BUTTE — A judge has cleared the way to auction off a failed recreational development near Melrose, about 35 miles south of Butte.
District Judge Brad Newman issued the order to sell the empty lodge, a communal guest house and 585 acres including 17 undeveloped lots at the Meriwether Ranch. The order is the latest move in the high-end development gone wrong that led to several personal bankruptcies and lawsuits among its investors.
Newman appointed Martin Jurisch, a Spearfish, S.D., real estate agent, to act as a receiver for the property. Jurisch was in Montana Wednesday and could not be reached for comment. His Internet site says Meriwether offers “some of the best fly fishing in the world and provides access to over three million acres of pristine national forest.”
The Meriwether Ranch was being developed as a high-end fishing, hunting and horse riding retreat just northwest of Melrose along the Big Hole River. The property includes lots in both Beaverhead and Silver Bow counties.
The development included home lots and time-share ownership of duplexes and homes, as well as a group lodge and “cabana” guest house open for use for everyone who bought into Meriwether. The lead developer in the project was David Ellingson, a Lincoln, Neb., certified public accountant with the firm Dana F. Cole & Co. Ellingson brought in a handful of investors who helped finance the project.
Meriwether drew more than two dozen buyers, including several who built homes on their lots and others who bought into the timeshare units.
But the development fell into financial trouble in 2010 and has gone into foreclosure.
In January 2010, Dr. Geoffrey Basler and Rebecca Basler sued Ellingson and Dana F. Cole Co. in Lancaster County district court in Nebraska. The Baslers alleged Ellingson gave them bad tax advice while they invested in Meriwether Ranch that cost the couple at least $4.6 million.
The Baslers and Ellingson have since filed for bankruptcy.
In April 2010 Community Bank of Lincoln filed a lawsuit in Butte district court against Meriwether Ranch, Geoffrey Basler, Ellingson and Hal Anderson, a Lincoln attorney, for failure to repay a $3.8 million loan. The bank alleged that the three men gave personal guarantees on repayment of the loan it had given Meriwether in June 2008.
A year later the ranch and bank restructured the loan agreement, but by September 2009 Meriwether had missed a $300,000 payment, according to court records.
Two creditors that have priority liens on the lodge and cabana — Security First Bank from Nebraska and Bergerson Construction Inc. of Bozeman — worked out an agreement to split any proceeds from the sale of the two buildings. Court records say Security First would receive 30 percent of any sale proceeds and Bergerson would get 70 percent.
Bergerson, which built the lodge, is owed $1.5 million as of August 2011 and Security First is owed $798,500, court records said. The lodge’s exterior was completed, but the interior work has yet to be finished.
Newman’s April 23 order said the property has more than $15 million in mortgages. Those include loans issued by banks and investment partnerships. But the order said it’s unlikely investors will recoup all of their money.
“The value of the property appears to be significantly less than the amounts due,” court records said.
The auction will be held 10:30 a.m. Wednesday, May 30, in the meeting room below the Denny’s Restaurant in Butte, just north of Interstate 90 at Exit 127, next to the LaQuinta Inn and Suites.
For information, go to www.martinjurisch.com.