The founders of New Glarus Brewery, one of the top 12 craft breweries in the United States based on beer sales volume, have been sued by three of their early investors which still hold stakes in the company. Deborah Carey, President and CEO of New Glarus, and her husband Dan Carey, the brewmaster of New Glarus, are accused of withholding annual profits and using the company's profits to invest in outside projects like the formation of Sugar River Distillery that only benefit the Carey family. Deb Careys is also accused of mix private and company interest like employment of her daughter as the brewery's architect; putting New Glarus shares into a trust for her daughter, and paying herself and her husband bonuses not explained to other shareholders.
Plaintiffs include, Karin Eichhoff, Steven Speer, and Roderick Runyan, altogether old friends of Deb and Dan Carey from Fort Collins, Colorado, who helped the couple to set up the brewery in the early 1990s. Speer and the Careys were neighbors in Fort Collins, Colorado when Dan Carey was first experimenting with beer recipes, while Dierck Eichhoff, deceased husband of Karin Eichhoff was a friend to Speer. Runyan had already invested in a Kansas brewpub and decided to invest also in New Glarus an undisclosed sum. Speer invested USD 25,000 while Eichhoff helped with USD 25,000.
"There is no doubt that (Deb) and her husband have done a fantastic job in helping this business grow and the plaintiffs in this case don’t dispute that. But what they do dispute is that she alone is responsible and entitled to the benefits," Kevin Palmersheim, the plaintiffs’ attorney explained. According to the indictment, yearly net income of New Glarus has historically been between USD 15 million and USD 20 million.
"I’ve made these people very wealthy and to have lies said is flat out stunning," Deb Carey said. In her opinion, the lawsuit is a retaliation for her refusal to cut benefits or to lay off any of her 120 employees during the COVID-19 pandemic. The also refused to apply for federal Paycheck Protection Program loans to offset the costs.
"I knew the brewery was firm financially, and we didn’t need any government assistance and other people would," Deb Carey explained. "The bottom line being I could have made more money during COVID, and I instead passed on government assistance and kept people employed, so (the plaintiffs) didn’t get as big a divided as they would have liked."
The plaintiff and their attorney see only two ways to resolve the problem: “Their first choice would be to remain shareholders and be treated fairly. They’re increasingly discovering that’s unlikely, and so the only other option is to be bought out," Palmersheim said.