Lawyer salary

Ex-SA lawyer Christopher Pettit has ‘$400 in his pocket’, lawyer says

Christopher “Chris” Pettit, the former San Antonio attorney accused of stealing tens of millions of dollars from his clients, has finally made an appearance in his massive bankruptcy filing – albeit over the phone.

In addition to confirming his attendance and providing his name for the record, Pettit let his bankruptcy attorney, Michael Colvard, do the talking during the nearly two-hour proceedings.

Robbie Ward, one of Pettit’s criminal defense attorneys, was also present but did not participate.

Pettit’s alleged misdeeds sparked an FBI investigation. Since being sued a dozen times for fraud or breach of fiduciary duty by clients this spring, Pettit has declared bankruptcy for himself and his law firm, relinquished his attorney’s license and has closed its offices.

He declared $27.8 million in assets and $115.2 million in personal bankruptcy in the June 1 petition, making him one of the largest on record in San Antonio. His law firm listed $13.8 million in assets and $111.6 million in liabilities. Records are administered jointly.

Pettit had practiced law for about 31 years before it all imploded. He specializes in estate planning and personal injury matters.

He has lived in Florida – where he said he owns a Disney World mansion that until recently went on sale for $8.9 million.

However, he will soon return to San Antonio. He is due to appear in person for a meeting of creditors on Wednesday, after which he is expected to be in Chief US Bankruptcy Judge Craig Gargotta’s courtroom when the hearing resumes.

no decision

Gargotta did not rule on the Chapter 11 trustee’s contempt motion on Wednesday. The judge is expected to hear evidence on the claim next week. Pettit could be called to testify.

He said in his individual bankruptcy that he had about $95,000 in an individual retirement account and nearly $635,000 in a 401(k) plan, both with Fidelity Investments.

He took $125,000 of that money, reported Eric Terry, administrator of Chapter 11. Terry and Pettit’s attorney disagreed on whether Pettit had the right to take the money.

Pettit claimed the retirement money as “exempt” from his bankruptcy estate – meaning it’s his to keep. Assets deemed “non-exempt” can be used to pay creditors.

Generally, most retirement accounts are protected from creditors. Nevertheless, Terry must investigate whether anything other than Pettit’s salary – such as money belonging to his clients – was used to fund the accounts.

Patrick Huffstickler, an attorney for Terry, argued that any assets Pettit contributed to the bankruptcy estate should be under the control of the trustee, whether or not they are exempt. The deadline for the trustee and creditors to oppose Pettit’s claims to exempt the assets has not passed, Huffstickler added.

“We were shocked”

“Frankly, we were shocked to see these transactions,” he told the judge. “We just want to stop the exit of any assets from the estate, and we basically want to get information on where the money that has been taken out has gone. We have a lot of information about it, but some of it is still opaque.

Colvard, Pettit’s bankruptcy attorney, said his client transferred some of the retirement money to Martha’s Vineyard Bank in Massachusetts and then used it to pay mortgages and bonuses. insurance. Some of the money also went to pay former Pettit employees who went unpaid when his law firm abruptly closed, Colvard said.

While agreeing that the deadline for filing objections to exempt property has not passed, Colvard said there have been no objections to the exemptions claimed by Pettit thus far.

“These are funds belonging to Mr. Pettit,” Colvard told the judge. “They are not part of the bankruptcy estate and are rightfully excluded.”

Pettit has “$400 in his pocket,” Colvard added. “He has other needs. He has a son. And they basically have to have a certain cost of living and a budget. He simply cannot be put on the street (and) not allowed to use his property, which is claimed as exempt and which, unless otherwise stated, is exempt or excluded from the bankruptcy estate.

Huffstickler challenged Colvard’s take.

“All of these transfers were unauthorized, improper (and) violated the bankruptcy code,” he said.

Wanted $40,000 per month

Pettit had asked for $40,000 a month for living expenses, Huffstickler said, a figure he considered “a non-starter.”

Colvard agreed the amount was “excessive” and suggested a budget of $12,000. Pettit wanted $7,500 to cover funeral expenses for his recently deceased brother, Charles Joseph Pettit. He was 49 years old. Chris Pettit’s two other brothers are deceased.

The remaining $4,500 would allow Pettit to return to San Antonio and pay his bills for about a week, Colvard said.

Huffstickler countered that Pettit should only receive funds to travel to San Antonio and for “basic living expenses.” Huffstickler disagreed that all money should be spent on the funeral.

San Antonio attorney Dean Greer, who is representing some creditors in the case, noted that Pettit owes his creditors more than $100 million.

“We’re not very sympathetic to him saying he needs the money because he doesn’t have it,” Greer said. “We have no idea what happened to $100 million.”

Saying it was a “tough call” given Pettit’s alleged client losses, Gargotta decided Pettit could have $5,000 to cover funeral expenses and another $3,500 to pay his bills through next Wednesday.

The judge also included a “clawback provision” in his interim order that would allow the trustee or any other party to recover sums later found to be exempt or not excluded from bankruptcy. Additionally, Gargotta has prohibited Pettit from dissipating or transferring any personal property he owns without a court order.

Separately, Colvard accused the trustee of changing the locks on Pettit’s main house in a gated community in Stone Oak.

“Mr. Pettit’s child…had to be transported to Florida with their guardians because he…had no access to the house,” Colvard said. “I have never heard of a trustee who Just walk in, break down the doors, lock the house, and kick the debtor out. It’s totally inappropriate.

Terry called the accusations “obviously false”.

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