SAN ANTONIO — Christopher “Chris” Pettit will remain in jail after a bankruptcy court judge ruled Wednesday that the disgraced former lawyer had not done enough to clear himself of a contempt of court charge.
Telling Pettit he holds the keys to his jail cell, Chief U.S. Bankruptcy Judge Craig Gargotta set 17 conditions the ex-attorney must satisfy to be released. First on the list is that Pettit turn over a business laptop to the trustee administering the bankruptcy estate. Pettit has given conflicting accounts regarding its whereabouts.
“It would really move things along if Mr. Pettit would come clean about what happened with regard to the laptop, good or bad, so we could move on in this case,” Gargotta said. The laptop purportedly contains information the trustee wants regarding Pettit’s clients and their funds.
“I’m not suggesting he say this, but if Mr. Pettit were to say, ‘I destroyed it’ … then if that really was the truth, then we would know … that as a result (the trustee and creditors are) not going to get that information,” the judge added. “Really, what’s at issue here is just saying where it is.”
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The judge was not convinced that Pettit, who appeared for the hearing via video, has been forthcoming about the laptop’s location.
Counsel for the trustee previously reported that Pettit failed to disclose his ownership of two Mercedes-Benz automobiles. On Wednesday, it was revealed he also failed to report ownership of a mobile home that has been used by the family of a woman taking care of Pettit’s minor son.
Pettit, 55, filed bankruptcy protection for himself and his law firm June 1 after allegations surfaced that he had absconded with money belonging to his clients. He surrendered his law license in lieu of discipline and shuttered his law practice. The FBI has been investigating the allegations.
Roughly $260 million in claims have been submitted by creditors in the bankruptcy cases, making it among the largest ever filed in San Antonio.
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Pettit specialized in estate planning and personal-injury cases but also provided financial advice and investment management services.
In a Nov. 3 court filing, he provided handwritten responses to the conditions Gargotta laid out in his Sept. 8 contempt order. Pettit wrote that he didn’t possess the laptop.
At Wednesday’s court hearing, San Antonio lawyer Ron Smeberg informed the court that he would be representing Pettit in his personal bankruptcy case. Pettit’s previous lawyer withdrew from the case after learning he had been paid with money allegedly stolen from Pettit’s clients.
Smeberg argued for his client’s release from jail, telling the judge that keeping Pettit incarcerated over the laptop and another issue would equate to a criminal contempt. The purpose of a civil contempt order is to coerce someone to comply with a court’s orders, while a criminal contempt is punishment for disobeying a court order.
“If Mr. Pettit is telling the truth, it will be impossible for me to ever show that he does not have that laptop, because you can’t prove a negative,” Smeberg said. That means even if other issues are resolved, he added, Pettit “will stay in jail forever because he can’t prove to the court or anyone here that he doesn’t have it.”
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The trustee’s lawyers opposed Pettit’s release.
“He is continuing not to tell the truth,” attorney Patrick Huffstickler told the judge. Smeberg “says he can’t prove a negative. He could actually have Mr. Pettit tell the truth: ‘I have the laptop or I threw it in the ocean, whatever.’ But telling the court and the creditors that he gave it to us, which is clearly not true … shows that he still has not purged his contempt and he frankly still has contempt for the court.”
Smeberg then questioned Pettit about the laptop.
“I’ll assist you and the trustee in any way I can to find that laptop,” Pettit vowed. “I’m certainly not trying to hide it. I didn’t ask anyone to hide it.” He added it should still be at his former law office.
The hearing continued into the afternoon with attorney Michael Colvard’s request for payment of fees and expenses for previously representing Pettit and his firm in filing the bankruptcy cases. The request has been opposed by the trustee and some creditors.
