankruptcy in 2010, but its principal investors, including Sid and Lee Bass of Fort Worth, almost immediately found themselves at the center of a legal faceoff with unsecured creditors over $470 million they took out of the project in 2004.
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The mega-case, as it was called on the Las Vegas Bankruptcy Court website, was scheduled for for a jury trial Aug. 18 in Las Vegas. But federal court filings reviewed by McClatchy, which owns the Star-Telegram, show that a settlement has been reached.
The judge approved the resolution in June, but the settlement has not been announced and the court date has not yet been taken off the docket.
A settlement would avoid a public and potentially embarrassing trial for the famously press-shy Bass family and other primary defendants, including Fort Worth attorney William Hallman, who is a longtime attorney for the Basses, and the family of the late California investor Ronald Boeddeker.
Sid Bass is the oldest of the four Bass brothers, who have put their imprint on Fort Worth through philanthropy and investment. Lee is the youngest.
The court documents that list the “settlement conference” do not specify the amount of the agreement, and none of the parties involved in the suit would comment about the resolution. A source close to the case, who would not speak publicly because of a confidentiality agreement, said the Basses and the other defendants will make a payment to the plaintiffs, though the amount has not been disclosed.
At issue in the case is $470 million that the Basses and other investors took out of the project in 2004 from the proceeds of a loan from lenders led by the multinational financial company Credit Suisse. Lee Bass took $112 million and Sid Bass $109 million.
The creditors call the distributions self-dealing that helped to sink the project. But the Bass legal team denies there was fraud and says the collapse of the real estate market during the nationwide housing bust was a major factor in the 2008 bankruptcy.
“I just can’t discuss that case,” Dee Kelly, a longtime Bass attorney and Hallman’s partner in the Kelly, Hart & Hartman law firm of Fort Worth, said last week while allowing that “it could be settled.”
The trustee in the case, Larry Lattig of Southlake, was also closed-mouthed. He said a settlement is possible but declined to provide details. “Nobody ever likes to take these things to trial,” he said.
Lattig, president of Dallas-based Mesirow Financial Consulting LLC, was also the trustee for the unsecured creditors in the American Airlines bankruptcy case. Fort Worth-based American came out of bankruptcy and merged with US Airways in December in a plan that fully paid the unsecured creditors.
Lou LeClair, a Dallas attorney representing Lattig in the Lake Las Vegas case, would not comment.
Houston attorney David Beck, who represents defendants including the Bass brothers and their trusts, 820 Management Trust and Sid R. Bass Management Trust, did not return a call requesting comment.
Beck recently lost a high-profile case representing the University of Texas against actor Ryan O’Neal over ownership of an Andy Warhol portrait of the late actress Farrah Fawcett. Beck’s firm, which was paid $1.1 million by the university according to an open records filing made by McClatchy, lost a Los Angeles jury trial in December. After filing an appeal, the university settled the case, leaving O’Neal with the painting.
“It’s typical that all cases get settled,” said James Shea, a Las Vegas bankruptcy lawyer who was involved in the Lake Las Vegas earlier on behalf of a lender.
Shea is familiar with the project and how far it’s come in a few years.
“It was somebody’s dream 30 years ago,” said Shea, the incoming president of the American Bankruptcy Institute. “The scope of the enterprise was mind-boggling. They created a small city out of nothing. There was rock. For a while, it was a hot spot to move to.”
Now, the lake site is a mini-Vegas with unrestricted views of the range and a new start.
Another upscale hotel replaced the Ritz-Carlton; Dion is building an even bigger home there, and for some people, it is still a place of dreams.