The Real Deal New York

Ira Rennert sues lawyers over $213M fine

Billionaire used company funds to pay for massive Hamptons estate
January 10, 2018 06:05PM

Ira Rennert and the mansion in Sagaponack

Billionaire Ira Rennert, who was fined in 2015 for using company funds to build a massive Hamptons estate, is suing his former lawyer for bungling his defense.

In a malpractice suit filed Monday, the 83-year-old industrialist said attorney Peter Haveles and the law firm Kaye Scholer failed to object to jury instructions prior to its decision, resulting in an “inexplicably inconsistent” verdict, according to Reuters. Rennert — who runs the $6 billion Renco Group — was ordered to pay $213 million in fines and penalties in February 2015.

The fight stems from a lawsuit involving Rennert’s Magnesium Corporation of America, which in 1996 sold $150 million in bonds, ostensibly to clean up production processes. But MagCorp allegedly passed the money to Renco and Rennert.

Rennert, who is worth an estimated $5.7 billion, allegedly used at least $41 million of the bond proceeds to build a 62,000-square-foot waterfront mansion in Sagaponack called Fair Field. The estate has 29 bedrooms, 39 bathrooms, three dining rooms, three swimming pools, a 164-seat theater and bowling alley. MagCorp went bankrupt in 2001.

During the trial, MagCorp’s lawyers displayed a photo of the estate — prompting Haveles (now a partner at Pepper Hamilton) to protest that it could inflame the jury. A judge agreed.

Rennert appealed the decision, which was upheld by a federal appeals court. Last summer, he appealed to the U.S. Supreme Court, which denied his petition in October.

Kaye Scholer has since merged with Arnold & Porter. A spokeswoman for the firm said it “vigorously defend these allegations and we are confident we have fulfilled our professional obligations.” [Crain’s]E.B. Solomont