Phoenix Businessman Loses $25 Million to Ex-Partner in Lawsuit, Angers Judge 'Cause of Juror Contact
(See update to story below with response from defendants)
A federal jury has awarded a total of $28 million to Phoenix businessman Marc Wichansky, who alleged that his ex-partner assaulted him, committed fraud, and stole his company.
Arizona U.S. District Judge David Campbell remarked that the "business divorce" between former friends and partners Wichansky and David Zowine was the most contentious civil case he'd ever seen.
Zowine, who must pay $25 million of the award himself, and his lawyers drew the wrath of Judge Campbell after the verdict by making an improper contact with a juror.
Wichansky and his legal counsel, meanwhile, celebrated the resounding victory.
"Everyone said it couldn't be done. Faith is rewarded!" Wichansky posted on Facebook. "5 years of litigation leads to truth."
The court battle royal between Wichansky and Zowine over Zoe Holding Company, parent company of MGA Home Healthcare, MGA Healthcare Service, and other firms, had been going on for three years before the April 20 verdict. As New Times covered in June 2013, details in Wichansky's federal complaint captured some of the physical drama and suspense that took place during the partners' squabble.
Wichansky alleged that his partner, a friend who'd joined the company after Wichansky founded it in the 1994, had been stealing from clients and the state of Arizona in an elaborate scheme. When Wichansky innocently stumbled upon evidence of the scam, he alleged, Zowine began an orchestrated campaign to smear Wichansky's reputation and take over the company with his loyal following of "confederate" employees.
Tension grew at the office at 2800 North 44th Street, and in January of 2011, Zowine reportedly attacked Wichansky in a fight witnessed by others. Zowine "grabbed Wichansky by the neck, threw him across the room, body-slammed him to the ground, and punched him in the back," Wichansky's complaint alleges.
Zowine and his loyal employees set up a "secret" office near 24th Street and Camelback Road, the complaint says.
The next month, several employees, apparently under the direction of Zowine, stormed the 44th Street office, pushed workers aside, kicked in the locked door to a server room, and made off with several pieces of key computer gear, according to the complaint.
Wichansky tried to dissolve the company as his control of it was slipping away, but Zowine took him to court and ended up owning the firm. Wichansky was booted out. But he hired lawyers, filed the federal complaint, and began his counterattack in earnest.
In November 2013, the company — with Zowine now at the helm — was ordered to pay $1.25 million to the state of Arizona because of over-billing to the Arizona Health Care Cost Containment System (AHCCCS). However, the state Inspector General ruled that the over-billing hadn't involved intentional fraud.
Wichansky referred calls to his New Jersey lawyer Sean Callagy.
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Zowine and the other defendants "betrayed trust," said Callagy, one of several lawyers who worked on the case. “There have been a number of baseless allegations and horrible thngs said ... This is vindication of [Wichansky's] reputation. This type of behavior is not going to be tolerated."
The jury gave Wichansky $11 million for Zowine's breach of fiduciary responsibility, of which Zowine has to pay 94 percent. Zowine has to pay $14.38 million himself in damages, bringing his total debt to more than $25 million.
The other defendants, three of whom were ordered by the jury to pay Wichansky, include: Brett Costello, Mike Illardo, Charles Johnson (ordered to pay $1.5 million to Wichansky), Kai Knowlton, Rio Mayo, Michael Narducci, Martha Leon (ordered to pay $500,000), and Pat Shanahan, ordered to pay $750,000.
The jury agreed that Zowine had committed assault and battery on Wichansky, but it said Wichansky wasn't "damaged."
Last week, Campbell learned that someone from the defense side had interviewed an unidentified juror about his or her verdict decision without first getting approval from the judge. Campbell forced the defense to write a letter about how and why the improper contact had occurred and to turn over any recordings of it. The defense did so this week, saying only one juror had been contacted.
Zowine didn't return messages on Tuesday.
UPDATE April 27: Zowine never got back New Times, but Robert Johnson, a spokesman working on behalf of the company, sent the following statement:
"First, what has played out in court and was the subject of the jury verdict, the latest of many court decisions in this on-going dispute, amounts to nothing more than a business relationship gone sour. The legal back-and-forth is the result of two former friends fighting between themselves over issues involving their now-dissolved business partnership.
"Second, please understand that the company and its operations are not affected by this ruling. Again, this battle is the business equivalent of a bitter divorce between two individuals. The company is doing fine and will continue to deliver quality services to its customers.
"Finally, know that every allegation made by the plaintiff has been refuted by government agencies investigating his claims. Indeed, he has leveled many charges over the past five years, but the truth is, none have been found to have any merit by any government agency."
Johnson also said that the company name isn't "Zoel Holding Company," as it's called in court paperwork — it's "Zoe Holding Company." New Times subsequently changed the name for this article.