Winery case ‘a bid to destroy’

A Nelson winery owner at the centre of a legal stoush between high-flying United States ‘‘buddies’’ says the lawsuit is an attempt to ‘‘destroy’’ him.

Mahana Estates owner Glenn Schaeffer is being sued by James Murren, chief executive of MGM Resorts International, and

another Las Vegas hospitality executive Daniel Lee.

The pair first brought the lawsuit against Schaeffer in 2015, seeking to recover the $3.5 million they invested in the Mahana business. The case is expected to finish on its eighth day in the High Court at Nelson today.

Last week in the High Court at Nelson, Murren and Lee alleged Schaeffer misrepresented the use

of their funds by treating the money as his own, which led Murren to believe the shares that represented his investments were in fact worthless.

On Monday Schaeffer took the stand to deny any misrepresentation of the funds invested by Murren and Lee, whom he described as ‘‘good friends’’.

‘‘What started out as a lifestyle investment among eight close friends has devolved into unfortunate

litigation, creating insecurity about the future of an up and coming world class winery and events centre,’’ he said.

He said the case brought against him by Murren had caused his family ‘‘significant anxiety’’ and was an attempt to ‘‘destroy’’ him and the Mahana winery.

Schaeffer met vineyard owner Philip Woollaston in 1999 and the pair purchased land and established

a new vineyard and winery together, originally known as Woollaston Estates. It was part of a plan for the Schaeffers to obtain permanent residency in New Zealand.

Schaeffer told the court preliminary discussions with Murren and Lee about the winery investment did not cover ownership structures or shareholders.

‘‘I believe that we were all thinking of it as a friends and family proposal without much importance attached to the finer details.’’

Schaeffer said the investors were aware of the company structure from the reports they had been given and none of them had raised issues with the way shares were held.

He said the winery had not performed as well as he had hoped, and since 2008 he had not sought any further funds from the investors.

Yesterday, Schaeffer received support from another American investor. California-based William Newby was working at Bank of America Securities when he met Schaeffer in 1992 and the pair became ‘‘good friends’’. Newby also became friends with a number of other casino executives, including Murren and Lee.

‘‘All of us would regularly socialise together and it would be fair to say that we all considered ourselves as buddies.’’

He was disappointed to learn Murren and Lee had taken legal action against Schaeffer given that they had been close friends.

In 2006 an investment agreement for the winery was circulated. ‘‘I thought it would be fun to invest in the development of the New Zealand winery with my friends and I agreed to participate.’’ Newby invested about US$200,000 in the partnership and understood Schaeffer would follow legal advice on the appropriate structure.

In cross-examination of Schaeffer on Monday, Murren’s lawyer Andrew Horne said no investor would have regarded it as necessary or appropriate for Schaeffer to own all the assets in his name.