Why the bankruptcy judge refused to hold Chris Pettit in contempt

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Christopher “Chris” Pettit, the ex-San Antonio lawyer accused of running off with millions of dollars in client money, has again avoided contempt of court in his bankruptcy case – for the moment.

In an emergency hearing on Thursday, U.S. Bankruptcy Chief Judge Craig Gargotta refused to grant the Chapter 11 trustee’s request to hold Pettit in contempt for violating a court order barring him from transferring or dispose of their personal property.

But the judge ordered Pettit — who lived in an $8 million mansion at Disney World while working as a cook for $15.75 an hour on the resort’s grounds — to appear in court in San Antonio the next week to show why he shouldn’t be disciplined for breaking the court order.

“Mr. Pettit, I know you work. I know you’re in Florida. There’s not much I can do about it,” Gargotta told Pettit, who appeared via video. September 8.”

Trustee Eric Terry requested the emergency hearing after one of his attorneys, Patrick Huffstickler, received a phone call from Rob Vogt of Vogt Auction Galleries.

Vogt told him someone had come into the business to inquire about the sale of personal property at a home on Champions Run in a gated community in Stone Oak, Huffstickler said Thursday.

Vogt visited the house and identified the property he would be willing to sell. While in the house, he noticed a post-it note with Pettit’s name on it but didn’t think about it. After he left, Huffstickler said, Vogt felt like something was wrong with his visit. He later recalled reading about Pettit’s bankruptcy in the newspaper. So he called Huffstickler.

“I told him there was no court order authorizing the sale of any personal property” that is part of the bankruptcy estate, Huffstickler said.

The trustee said he believed Vogt met with a family member of the nanny caring for Pettit’s 10-year-old son.

Pettit testified that he did not allow anyone to meet with auction house representatives.

“I didn’t ask anyone to take anything out” of the house, he added.

bankruptcy court next week to show why he should not be held in contempt of court for violating a court order that bars him from transferring or dispose of personal property.”/>

Former San Antonio lawyer Christopher Pettit has been ordered to appear in US bankruptcy court next week to show why he should not be held in contempt of court for violating a court order that bars him from transferring or dispose of personal property.

Jerry Lara, San Antonio Express-News/Staff Photographer

Pettit filed for bankruptcy protection for himself and his law firm on June 1 after being repeatedly sued by clients who alleged their money was missing. Its latest bankruptcy schedules listed $43.5 million in assets and $112.2 million in liabilities. He gave up his attorney’s license and closed his law firm.

The FBI investigated the allegations against him.

Pettit appeared at Thursday’s hearing without a bankruptcy attorney after his former attorneys were allowed to step down from the case this week. They told the judge they had a conflict of interest after learning they had been paid with money belonging to a client of Pettit, which put them at risk of being sued. Pettit hopes to hire a new lawyer soon.

Throughout the case, he was portrayed as an uncooperative debtor who clouded matters in the bankruptcy. He was unwilling or unable to say where his former clients’ money went, but says he is looking into the matter.

After Huffstickler heard from the auctioneer, Terry and attorney Danielle Rushing visited the Champions Run house on Wednesday. They found items packed and others missing, including a washer and dryer, a foosball table, and a mini-refrigerator.

While on the witness stand, Terry described creditors – some of whom regularly attend hearings – as “victims”.

“Their lives were destroyed,” he said. “Since my appointment, they have been increasingly looked down upon because of Mr Pettit’s interference. Frankly, this tribunal is not respected.

Earlier this summer, Pettit angered the trustee when it was discovered that Pettit withdrew more than $186,000 from his retirement accounts after filing for bankruptcy and then went on a spending spree. Although Pettit said the money was freely his, no decision was made by the court.

The trustee also sought to hold Pettit in contempt over the matter, but the judge denied the claim in late July. But he issued the order restraining Pettit from disposing of any personal property.

At Thursday’s hearing, some wanted Gargotta to go even further than the trustee had requested.

Mary Elizabeth Heard, a creditor’s lawyer, told the judge he should hold Pettit in civil contempt and have him sit in a jail cell until he reveals what he did with the money of his client.

“He orders … his minions to sell personal property off the estate without permission,” she said. “Your Honor, I would just ask that…you take him back to San Antonio and put him somewhere where he can spend some time thinking about what he’s done.”

Gargotta said there was no compelling evidence to show Pettit ordered his nanny’s family to sell items at the auction house. The judge ordered them to appear next week so that he could hear their testimony.

He added that he will issue a warrant for Pettit’s arrest if he does not appear.

“This is not an invitation to a party,” Judge said. “It is time we got a resolution on this. Frankly, my considerable patience is worn out.


pdanner@express-news.net

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