Fri Feb 27, 2015 4:33pm EST
(Adds comment from Renco in sixth paragraph, additional byline)
By Joseph Ax and Nate Raymond
NEW YORK Feb 27 (Reuters) - Billionaire Ira Rennert and his investment firm were ordered on Friday to pay $118.2 million after being found liable for looting a magnesium company to build one of the most expensive mansions in America.
A Manhattan federal jury found Rennert and Renco Group Inc liable for breach of fiduciary duty and other claims following a three-week trial over a lawsuit brought by the trustee for the estate of Magnesium Corp of America, a company the billionaire controlled until its 2001 bankruptcy.
The jury found Rennert liable for $16.222 million and Renco liable for $102 million.
Lawyers for Lee Buchwald, MagCorp's trustee, are seeking interest that could increase the award to nearly $700 million for MagCorp creditors, though Rennert's lawyers contest that figure.
Rennert, 80, is worth $6.1 billion, according to Forbes. His lawyers told U.S. District Judge Alison Nathan they plan to ask her to set aside the verdict.
"Clearly, the jury was swayed by a passionate, but wholly unsupported, argument," Renco said in a statement. "Renco and the management of MagCorp always acted properly and did not engage in the acts of which the Trustee wrongly accused them."
Renco bought Utah-based MagCorp, one of the world's largest magnesium producers, in 1989 for $44 million.
MagCorp was coming off years of financial struggles and environmental violations, yet Renco did nothing to fix those problems, Buchwald contended.
In the mid-1990s, magnesium prices reached record highs, allowing Renco to double MagCorp's long-term debt to $150 million and use the proceeds to pay $118 million to Renco and its directors in 1996.
Buchwald's lawyers said the money was improperly taken from MagCorp to finance the construction of an oceanfront, 43,000-square-foot mansion with 21 bedrooms and 18 bathrooms in Sagaponack, New York, among other expenses.
As of 2013, the property was valued at $248 million, according to the website Zillow.com.
In court papers, Rennert's lawyers described the case as an attempt to twist the story of a successful entrepreneur into "a picture of avarice."
Buchwald argued that at the time of the debt offering, MagCorp was insolvent because of environmental liabilities.
It filed for bankruptcy in 2001 after the U.S. government sought $900 million in penalties.
Rennert's lawyers argued the liabilities were contingent and unknowable at the time the debt was issued.
"At the end of the day, they understood the evidence and returned a just verdict," Scot Stirling, a lawyer for the trustee, said of the jurors.
The case is Buchwald v The Renco Group Inc, et al, U.S. District Court, Southern District of New York, No. 13-7948. (Reporting by Joseph Ax and Nate Raymond in New York; Editing by Dan Grebler and Alan Crosby)
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