Headwaters lawsuit settled for $4 million

A lawsuit alleging a Texas financier and his companies defrauded the state and federal governments out of hundreds of millions of dollars in the historic Headwaters old-growth forest deal has been settled for $4 million.

The settlement, finalized Tuesday, abruptly ended a jury trial underway in U.S. District Court in Oakland.

The lawsuit, brought by two former state forestry officials, alleged that Maxxam Inc., Pacific Lumber Company and Maxxam CEO Charles Hurwitz failed to live up to their obligations under the 1999 Headwaters agreement.

Under the Headwaters deal, the now-defunct Pacific Lumber Company sold 5,600 acres of ancient redwood forests in Humboldt County to the state and federal governments for $380 million.

The company also agreed to submit a “sustained yield plan” that would regulate logging on the company’s remaining timberland.

The plaintiffs, former state forestry director Richard Wilson and Chris Maranto, a state forester, alleged the company obtained state approval of the 100-year plan by submitting false data. The suit claims Pacific Lumber used hardwood data rather than conifer and redwood data to determine its yield and logging plan.

Maxxam officials admitted no wrongdoing under the settlement and said the lawsuit was unfounded.

“The plan was examined, reviewed and critiqued again and again and then approved by the applicable California state agency,” the company said in a statement.

Maxxam said the $4 million settlement compares to the legal fees it would have incurred had it continued to fight the lawsuit.

Bill Bertain, an attorney for the plaintiffs, said the settlement “makes sense” considering the restrictions made on evidence that could be divulged to jurors during the trial.

Under the agreement, the state will receive $500,000; the federal government will receive $2.5 million and the plaintiffs’ attorneys will get $1 million.

The Humboldt County timberland holdings at the center of the lawsuit no longer belong to Maxxam. It was purchased by the founders of the Gap clothing store chain, who renamed it Humboldt Redwood Company. The Fisher family, which owns the land, have promised to log it sustainably.

The Fisher family also owns Mendocino Redwood Company, formerly Louisiana-Pacific, in Mendocino County.