The lawsuit filed by the Community Foundation for San Benito County against the president of the San Benito County Board of Education, Mitchell Dabo, is finally scheduled for trial on Monday, Nov. 13.
At stake is at least $1.8 million that the foundation is seeking from Dabo, whom the foundation in court papers accused of “self-dealing and mismanagement” of a trust that he had managed for a Hollister couple, now deceased. The foundation also is seeking $80,000 from two co-defendants, Jim Morris and David Vavoulis, former Dabo business partners.
Dabo, Vavoulis and Morris, plus Gary Byrne, president and CEO of the foundation, are scheduled to testify at next week’s trial in San Benito County Superior Court.
In documents filed Nov. 8 in Superior Court, the foundation said it seeks repayment of $490,000 that it said Dabo took from the trust for his own purposes, plus $415,000 in interest. The foundation is asking the court to award double these damages, plus nearly two years of legal fees and unspecified “compensatory damages.”
Dabo contends in court papers that he bears no liability, because a friend and business associate, the late Jack Tyler, had defaulted on two 2009 unsecured loans from Dabo totaling $490,000. The foundation contends this money came from the Matulich trust.
Dabo was elected to the county school board in 1994 and has was elected board president in 2016. He is up for reelection in 2018.
When Barbara Matulich of Hollister died in March 2012, the Community Foundation expected a windfall of least $400,000 from a trust that had been established in 2001.
The foundation—a major benefactor for the county’s community nonprofits—had been designated to receive any money remaining from the original $750,000 trust after the death of Barbara and Tony Matulich.
There was one problem: In 2012, at Barbara Matulich’s death, there was only $81,000 left, according to court papers filed Nov.8.
Dabo, a licensed financial broker from 1983–1999,and longtime friend of Barbara and Tony Matulich, who died in 2003, was the trustee of the Matulich trust. Appointed in 2008, Dabo had sole authority to manage the trust.
Instead of investing the trust money so it could grow, Dabo, according to court documents filed by the foundation’s lawyer, John Clark of Morgan Hill, “utilized the trust assets for his own personal use,” including spending on auto repairs, restaurants, clothes, airline tickets and tickets to sporting events—and the unsecured loans to his business partner, Jack Tyler.
The foundation said Dabo established a pattern of borrowing money from the trust, which “continued through his tenure until there was no money left to borrow.”
The foundation sued Dabo in December 2015 after unsuccessful attempts to find out from Dabo what happened to the remainder of the Matulich trust after Dabo paid the foundation $81,109 in 2012. Repeated attempts at mediation also failed, and the civil case finally goes to trial on Monday, Nov. 13. The case is in a third position on the docket.
Clark told the court he expects the trial to last two days. The foundation is represented by Clark, of Rusconi, Foster and Thomas of Morgan Hill.
Dabo, Morris and Vavoulis are represented by Amiel Wade and Karla de la Torre of San Jose.
Dabo listed his business address in court papers as 801 San Benito Street, which is in the same building as Dabo Liquor Store. His LinkedIn profile says he is President of Dabo Financial Group, LLC and a financial planner. The California Secretary of State lists no LLC under that name. Dabo Holdings LLC is listed: it was formed in 2007 and lists Catherine M. Dabo as principal and manager.
Morris and Vavoulis were partners with Dabo and Tyler in development firm called DMT Investments. They claim in court papers that they have no connection to the dispute between Dabo and the Community Foundation for San Benito County, saying that Dabo had acted as an individual, and not in any capacity with their partnership. “The partnership did not misappropriate any money from the trust,” said Wade in court papers.