NEW YORK (AP) - Billionaire Ira Rennert plundered a now-bankrupt mining company to pay for personal luxuries, including a Hamptons mansion that's one of the world's biggest private homes, jurors found Friday and levied $118 million in damages.
NEW YORK (AP) — Billionaire Ira Rennert plundered a now-bankrupt mining company to pay for personal luxuries, including a Hamptons mansion that's one of the world's biggest private homes, jurors found Friday and levied $118 million in damages.
The lawsuit stemmed from the 2001 bankruptcy of the Magnesium Corp. of America, or MagCorp, a Salt Lake City-based producer of magnesium. But it also spotlighted the 100,000-square-foot, 29-bedroom, 40-bathroom beachfront complex that raised eyebrows in the Hamptons when it was built, starting in the 1990s.
Lawyers for MagCorp's bankruptcy trustee applauded the verdict as a step toward repaying more than decade-old debts. Rennert's company, Renco Group Inc., said it would appeal.
"Clearly, the jury was swayed by a passionate, but wholly unsupported, argument," the company said in a statement. "Renco and the management of MagCorp always acted properly and did not engage in the acts of which the trustee wrongly accused them."
Interest could substantially increase the damages, assessed against Rennert and Renco.
Rennert, 80, has a fortune Forbes estimates at $6.1 billion, made by building Renco into a conglomerate involved in mining, automotive supply, defense and other industries. The private holding company says its annual revenue tops $5 billion.
MagCorp produced magnesium, a metal used to strengthen soda cans and car parts. The company filed for bankruptcy in 2001, several years after Renco acquired it.
The creditors' trustee said MagCorp. went under because Rennert took about $120 million in dividends while the company borrowed more than it could afford.
The trustee said Rennert used some of that money to build his mansion — complete with movie theater and two bowling alleys — on 64 acres in Sagaponack. Neighbors in the quiet, tony Hamptons community bristled at Rennert's plans (the late novelist Kurt Vonnegut once said the house was like "sticking a thumb in our eyes").
While the mansion may have painted a vivid picture for jurors, "the bottom line is: When the money was taken from MagCorp and put beyond the reach of the creditors ... our only interest was getting that money back into the bankruptcy estate, so it can be used to pay people," said Scot Stirling, a lawyer for the bankruptcy trustee.
The defense said MagCorp. failed because of the early 2000s recession and a drop in magnesium prices, not because of the Rennert's dividends.
And Rennert himself told jurors "there is no relationship between the dividends and the property in Sagaponack," according to Crain's New York Business.
Asked whether he'd cared that creditors went unpaid after MagCorp's bankruptcy, he responded, "Of course!"
"Don't paint me into a bad guy," he added, according to Crain's.
Reach Jennifer Peltz on Twitter @ jennpeltz.