DENVER — A Colorado business owner facing criminal charges and multiple civil lawsuits related to Schwalb Builders has filed for bankruptcy, causing concern for some clients who hoped to be awarded damages in civil court.
Denver7 Investigates has been reporting on Schwalb Builders, Sean Schwalb, and his father Avi for more than a year.
Clientsreported they paid thousands, and the work was either never done or homes were left uninhabitable.
Karen and Ben Davidson have the receipts from their experience with Schwalb Builders.
"To be honest, I thought it was an open and shut case," said Ben Davidson.
They hired Schwalb in 2022 to remodel the basement and a bathroom in their Lakewood home. They said the contractor never pulled permits, did shoddy work, and caused a major asbestos spill that forced them to move out and dispose of almost everything they owned.
"You wake up in the middle of the night and you realize that your mom's ashes are at the dump, or your kids' projects, or all of the pictures from when they were little," said Karen. "We lost everything."
Denver7 Investigates has interviewed clients with similar stories of suing Schwalb Builders in civil court.
Then we reported on criminal charges: a grand jury indicted Sean Schwalb, his father Avi, and multiple employees on more than 50 felony charges, including money laundering and theft.
"I never thought it would develop into what it is now, where the owners have been criminally indicted. There are all kinds of shell companies and alter egos," said Matt Osborne, a consumer protection attorney representing the Davidsons. "Sean Schwalb was basically just using this as a Ponzi scheme, essentially, and it was all being funded by Avi Schwalb."
Just a few days before their civil trial, the Davidsons say the wheels of justice slowed down again.
Avi Schwalb filed for Chapter 11 bankruptcy protection on May 2, putting the civil cases on hold.
"The only time I've ever met Avi, he said to me, 'How dare you sue me. I will file for bankruptcy before I give you a penny," said Karen Davidson. "Bankruptcy laws are meant to protect people who make mistakes and need a fresh start, not to protect millionaires and their yachts and multiple properties."
Just before filing for bankruptcy, Avi Schwalb created a new business called Holding Company LLC, according to the Secretary of State's website.State records show he transferred his interests from multiple companies to Holding Company LLC.
"I think it's very possible that the bankruptcy court could find that Avi acted in bad faith," said Osborne. "I would keep fighting the good fight and see what happens."
Denver7 Investigates reached out to Avi Schwalb's bankruptcy attorney for comment, but there was no response.
The Davidsons said that no matter what happens in civil court, they are ready to testify in criminal court and are still hopeful for restitution.
"But it just means that after three years, we can't put it behind us," said Ben Davidson. "We have to keep thinking about it."
