Bankruptcy

Boiler Room Law: Thievin’ San Antonio Lawyer Chris Pettit Symbolizes Criminal Greed in the Legal Profession

No doubt the State Bar of Texas will have a green light (eligible to practice law) on Pettit’s profile during the bankruptcy and legal cases.

San Antonio lawyer faces multiple lawsuits for allegedly stealing millions from clients

JUN 2, 2022 | REPUBLISHED BY LIT: JUN 3, 2022

More woes for embattled ex-San Antonio attorney Chris Pettit: job offer rescinded, banks reject account

Embattled ex-San Antonio attorney Chris Pettit’s numerous troubles are catching up with him in new ways.

JUL 28

Pettit, mired in bankruptcy after surrendering his law license amid allegations that he had stolen millions of dollars from his clients, this week returned to Florida to start employment at an art store only to learn he had no job.

His efforts to open a bank account were also rebuffed by various financial institutions that refused to do business with him.

Pettit had been living in Florida since at least a couple of weeks before his massive June 1 bankruptcy and said he had landed a job selling art on commission. But he never got to start work, Michael Colvard, his bankruptcy lawyer, said at a Thursday court hearing.

“He got there today and his employer calls him and says, ‘Sorry, we received word from a third party in Texas about the bankruptcy being filed and allegations in the bankruptcy, and your services are no longer required,’” Colvard said.

He described Pettit as “dejected” over having the job yanked away.

The revelation that Pettit hadn’t remained in San Antonio where his massive Chapter 11 case is unfolding surprised Chief U.S. Bankruptcy Judge Craig Gargotta.

“Why can’t he find employment in San Antonio?” the judge asked.

Colvard replied that Pettit’s “focus” before the June 1 bankruptcy was in Florida and “he wanted to secure that job because that was available. And then that’s pulled out from under him.”

Pettit has been living in a mansion in the Disney World community of Golden Oak. He originally claimed ownership of the mansion — valued at more than $6 million — but later amended his bankruptcy schedules to say it’s owned by an entity for the benefit of his 10-year-old son.

“It begs the question why (he’s) living in a house he doesn’t own and he’s in Chapter 11 bankruptcy when he could be here in San Antonio living in a house he does own,” Gargotta said. “This doesn’t make any sense to me.”

Pettit owns a home on Champions Run in a gated community in Stone Oak that he’s claiming as his homestead in the bankruptcy.

Meanwhile, several banks have refused to open an account for him.

PNC Bank, Frost Bank, Broadway Bank and Jefferson Bank all declined Pettit’s business, Colvard said. IBC Bank allowed him to open an account but closed it two days later. The bank even charged a $25 fee for closing the account, said Patrick Huffstickler, an attorney for the Chapter 111 trustee.

Colvard didn’t offer a reason for the banks’ actions, but banks are allowed to assess a customer’s character in deciding whether to enter into a business relationship.

Pettit’s expected back in San Antonio for a court hearing Aug. 4, when the judge may rule on a budget for his living expenses. The judge previously said he might be more inclined to let him access “a little bit of money” if he finds a job.

Pettit has submitted to the court a “limited” budget request that would give him more than $10,000 a month from his retirement accounts. Opposition to the request is anticipated.

The trustee overseeing the assets in the bankruptcy reported Pettit had spent about $260,000 in roughly 50 days after the filing. That prompted the judge on Monday to limit Pettit to $100 a day to live on until next week’s hearing. The money will be added to a debit card. Pettit is required to submit receipts to the trustee for any purchases made.

Given Pettit’s limited financial means at the moment, Gargotta said he wanted to know how Pettit managed to return to Florida. Colvard said he thought Pettit’s airline ticket had been previously purchased.

“I’d like to see receipts, how that was paid, and how he gets back,” Gargotta said. “If it is the debtor’s intention to live in Florida, then that’s going to change the court’s review of the budget.”

On Monday, Pettit narrowly avoided being held in contempt for withdrawing more than $186,000 from his retirement accounts after filing for bankruptcy.

He has certain obligations to meet, including cooperating with the trustee and providing records related to law firm accounts that held money for his clients’ benefit. He faces the prospect of being held in contempt if he doesn’t comply.

Also on Thursday, the trustee received court approval to sell three of Pettit’s cars: a 2019 Mercedes GLS, valued by Pettit at $38,000; a 2018 Mercedes E53 AMG, valued at $40,000; and a 2019 Porsche Panamera, valued at $40,000.

Embattled San Antonio attorney Christopher “Chris” Pettit and his law firm, accused of defrauding clients of millions of dollars, have filed for bankruptcy protection.

Pettit listed assets of almost $27.8 million and debts of $115.2 million in his Chapter 11 petition, making it one of the largest individual bankruptcy cases ever filed in San Antonio.

His firm, Chris Pettit & Associates, reported assets valued at no more than $50,000.

The filings Wednesday trumped plans by six Pettit creditors to file involuntary Chapter 7 cases against him and his firm today, said Raymond Battaglia, their San Antonio bankruptcy lawyer.

Pettit and his firm’s bankruptcy lawyer has indicated he intends to ask the court to appoint a trustee to oversee the debtors’ estates, Battaglia said.

“This case is going to require someone who can trace assets and trace transfers and things that (Pettit’s) done with other people’s monies over the last couple of years,” he added.

Embattled attorney Christopher “Chris” Pettit filed for bankruptcy protection Wednesday.
Among his real estate holdings is this coliseum-like mansion at 555 Argyle Ave. in Alamo Heights, overlooking Olmos Dam. Pettit values the property at $3.6 million.

The bankruptcies come after numerous lawsuits against Pettit and his firm, most alleging they stole millions of dollars from clients.

He has given general denials in responses to some of the suits but he and his firm also reached agreed judgment with some plaintiffs who were awarded — at least on paper — millions in economic and punitive damages.

Others allege they lost far less but, nonetheless, amounts representing their life savings.

“It’s just sad,”

Battaglia said.

“They trusted him, and that’s a shame. As a lawyer, I’m ashamed that someone would do this. Some of these people were in pretty dire situations at the time he stole their money.”

The FBI also is investigating.

Michael Colvard, the San Antonio bankruptcy lawyer representing Pettit and his firm, didn’t immediately respond to requests for comment.

Pettit, 55, specializes in estate-planning and personal-injury law, according to his firm’s website.

He graduated from St. Mary’s University School of Law in 1988 and is the single father of a 9-year-old son.

Pettit has served in various capacities, including as attorney, investment adviser and trustee of various trusts, for dozens of clients.

In a May 20 agreed judgment signed by state District Judge Tina Torres, Pettit and his firm were found to have committed fraud, misappropriated property and breached their fiduciary duties as trustee of one trust.

Torres awarded the plaintiff almost $1.7 million in economic damages and $5 million in punitive damages.

Just how Pettit allegedly misappropriated clients’ assets hasn’t been detailed. But his personal bankruptcy petition listed numerous residences and vehicles.

Among the assets he reported are:

• A five-bedroom, 5½-bath mansion in the upscale Golden Oak community of Walt Disney World Resort in Florida. The 7,300-square-foot home is listed for sale for almost $8.9 million.

• A three-bed, 4½ bath house at 555 Argyle Ave. in Alamo Heights. The property overlooks Olmos Dam and is one of the area’s most well-known residences. It’s valued at $3.6 million.

• A four-bed, 4½-bath house on Champions Run in Stone Oak. It’s valued at $1.8 million.

• A 3,000-square-foot home on Lakebreeze Drive in Canyon Lake. It’s valued at $1.1 million.

• A Port Aransas condominium valued at $640,000.

His real estate holdings, which includes his law office building on Huebner Road, are valued at $18 million

Petitit also reported owning a 2021 Porsche Macan valued at $60,000; a 2019 Porsche Panamera, $50,000; a 2019 Mercedes GLS, $55,000; a 2018 Mercedes GL, $40,000; and a 2022 “boat,” $150,000.

He is claiming the Champions Run property, the Mercedes GLS and numerous household items as exempt from seizure by creditors.

Petitt also has claimed as exempt a 401(k) valued at about $635,000, an Individual Retirement Account with about $95,000 in it, and three insurance policies collectively valued at almost $900,000. (His combined checking and savings accounts are in the red.)

His secured debts, which include mortgages and car loans, total about $8.9 million.

Most of Pettit’s creditors — numbering almost 170 — are listed as unsecured.

They range from credit card companies to individuals to trusts.

While many of the amounts owed are listed as “unknown,” about 30 unsecured creditors hold claims of more than $1 million each.

Pettit disputes those debts.

The largest claim, listed at $14.4 million, belongs to a San Antonio family partnership.

His petition shows he recently made a $30,000 credit card payment to high-end jewelry retailer Tiffany & Co. and $50,000 payment to a Houston-based commercial real estate lender.

Pettit reported income of $80,000 in the first five months of this year. He had income of $340,000 last year and about $145,000 in 2020.

His law firm had about $1.3 million in gross income in the first five months of this year.

It generated about $695,000 in income last year and $721,000 in 2020.

Pettit reported he and his firm are defendants in 12 lawsuits, eight of which are pending and four that have concluded.

The petition didn’t mention at least two lawsuits filed last week in state District Court in San Antonio.

In one, a Colorado man and a trust allege he was “convinced” to allow Pettit to “control” about $3.8 million.

Rather than invest the funds, Pettit transferred the funds directly into his law firm’s operating account and “proceeded to use those funds” for his “own use and benefit,” the lawsuit says.

“Pettit used his positions as attorney, financial advisor, tax return preparer, investment advisor and trustee and custodian of plaintiffs’ money to actively conceal his actions,” the complaint adds.

The plaintiffs allege fraud and felony theft.

In the other lawsuit, a San Antonio man alleges he invested about $975,0000 with Pettit but only got back $24,000.

The man said he had been assured the money was “available for withdrawal at any time.”

The Securities and Exchange Commission shows Pettit was a registered investment adviser from April 2015 until September of last year.

It’s not clear why he’s no longer registered.

He had been affiliated with Austin’s Triad Advisors.

The Express-News first reported on Pettit’s mounting legal troubles on May 19.

The next day, he resigned his position from a EF EnergyFunders Ventures Inc., an oil and natural gas investment company.

It’s a Canadian stock exchange company based in Calgary but that maintains its executive offices in San Antonio.

Chris Pettit & Associates, P.C.

(22-50591)

United States Bankruptcy Court, W.D. Texas

Hon. Craig A. Gargotta

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Boiler Room Law: Thievin’ San Antonio Lawyer Chris Pettit Symbolizes Criminal Greed in the Legal Profession
2 Comments

2 Comments

  1. Jerry Rodriguez

    July 13, 2022 at 2:31 pm

    Hello,

    Who do we contavt if we have an ongoing case with the firm? No one notfied us about the law firm closing.

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