New Glarus Brewery shareholders sue CEO over misconduct claims

(FILE)
(FILE)(WMTV)
Published: Aug. 20, 2021 at 4:57 PM CDT|Updated: Aug. 20, 2021 at 9:05 PM CDT
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NEW GLARUS, Wis. (WMTV) - New Glarus Brewery shareholders are suing the president and CEO of the company Friday over claims of misconduct.

Karin Eichhoff, Steven Speer and Rod Runyan filed the lawsuit against Deb Carey in the Dane County Circuit Court.

Among the list of claims, the three allege that Carey used brewery money and resources to make a distillery meant to be owned by the brewery, but was instead transferred to Deb Carey and her husband Dan, personally.

“Deb and Dan have done a good job with using that money to grow and expand the brewery,” the shareholders’ attorney Kevin Palmersheim said. “The problem is now Deb Carey is using the brewery treating it more as her personal business.”

NBC15 spoke with Carey, who said she was “surprised” by the allegations and has been willing to work with the shareholders.

“I am totally gobsmacked. I saw these people in June or July,” said Carey. “Everything was amiable. I had no idea they’re unhappy. These accusations are malicious and I mean they’re just lies.”

Carey says the lawsuit is an attempt to bully her into expanding her Wisconsin brewery and its beer outside the state to bring in more cash for shareholders.

“I have been very open about only selling in Wisconsin. I’ve built a very profitable business on this business model, and I am sorry they feel they should have more money in their lives. But I’m not a slave to our investors. My commitment is to make world class beer and to take care of the people at the brewery, and that’s where this has brought us today, and their bully behavior wont change that,” says Carey.

They also claim that she kept over $100 million, $40 million of which is in cash, and spent large sums of money on personal items. Carey stated she would not distribute these profits with the minority shareholders, beyond what was needed to cover the brewery taxes, the court document states.

The group also alleges a list of claims that pertain to stock transfers:

  • The owner used Brewery money and resources to set up Deb Carey’s nonprofit family foundation, and changed internal shareholder rules so that shareholders could not donate shares to any charity other than Carey’s.
  • Carey exempted herself and her daughter from stock transfer restrictions that applied to the other shareholders.
  • She withheld and manipulated financial and valuation data, and used Brewery money to buy the minority shareholders’ voting shares at low values to retain and bolster Carey’s voting majority.
  • She pushed new stock transfer restrictions that would not apply to Carey, where the Brewery could buy back minority shares at substantially less than fair market value and less than prices offered by third parties.
  • She threatened that if the minority shareholders did not agree to the new stock transfer restrictions, or the preferred status of her family foundation, that Carey would arrange to sell her shares to the highest bidder and freeze the minority shareholders out of the sale.

“I’m going to continue focusing on taking care of our people and being a good neighbor. This frivolous lawsuit will be resolved in court,” says Carey.

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