A legal battle that began nearly 10 years ago came to a close this year, with the original plaintiffs being ordered to pay millions in damages to the investor he first sued.
Nick Behunin, who cofounded the charity Seathos Foundation in Venice in 2010 with Michael Schwab, was ordered in January to pay $6 million to Schwab and his father, billionaire Charles Schwab. Behunin had initially sued the Schwabs in 2014 for pulling their investments from one of his business ventures.
Once that lawsuit was dismissed for lack of merit in 2017, the Schwabs fired back with lawsuits accusing Behunin of fraud and libel – both of which were successful.
“It was quite an adventure,” said Michael Betz, a partner with downtown-based Allen Matkins Leck Gamble Mallory & Nastis who represented Michael Schwab for all 10 of the contentious years.
“It was a really nice ending, notwithstanding the fact that it was 10 years ago that the cases were first litigated,” he added. “Over the years, the legal system worked slowly, but justly.”
Behunin, who has repeatedly missed court appearances and is reportedly living in Colombia, was ordered in January to pay $6 million in libel damages. He was also ordered last year to pay $15 million in a fraud judgment that favored the Schwabs.
As the Business Journal previously reported, Behunin and Michael Schwab first worked together in 2009 to found environmentally conscious real estate development firm Sealutions in El Segundo. That company later bought a majority stake into another of Behunin’s businesses based in New Zealand, and the pair would also form Seachange to serve as a property acquisition arm.
Behunin claimed in his 2014 lawsuit that the Schwabs began courting the family of Suharto, the former Indonesian dictator, about developing properties owned in that nation by the family. He alleged that the Schwabs withdrew their investments and persuaded Behunin to pull out of Seachange in order to freeze him out of those deals.
The Schwabs denied those allegations and pointed to Behunin’s history of failed endeavors in their countersuits against him.
In addition to Betz, the Schwabs were represented by Allen Matkins partner Robert Moore as well as San Francisco firm The Law Offices of David H. Schwartz.
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