MagCorp suit targets owner and advisers | Salt Lake Tribune

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MagCorp suit targets owner and advisers

By Judy Fahys and Steve Oberbeck
The Salt Lake Tribune

Magnesium Corporation of America's Ira Rennert and his deputies now have company in the legal and environmental quagmire at the magnesium plant on the edge of the Great Salt Lake.

The newly appointed trustee for bankrupt MagCorp, for years the nation's worst toxic polluter, has filed a lawsuit in U.S. Bankruptcy Court in New York alleging that Rennert and his professional advisers illegally concealed crucial information from investors. Along with Rennert and other executives in his business empire, the suit targets financial and legal advisers who helped MagCorp raise $150 million through a 1996 bond offering for the company, which emerged from bankruptcy last year with a new name, US Magnesium.

Trustee Lee E. Buchwald's suit seeks up to $1.5 billion, asserting bondholders were never clued in about a longtime waste-dumping dispute between the company and environmental regulators -- a situation that ultimately prompted the U.S. Environmental Protection Agency to file a $902 million lawsuit against the company.

"If bondholders had known about the potential environmental liabilities, they never would have invested," said Leo Beus, a Tucson, Ariz., attorney representing MagCorp's trustee.

The lawsuit is an assault on Rennert and the holding companies comprised by his privately held industrial empire, as well as those who helped engineer a key transaction that pumped nearly $89 million into bank accounts controlled by Rennert and his executives while leaving bondholders empty-handed.

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