Um, did nobody bother to read the post? Idiots are messing with a young horse. Of course the thing is going to be acting up. It's a defense mechanism.
Well, OP, guess what? You can't fix this. Any work you do is going to be messed up by the owner and his family. Someone should have persueded him to get a horse more suited to his abilities. If he wasn't an idiot, he would have realized that himself. Since he did not, he's an idiot. I really wouldn't want to work for an idiot, especially since he could damage your reputation. If anyone asks about his horses, he'll mention that you train them, and when they see how the horse acts with the guy, they'll think you're a quack.
Personally, I'd dump those people. You aren't going to get anywhere with the horse. And why would you want to? The guy is just going to haul on his face as soon as your done, which will be much less stressful to the horse if he just develops a hard mouth.