Well the way I see it the problem is legit, but the shop is now expoliting the situation to thier benifit. The car owner looks to be a legitimate douchenozzle with a paper trail a mile long of the crap hes pulled. The guy is a real piece of work and it sounds like his family is paying the price for it as well.
The shop on the other hand made a huge error in judgment and has put themsleves in this position and I have mixed feelings about thier situation. First of all they ARE out something more than materials as they had to pay employees at least, Im sure, and of course overhead from rent and power etc. But, to go 4 months without taking some kind of money is stupid. I mean, its obvious if they had done a little research on the kid they would have turned up his paper trail and saved themselves this hassle.
Now it seems to me they are just trying to capitolize on the situation and maybe get more than they deserve out of it. They certainly deserve to get paid for thier work, and it seems they are making a name for themeselves but for the wrong reasons. If their work is so great that some carbon fiber and paint runs 16k and takes 4months to complete, then the work should speak for itself right?
Either way that shit stream of a human being rip off artist should get what hes got coming to him, nothing short of some jail time in a "pound me in the ass prison".