The Real Deal New York

Grapes of wrath: Casino moguls end friendship over New Zealand winery

NZ court tells former Mandalay president to repay casino CEO friends
January 26, 2019 10:00AM

(Credit: Pixabay, Max Pixel)

A picturesque winery in New Zealand has become the scene of a bitter dispute between three Las Vegas casino moguls and former friends, involving accusations of fraud and death threats.

MGM Resorts CEO Jim Murren and Full House Resorts CEO Dan Lee have accused former Mandalay Resort Group president Glenn Schaeffer of misrepresenting the nature of their investment in the Mahana Estates Winery, of which Schaeffer was the managing partner, Bloomberg reported. A court in New Zealand ruled in favor of Murren and Lee last month, ordering Schaeffer to repay their $2.3 million investment with interest.

The trio first became friends in the early 1990s, vacationing together with their families and drinking fine wine — often of New Zealand vintage — together. In fact, the $7.9 billion sale of Mandalay to MGM (known as MGM Mirage at the time) was hatched over a bottle of New Zealand pinot noir in 2005.

Murren and Lee first discussed forming a partnership for the winery with Schaeffer in 2002, according to court documents. Over a few years, Murren contributed a total of $1.6 million to the venture, while Lee chipped in $700,000.

Though the two neglected their investment for some time, a chance meeting between Murren and Schaeffer’s soon-to-be-ex-wife alerted them that something might be wrong. They later discovered that they had never owned shares in the partnership as they’d believed.

Schaeffer, for his part, denies any wrongdoing and plans to appeal the verdict. He also alleges that Lee threatened to bury him in the desert “like in the old days,” and to kill his prized show dogs. Lee says he was joking and that his comments were taken out of context.

Mahana, which means warm place in Maori, is located at the northern end of New Zealand’s South Island, and was visited by Prince Charles visited during his 2015 trip to the country.

New Zealand has long been a popular destination for rich foreigners looking to buy property – to the point that the country recently banned foreigners from buying existing residential properties. Newly constructed properties are not affected by the law. [Bloomberg] — Kevin Sun