Lawyer accused of fraud files for bankruptcy protection
Embattled San Antonio attorney 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 Thursday, said Raymond Battaglia, the creditors’ San Antonio bankruptcy lawyer.
The bankruptcy lawyer for Pettit and his firm 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.
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 still 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 An
tonio bankruptcy lawyer representing Pettit and his firm, didn’t immediately respond to requests for comment.
Pettit, 55, specializes in estateplanning 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, 5 ½-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, 4 ½-bath house at 555 Argyle 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, 4 ½-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 include his law office building on Huebner Road, are valued at $18 million
Pettit 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.
Pettit 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 a $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 last September. 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 an EF Energyfunders Ventures Inc., an oil and natural gas investment company. It’s a Canadian stock exchange company based in Calgary that maintains its executive offices in San Antonio.