Nygard vs Bacon: how a gated-community feud ended in a $203mn defamation payout

It started, as so many disputes between neighbours do, with a shared driveway.

To reach Peter Nygard’s six-acre property in the Bahamas, with its smoking volcanoes, Mayan temple and pools where a glass barrier once reputedly separated swimmers from sharks, guests needed to take a road owned by the man next door, the billionaire hedge fund manager Louis Bacon.

They came for raucous events Nygard called “pamper parties”: nights of “karaoke and dancing and massaging”, in the Finnish-Canadian clothing mogul’s words, where the decibel count and the lines of parked cars would drive Bacon to distraction.

The gated-community feud began more than a decade ago with Nygard alleging that Bacon’s repaving of the road had created foul-smelling puddles on his Lyford Cay property. It culminated last week in a $203mn damages award against Nygard that was as striking for its details as for its size.

Layn Phillips, the judge appointed to referee Bacon’s defamation case against Nygard, concluded that the evidence against the 81-year-old from incendiary messages, tapes, whistleblowers and “insiders to [his] scheme” was “stunning”.

Nygard had spent $15mn on a relentless smear campaign to personally and professionally destroy the founder of Moore Capital Management, Phillips ruled, as he handed down the largest damages award ever seen in a New York State court.

The man accused of giving “global and multimedia distribution” to a barrage of defamatory statements made no comment after the ruling. Nygard is in a jail cell in Toronto, where he faces multiple charges of sexual assault and forcible confinement that are echoed in another case in Quebec.

He is due to face trial in Toronto in September and is awaiting extradition to the US, where he has been charged with racketeering, sex trafficking and related crimes involving “at least dozens” of women and minor-aged girls.

At his parties in the Bahamas and at sex clubs from Miami to Winnipeg, Nygard pressured victims to engage in sexual activity to which they had not consented, the Department of Justice alleged in 2020.

He has maintained his innocence in those cases and in the defamation lawsuit. But the pile-up of allegations has already brought an end to the affordable clothing empire whose Times Square flagship once featured his name in seven-storey high letters.

With Nygard’s businesses in bankruptcy and the possibility of an appeal, it is uncertain whether Bacon will see a dollar of the damages he has won.

The New York court did not touch on the claims in the Canadian and DoJ cases. Nor did it resolve the two men’s early quarrel over an assertion that Nygard had illegally doubled his property’s acreage by pumping sand from the surrounding seabed.

It focused instead on “malicious falsehoods” that went far beyond local issues such as Nygard’s allegations about loudspeakers that Bacon had supposedly pointed at his 150,000 square foot mansion. (Police raided Bacon’s home but concluded that the speakers did not constitute “ultrasonic weaponry”.)

Some of the defamatory statements painted Bacon as a white supremacist, the court said, highlighting rallies in Nassau in which Nygard allegedly paid hundreds of protesters to wear T-shirts and carry signs painting Bacon as a Ku Klux Klan member.

Nygard also spread false rumours about Bacon’s business ethics, the court found. Bacon’s lawyers alleged that Nygard had urged the editor of one Bahamas publication to run a doctored version of a Financial Times headline linking him to insider trading.

Other smears implicated the hedge fund manager in arson, after a destructive 2009 fire on Nygard’s property, and even in murder, following the death in 2010 of Bacon’s house manager. Bacon’s lawyers told the court that an investigation had blamed the fire on “faulty electricals” and an autopsy had attributed the house manager’s death to coronary artery disease.

Bacon’s defamation case, filed in 2015, was just one of the pile of lawsuits spawned by the battle between the two neighbours, including one featuring garish allegations of firebombing and a fabricated murder-for-hire plot.

Bacon alone brought 11 lawsuits before the defamation case, said Jenny Afia, a partner of Schillings in London who has represented him since 2010. The cost in legal and other fees has been astronomical. Lawyers for Bacon, now resident in the UK, told the court he had spent more than $53mn on legal and investigative work to counteract Nygard’s campaign.

Nygard paid more than two dozen people to pursue his campaign against his neighbour, according to Bacon’s spokesperson, but few came to his defence after the court order.

“I was long gone before he went to jail,” said one former publicist who added that he would never have approved the smear tactics exposed in court. Another former spokesman and a former lawyer were similarly keen to stress that they had not worked for him in years.

In its damages brief, Bacon’s legal team wrote that he “should today be enjoying quiet days as an elder of the investment industry. Instead, he is now probably best known as one of the putative combatants in Vanity Fair’s ‘Battle of the Billionaires’.”

Bacon is still running Moore Capital Management but closed its flagship funds to outside money in 2019. “I think he feels it’s been an ordeal and I think he feels a great deal of relief that this chapter can be put to bed now,” Afia said.

Nygard could still appeal against the defamation verdict, but the judge noted that he had failed to submit an opposition at the final court hearings of the case.

For now, Nygard’s story appears very different from the rags to riches tale he once told of growing up in a converted coal shed before dating a Playboy Playmate and being photographed with President George Bush, Oprah Winfrey and Prince Andrew.

The man who once said that he had been “reversing my ageing” using stem cell treatment told a Manitoba court in 2021 that he was now frail and sick from his carbohydrate-heavy prison diet.

His video appearances in court have painted a stark contrast with the confidence he once exhibited. In a 2016 interview at a “night of 100 stars” party he sponsored, Nygard was asked the secret of his business success. “It’s really just perseverance, you know,” he said: “I’ve had what you call permanent success.”

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