IEN Radio

Craft Brewery CEO Sued for Misappropriating $100M

September 09, 2021 Eric Sorensen
IEN Radio
Craft Brewery CEO Sued for Misappropriating $100M
Show Notes

For those who haven’t been, the rolling hills and valleys of southwestern Wisconsin combine with wide swaths of lush farmland to create a uniquely beautiful landscape. And sitting as a perfect example of this blend of small towns and dairy farms is the village of New Glarus.

With a population of about 2,000, local pride resonates primarily from two areas: its Swiss ancestry and the local craft brewery.

Perhaps best known for its Spotted Cow offering, although I’m more preferential to the seasonal Staghorn, New Glarus Brewery employs about 120 people.

Co-owned by Deb Carey and her husband Dan, who is also the head brewmaster, the company was founded by the couple in 1993. It has since grown to become the 12th largest craft brewer in the U.S, with annual sales in the ballpark of $20 million.

However, recent allegations are casting some dark clouds over the company’s success. According to a report from IBMadison.com, a handful of brewery shareholders, led by three original investors, are suing the company’s CEO- Deb Carey. 

At the heart of their suit are allegations that basically accuse Carey of being less than transparent about the company’s financials. This includes the establishment of the Sugar River Distillery, which was designed to be owned by the brewery, but Carey transferred ownership to her and her husband without notifying stockholders.

In case you were wondering, the company does have a board of directors, but Carey is the only member.

The suit also claims that New Glarus Brewery retained, as opposed to distributed, over $100 million in earnings, including over $40 million in cash. It’s alleged that the Carey’s used large portions of these funds for their own wants, as opposed to re-investing in the business or sharing with stockholders.

Deb Carey is also being accused of using brewery money to buy minority shareholders’ voting shares at lower values in order to retain her majority.

According to Carey, in a report by Wisconsin Public Radio, she was blindsided by the lawsuit and sees it as retaliation for her decision to not lay off employees or seek PPP funds over the last year. Essentially, she contends, that because stockholders didn’t see dividends at the level that they could have, they’re now suing.

It’s worth noting that those three stockholders’ initial $25,000 investments would now be worth upwards of $10 million.  The company’s net value is estimated at about $200 million.