Kiwi vineyard owner Glenn Schaeffer ordered to pay $3.3m to Las Vegas execs

Mahana Estates is on the market for sale. Photo / supplied

The owner of a Nelson vineyard has been ordered to pay US$2.3 million ($3.3m) to two Las Vegas executives.

Glenn Schaeffer, an American-born hotelier who formerly headed the Mandalay Resort group in the US, is the majority shareholder of Mahana Estates - one of New Zealand's biggest winery-based tourism and hospitality operations

For the past three years Schaeffer - who has given substantially to the arts in New Zealand - has been battling a High Court lawsuit brought against him by James Murren and Daniel Lee.

Murren is chief executive of MGM Resorts International, a multi-billion dollar Las Vegas hospitality business, while Lee is also the boss of a casino company in the same city.

Murren and Lee said they and others discussed forming a partnership with Schaeffer that would own a vineyard and winery.

After a 2008 approach from Schaeffer, Murren said he and his trust had personally paid Schaeffer US$1.6 million (NZ$2.3m) and Lee said he paid US$700,406. The pair allege false representations were made to them that they would be part owners of the vineyard

In a just-released judgment, Justice David Collins ruled Schaeffer made negligent misstatements to Murren and Lee and is liable for them.

"I have also concluded that Mr Schaeffer is liable in relation to causes of action brought under the Fair Trading Act 1986 and the Nevada Deceptive Trade Practices Act," the judge said.

"None of the affirmative defences alleged by Mr Schaeffer have merit. Accordingly, I find Mr Schaeffer is liable for the damages sought plus interest. Judgment is entered in favour of Mr Murren for US$1,600,813.92 plus interest and USD 700,406.96 plus interest for Mr Lee," Justice Collins said.

Mahana is on the market for sale and was tipped into receivership in September.

In their first report last week, receivers said the business owed about $20 million to a related company that developed the vineyard and winery. Rabobank was also owed $3.2m, the receivers from KordaMentha said.

Trade creditors are owed a further $223,000 and employees are claiming $41,696.

The receivers are selling Mahana's 21ha vineyard planted in pinot noir, pinot gris, riesling and chardonnay; a 1589sq m winery, a cellar door tasting room and retail outlet designed as an a-la-carte restaurant and a commercial grade event venue.