Another Loss In Court For Ira Rennert

Billionaire Ira Rennert and his holding company Renco Group were once again found liable to stockholders to pay back millions of dollars borrowed from his mining company to purchase the 63-acre property where his Sagaponack mansion now resides.

On August 19, U.S. District Judge Alison Nathan mostly agreed with a February jury verdict, finding him responsible for paying back $117 million that he pilfered from his ailing magnesium company to help purchase his waterfront estate in the late 1990s, plus $96 million in interest, making the grand total $214 million.

The jury had originally found Mr. Rennert and his holding company responsible for $118 million, but Judge Nathan erased $1 million in punitive damages, noting that a punitive award was not available under applicable Delaware law.

The lawsuit was brought on by creditors of Utah-based Magnesium Corporation of America, or MagCorp, the mining outfit that failed. The lawyers for the creditors 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 by Mr. Rennert.

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.

Judge Nathan rejected several arguments from Mr. Rennert’s lawyers, including that the jury was “troubled” and offered an inappropriate compromise that failed to reflect the facts.

“The notion that the jury was ‘troubled,’ as Defendants put it, is fanciful at best and, in the Court’s judgment, contrary to fact,” she wrote. “To later claim that such a verdict was evidence of an impermissible compromise is, intentionally or unintentionally, to rig the game, setting in motion ahead of time a potential way out of an unfavorable verdict. The Court finds the argument unconvincing, and not an accurate description of what occurred at trial.”

“We remain firmly resolved in the strength of our case and are ready to begin the appeals process,” Renco said in a statement. “We are confident that we have a strong basis for appeal because the finding of liability is so obviously inconsistent with the jury’s own ruling on the facts.”

Mr. Rennert paid $11 million for the land in Sagaponack and named his compound “Fair Field.” The buildings on the Daniels Lane property 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.