Pay up, Schaeffer told
Court backs US investors in Mahana Estates winery dispute
Mahana Estates winery owner Glenn Schaeffer has been ordered to pay $3.3 million after a judge found he misled United States investors.
The former casino developer was sued by former friends, Las Vegas entertainment executives James Murren and Daniel Lee, who invested in the Nelson business.
Justice David Collins released his decision on Wednesday, finding that Schaeffer made negligent misstatements to Murren and Lee about their investments, for which he was liable for the damages sought.
Schaeffer was ordered to pay Murren US$1.6m (NZ$2.3m) and Lee US$700,000 (NZ$1m), plus interest.
The long-running High Court case concluded on November 7. At the hearing, both men said Schaeffer had discussed with them a partnership to own a vineyard and winery in 2001 and 2002, and he had asked for capital contributions from Murren, Lee and others. It was either stated or implied that they would be partowners of the Woollaston Estates vineyard, which has since changed its name to Mahana.
Murren and Lee claimed that representations made to them were false and that they did not receive an interest in the vineyard and winery.
They said their payments were not used to make the investments promised, but were instead used by Schaeffer to acquire assets that he now held as a shareholder of his company.
Murren and Lee brought four causes of action against Schaeffer, and succeeded in their direction for repayment of their money plus interest as well as breaches of the Fair Trading Act and the Nevada Deceptive Trade Practices Act.
At its peak, the vineyard was spread over several sites and comprised more than 100ha of land in and around Moutere and Hope. The vineyard buildings include a four-level, gravity-fed winery with a restaurant and reception and a villa, which is described in advertising literature as ‘‘featuring seven bedrooms, seven bathrooms, wine cellar, library and art gallery’’.
The vineyard was placed into receivership in September, and the winery, cellar door and events venue are currently for sale as part of the receivership process.
Two other assets, a 9ha vineyard in Hope and an upmarket lodge on the Mahana property, are being sold by Schaeffer.
In September, Schaeffer went to the High Court, seeking to have the case struck out because of a threat made by Lee during a mediation hearing in August last year.
Schaeffer alleged Lee said ‘‘he knew where I lived, knew where my family lived and knew where my dogs lived’’.
‘‘He said if I did not give him back his money that he would bury me in the desert like in the old days, he would destroy my children’s lives and bankrupt my ex-wife and travel to Omaha to kill my three show dogs. He ended his threats with the words, ‘Give me my f ..... g money’.’’
However, the judge ruled that the threats were a distraction from the main issues at stake.
Mahana Estates winery owner Glenn Schaeffer has been ordered by the High Court to repay $3.3 million to two former friends who invested in the business.