The billionaire owner of what is believed to be the largest inhabited private residence in the United States finds himself in Manhattan federal court this week, accused of looting a metal company in order to build the enormous oceanfront mansion.
Ira Rennert appeared in court Tuesday to face a civil lawsuit which accuses him of funneling millions of dollars out of a failing business to fund construction of the sprawling 62, 000-square-foot estate in the Hamptons, the Daily Mail said.
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The 80-year-old businessman is being sued by a group of creditors to the now defunct Magnesium Corporation of America (MagCorp), who allege that he unlawfully took $100 million for his personal use, causing the metal company to go bankrupt, according to the Mail.
MagCorp’s creditors are suing for $118 million which, with interest, could amount to more than $600 million plus punitive damages. They charge that Rennert is guilty of fraudulent conveyance, breaches of fiduciary duty and unjust enrichment, the report said.
However, Rennert’s attorneys claim that he can’t be held responsible for the market fluctuations that prompted the downfall of MagCorp, and that there’s no way to prove that the money went towards construction of the estate, according to the report.
The beach home, named Fair Field, has 29 bedrooms, 39 bathrooms, three dining rooms, three swimming pools, an 164-seat theater, basketball court, gymnasium and two-lane bowling alley, the Mail said. In 2004, the New York Times called Rennert’s mansion “Versailles on the Atlantic.”
The businessman’s involvement with MagCorp goes back to 1989, when his industrial conglomerate Renco Group bought the company for $44 million. Over the next six years, the company boomed thanks to an 8 per cent growth in the magnesium market. Then, in 1996, the company sold $150 million in bonds, but instead of investing the profits to update technology and modernize production, creditors say the money was sent back to Renco and onto Rennert personally, the report said.
The magnesium market started to swing in 1996 and in 2001 MagCorp filed for bankruptcy. Rennert’s attorneys say he is not responsible for MagCorp’s bankruptcy, and that the company had enough money to make the necessary improvements, according to the Mail.
Manhattan-based Renco Group is New York’s eighth-largest private company, generating $5 billion in revenue in 2013. Forbes estimates Rennert has a personal fortune of $6.3 billion, though Bloomberg reckons it’s a more modest $4.7 billion, Crain’s New York Business said.
Rennert, an Orthodox Jew, has been generous to Jewish and Israeli causes, bestowing the Rennert name on a women’s Torah study program in Israel and endowing a chair in Judaic studies at Barnard College. He has also given large donations to Yeshiva University and the Center for Jewish History in New York, the New York Times said in 2004.