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Feb 4, 2015 11:35 AMPublication: The Southampton Press

Billionaire Ira Rennert On Trial For Allegedly Looting Company To Build Sagaponack Estate

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Feb 4, 2015 11:35 AM

Billionaire Ira Rennert, famous in the Hamptons for his 63-acre estate in Sagaponack, is on trial in federal court in Manhattan, accused of pilfering almost $120 million from his ailing company to help fund construction of the estate in the late 1990s, which was at one point considered the largest occupied home in the country.

Lawyers for creditors of Utah-based MagCorp, a mining outfit that failed, contend that Mr. Rennert drove the company into bankruptcy by having MagCorp and Renco Metals pay more than $100 million in unlawful dividends and stock redemptions to parent company Renco Group, a holding company founded in 1975 by Mr. Rennert, between 1995 and 1998.

Mr. Rennert, they contend, was “unjustly enriched” by taking $150 million from MagCorp and using it to build his oceanfront mansion in Sagaponack, while ignoring the company’s increasing environmental, technological and competitive problems. In a civil lawsuit filed in 2003, MagCorp’s lawyers are seeking more than $600 million, including punitive damages.

“They didn’t set aside any money for that $150 million—not one penny,” Leo Beus, attorney for the bankruptcy trustee, said in his opening remarks in court this week. “No rainy day fund at all. They think they are going to refinance.”

“The financial projections used to justify some of the … payments were fanciful and unrealistic,” the trustees’ attorneys state in court documents. “Rennert personally approved and knowingly provided substantial assistance to cause each of the fraudulent conveyances, and caused damage to the debtors.”

Mr. Rennert’s attorneys, however, assert that there is no proof that money taken from MagCorp was for personal use, or that in doing so Mr. Rennert rendered the company insolvent. Rather, they contend, MagCorp’s failure was caused by difficult market conditions.

“This is a case about a strong company and a healthy company that performed well and did so until the time of bankruptcy,” said Peter Haveles, one of Mr. Rennert’s attorneys, in his opening remarks on Tuesday. The failure of the company, he said, was “all about global economy … The plaintiff attempts to make this case an indictment of Ira Rennert. That attack is unfair and false. Mr. Rennert is a hard-working and smart businessman. He grew up in the heart of Brooklyn, and he is emblematic of the American success story. He got there because of his hard work and diligence.”

Mr. Rennert paid $11 million for the land in Sagaponack and built his compound in the late 1990s, naming it “Fair Field.” The buildings on the Daniels Lane property, Mediterranean in design and reminiscent of old Italian villas, total more than 110,000 square feet and include a 57,700-square-foot main house with 29 bedrooms. A 10,000-square-foot “playhouse” sits adjacent to the main house and contains a squash court, two bowling alleys, an exercise room, lounge, billiards room, playroom, game room and outdoor terrace.

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According to Crain's, not only did he take the over 100 million in dividends, he bought the remains of the company and never paid creditors.

Modern capitalism in action...
By Mr. Z (11552), North Sea on Feb 6, 15 9:26 AM
2 members liked this comment
This is where restrictive zoning about the size of a house would have protected the community. Now what will become of that enormous white elephant of a house that Mr. Rennert built?
By localcitizen (108), Southampton on Feb 6, 15 2:36 PM
1 member liked this comment
Well that's why after he built this Southampton instituted maximum size limits and when Sagaponack became a village they made the limits more restrictive.

And if he were to sell this property - you can be sure someone will buy it (Trump maybe? or a Foreigner)
By Nature (2966), Southampton on Feb 9, 15 10:51 AM
You never pass up an opportunity to bash capitalism do you Mr Z? It might be time for you to try your hand in a worker's utopia for a while.
By bigfresh (4545), north sea on Feb 7, 15 1:28 AM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By Mr. Z (11552), North Sea on Feb 8, 15 7:54 PM
You always bash capitalism but Crooks are everywhere. Just ask Sheldon silver.
By razza5350 (1910), East Hampton on Feb 9, 15 7:40 AM
I have no issue with bashing a system so rife with corruption.

Three chances, three spectacular FAILS.
Feb 9, 15 8:23 AM appended by Mr. Z
"The death-knell of the republic had rung as soon as the active power became lodged in the hands of those who sought, not to do justice to all citizens, rich and poor alike, but to stand for one special class and for its interests as opposed to the interests of others." ~ Theodore Roosevelt, Labor Day speech at Syracuse, NY (Sept 7, 1903)
By Mr. Z (11552), North Sea on Feb 9, 15 8:23 AM
2 members liked this comment
Ok Einstein give me a system that works?
By razza5350 (1910), East Hampton on Feb 9, 15 9:45 PM
We had one in the decades after WWII.

It was dismantled brick, by brick.
By Mr. Z (11552), North Sea on Feb 13, 15 11:22 PM
It's called adapting to a global economy. If you haven't done so already I suggest reading about the Nixon effect to get an understanding. All booms eventually come to an end
By razza5350 (1910), East Hampton on Feb 14, 15 2:34 AM
The house is on 63 acres. I bet that its size is less than what could be built if you add up all of the potential building lots that 63 acres would provide and the houses that could be built on it. All the outcry yet the lot was for sale for years and all the complainers should have pooled their money and bought it. Though the house is huge, I bet it has less of an environmental impact than 30-40 houses if it were a subdivision. However it is an interesting lawsuit and if true makes for a good gossipy ...more
By North Sea Citizen (561), North Sea on Feb 7, 15 9:40 AM
1 member liked this comment
Phil and Z you should maybe try a country like Russia or China they love your way of thinking.
By chief1 (2768), southampton on Feb 8, 15 9:01 AM
Horse and Sparrow. Mellonomics. Reaganomics.

Three chances in American History.

Three SPECTACULAR FAILS.
By Mr. Z (11552), North Sea on Feb 8, 15 7:57 PM
1 member liked this comment
Z, I agree.
By dnice (2345), Hampton Bays on Feb 8, 15 8:11 PM
Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.

~James Madison
By Mr. Z (11552), North Sea on Feb 8, 15 8:24 PM
Haha, thread drifts are a part of daily life on 27 East;)
By dnice (2345), Hampton Bays on Feb 8, 15 8:29 PM
1 member liked this comment
According to the benighted, I'm bashing capitalism.
By Mr. Z (11552), North Sea on Feb 8, 15 8:35 PM
Laws don't mean much when they're not enforced, and regulatory agencies are stripped of their funding and ability. Additionally, when you have enough money (power) to tie up the courts for years, or even a decade the chances of paying for it lessen a great deal.
By Mr. Z (11552), North Sea on Feb 8, 15 9:25 PM
2 members liked this comment
Well, I must say our system warrants this:

"Of all forms of tyranny, the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy."

~ Theodore Roosevelt
By Mr. Z (11552), North Sea on Feb 9, 15 8:34 AM
1 member liked this comment
I don't care how "wealthy" someone is.

However, I prefer that my government is not for sale and do not appreciate wealth being abused and used like a weapon. Any tool may be a weapon, but not every weapon is a tool. Around these parts, it is used as a weapon in a petulant manner with rather high frequency.
By Mr. Z (11552), North Sea on Feb 9, 15 1:27 PM
1 member liked this comment
You keep thinking of wealth in terms of money, and therein lies where you fail.
By Mr. Z (11552), North Sea on Feb 13, 15 11:23 PM
You should be quite embarrassed to pull the envy card. It's rather low brow, and short sighted.
By Mr. Z (11552), North Sea on Feb 14, 15 11:51 PM
I doubt that Rennert intends the house to be a private residence for very long. In setup, it resembles a conference center/hotel far more than a home. The question is what he intends to do with the house long-term. I suspect that the long-term plan is to make it the centerpiece of his charities, probably by transferring it to a religious foundation.
By highhatsize (4147), East Quogue on Feb 9, 15 10:03 AM
1 member liked this comment

"Long-term Plan"? He is 80 years old... the whole "religious retreat" thing was debunked and was nothing more than anti-Semitism.

The house has been there and occupied for 15-17 years. Why do you have these "suspicions" ?

**Note: not trying defend rennert - the guy has committed horrible crimes against humanity in South America
By Nature (2966), Southampton on Feb 9, 15 10:56 AM
to Nature:

Ira Rennert will have heirs.

I am unaware of any "debunking" of the "religious 'retreat'" suggestion (which was NOT MY suggestion.)

Tellingly, while I made no mention of Ira Rennert's ethnicity, you have labeled my speculations as anti-Semitism. This reflects nothing more than your own prejudicial preconception that if an individual MAY BE Jewish, any mention of him that isn't laudatory is bigoted. The fact is that my suspicions of Ira Rennert's intent are ...more
By highhatsize (4147), East Quogue on Feb 9, 15 1:10 PM
That's why I said the "religious retreat" thing WAS nothing more than anti-Semitism (note that "was" is past-tense - meaning it was not in reference to your comment).

This palace he has created is no different than the South Florida home of Donald Trump, or the old manses that dotted the Gold Coast of LI or which lined the Hudson River. Seems to me he built it because he could - not so that after he dies, it can become a religious retreat or a resort. (As if a religious retreat would ...more
By Nature (2966), Southampton on Feb 11, 15 4:17 PM
to Nature:

My apologies for misunderstanding your comment. That being said, my suspicions are not allayed by Ira Rennert's denial. His reputation does not inspire confidence in his word.
By highhatsize (4147), East Quogue on Feb 14, 15 2:00 AM
Ira Rennert is an Orthodox Jew. I know many Jews, Orthodox and Reform. 99% of them are good people and sincerely follow the Torah.
Rennert owns many polluting industries like the Doe Run Lead Co. It's Peruvian operations have lead poisoned 33,000 people including 18,000 children. His mining and smelting operations in Missouri have contaminated much of SE Missouri and devastated the smelter town of Herculaneum. Several years ago Rennert posted his "Torah Ethics Project" on line. It is no longer ...more
By TomKruzen (1), Williamsville, New York on Feb 28, 15 6:57 PM
Y'all need some more productive hobbies. The bay is gorgeous today. Get out and take a look...
By getalife (60), Southampton on Feb 11, 15 2:23 PM
2 members liked this comment
KARMA!
By Trish (91), Sag Harbor on Feb 11, 15 3:36 PM
1 member liked this comment
oh boy here come all the I hate successful people
By widow gavits (219), sag harbor on Feb 11, 15 4:23 PM
Mr. Rennert, aside from what he is being now accused of, is responsible for the death of hundreds if not thousands of people (including many children) who were poisoned by his smelting plant in Peru. So... success at what costs?

LIMA, Peru, Nov. 1, 2012 - American Ira Rennert, known for his lavish lifestyle and operating companies that have polluted whole communities, may soon face an international arrest warrant followed by extradition to Peru if a judge has her way.

Rennert ...more
By Nature (2966), Southampton on Feb 12, 15 7:39 PM
3 members liked this comment
Widow: Depends on what your definition of "success" is....Rennert is the personification of gluttony.
By Earthgirl (52), Southampton on Feb 13, 15 4:24 AM
1 member liked this comment
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