Ex-lawyer Chris Pettit’s peculiar real estate transactions

Less than two months before Christopher “Chris” Pettit’s San Antonio law firm collapsed amid allegations that he stole millions of dollars from clients, he entered into a series of peculiar real estate transactions.

He sold at least seven properties in the San Antonio area to the same buyer — Sin Reposo LLC. Among them was Pettit’s main law office building at 11902 Rustic Lane.

Sin Reposo also entered into an option to purchase from Pettit the mansion at 555 Argyle Ave. in Alamo Heights overlooking Olmos Dam, according to a bankruptcy court filing this week.

In addition, the company acquired the property at 200 Alameda Circle in Olmos Park from Pettit in January.

All told, the nine properties are valued at more than $10 million.

Sin Reposo’s sole member and manager is Garrett Glass, who also serves as the chief financial officer of EF EnergyFunders Inc., an oil and gas investment company that’s based in Calgary but maintains its executive offices in San Antonio. It appointed him to the post in March.

Pettit had a connection to EnergyFunders until the allegations that he had looted clients became public. On May 20, a day after the Express-News first reported on his legal troubles, Pettit resigned from the board of EnergyFunders, a penny-stock firm that trades on the TSX Venture Exchange in Canada.

More than a dozen lawsuits were filed against Pettit and his law firm Chris Pettit & Associates before both filed Chapter 11 bankruptcy June 1. Pettit listed $27.8 million in assets and $115.2 million in debts in his personal bankruptcy, making it among the largest ever in San Antonio. The bankruptcies put a hold on the litigation.

‘Ponzi scheme’

Pettit operated a “Madoff-like Ponzi scheme for years,” the bankruptcy court filing alleged. Bernard “Bernie” Madoff orchestrated the largest such scheme in history, resulting in reported combined losses of almost $65 billion for thousands of victims. He died in prison last year at 82.

Pettit already had surrendered his law license when the bankruptcies were filed and the allegations against him have sparked an FBI investigation. He was an estate-planning and personal-injury lawyer.

It couldn’t be determined why Pettit entered into the transactions with Sin Reposo or how they were structured. Two of his attorneys didn’t respond to a request for comment.

In his filings, Pettit did not report having an ownership interest in Sin Reposo.

“It does look questionable,” San Antonio bankruptcy lawyer Steven G. Cennamo, who is not involved in the case, said of the transfers. “It needs to be looked at. The question is whether there’s a problem with it.”

In individual bankruptcy petitions, debtors must complete a statement of financial affairs. One of the questions on the form asks if the debtor sold or transferred any property to anyone within two years of the bankruptcy filing.

Pettit answered “yes” but made no mention of the properties deeded to Sin Reposo. He signed the form under penalty of perjury that his answers were correct.

“On the eve of filing (bankruptcy), he makes all these transfers, doesn’t disclose them under oath — and the guy’s a lawyer. He knows that this needs to be disclosed,” said Martin Seidler, a San Antonio bankruptcy lawyer representing creditors in the case. “He made a false statement under oath.”

Other omissions?

Seidler wants Chief US Bankruptcy Judge Craig Gargotta to direct Pettit to amend his bankruptcy schedules and statement of financial affairs within 10 days of a court order.

The judge is scheduled to take up Seidler’s request Monday.

Seidler alleges Pettit omitted a lot of other information, including the transfer of two vehicles — a Mercedes and Porsche — to his friend and accountant.

Among the properties Pettit transferred to Sin Reposo were:

• A house at 711 Contour Drive in Olmos Park. It’s appraised by the Bexar Appraisal District at nearly $1.9 million.

• The property at 200 Alameda Circle valued at $1.8 million. Sin Reposo has since sold the property and the house has been demolished.

• An apartment building at 488 E. Olmos Drive valued at almost $594,000.

• A house at 772 Lakebreeze Drive in Canyon Lake valued at $1.2 million.

• His law office building valued at $450,000.

Confusingly, Pettit reported in his property schedule that he owns or has an interest in the law office building and the Canyon Lake house.

In the same schedule, Pettit valued the mansion at 555 Argyle — for which Sin Reposo holds an option to purchase — at $3.6 million.

Transfers’ timing

The transfers occurred around the time some of Pettit’s clients obtained huge court judgments against him and his firm. One couple in Spring were awarded about $908,000 in actual damages and $500,000 in punitive damages in state District Court in San Antonio. The defendants “knowingly and intentionally committed theft,” the April 6 judgment said.

A small group of creditors received a $2.4 million judgment April 18 in Bexar County Probate Court.

The sales likely will receive scrutiny from San Antonio attorney Eric Terry, who has been appointed Chapter 11 trustee. His duties will include hiring professionals to track down assets and client funds.

Given Pettit didn’t disclose the sales on his bankruptcy form, it’s not known whether he received anything in return or what he may have done with proceeds. That information would have to be reported on the form.

Terry will probably want to know if Pettit received a “reasonably equivalent value” in return for selling the properties to Sin Reposo.

If he didn’t, or if the transactions are deemed fraudulent because they were intended to keep money out of the bankruptcy, then under the bankruptcy code Terry could “avoid any transfer” of property within two years of the bankruptcy petition.

Besides his roles with Sin Reposo and EnergyFunders, Glass is manager of Source-Texas LLC. It’s planning to develop a 600-unit apartment complex just off of Interstate 10 in Scenic Loop-Boerne Stage Corridor.

Glass listed Sin Reposo’s address in state corporate records as his home in Olmos Park. He didn’t respond to messages seeking comment.

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