New Glarus Brewing shareholders sue CEO, claiming securities fraud
NEW GLARUS, Wis. — A group of original New Glarus Brewing shareholders are suing the Brewery and CEO Deb Carey, accusing her of securities fraud and breaching her fiduciary duty.
In the 43-page lawsuit filed Friday in Dane County court, lawyers for Karin Eichhoff, Steven Speer and Rod Runyan claim Carey and her husband, Dan, used Brewery money to fund other ventures and interests, including a distillery that was eventually owned solely by the Careys and a non-profit foundation.
The suit also alleges Carey exempted herself and her daughter from stock transfer restrictions that applied to other shareholders, and “threatened” minority shareholders by saying she would sell her shares to the highest bidder and freeze them out of the sale if they did not agree to the new stock transfer restrictions.
The suit also claims the Careys retained more than $100 million, including $40 million in cash, and spent large sums of money in support of their personal interests. The lawyers for the shareholders suing the Careys also claim they refused to distribute any Brewery profits to the minority shareholders beyond the amount needed to cover taxes on Brewery income.
They also allege the Careys “withheld and manipulated” financial and valuation data from minority shareholders and bought minority voting shares at prices less than fair market value to bolster Deb Carey’s voting majority.
The three plaintiffs were all original investors in the brewery, with the lawsuit saying all three put money in with the expectation of possibly making profits in the future if the brewery became successful.
The suit from Eichhoff, Speer and Runyan is seeking multiple judgments, including asking the court to order Carey buy their shares at “fair value” and removing Deb Carey as director. The suit also seeks a ruling that Carey repay dividends to other shareholders and pays an unspecified amount of other damages.
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