Reporter David Wren at the Myrtle Beach Sun reports on the local personal injury lawyer caught in Titanic debt. The lawyer Harry Pavilack is also one of the regions big time advertisers. He is reportedly causing major headaches for creditors and bankruptcy examiners trying to assess what remains of assets. In one remarkable moment described by reporter Wren, Pavilack who was being examined by the bankruptcy investigator in Pavilack's office. Attorney Pavilack goes "off the record" to collect nearly a million dollars he hid in an office closet.
Wren's original story is quite detailed and is presented below, in excerpt:
"Harry Pavilack - the Myrtle Beach lawyer perhaps best-known for his television commercials and billboards urging potential clients to Call Pavilack Today!' - is $72.5 million in debt and is facing allegations in bankruptcy court that he could be hoarding cash and hiding assets from creditors, court records show. The allegations were raised in a report last week by George DuRant, a court-appointed examiner from Columbia who said Pavilack has been taking cash out of his corporations, transferring some of his assets to relatives and friends and opening bank accounts in Peru.
Pavilack, 70, initially told The Sun News he would schedule an interview through his lawyer, William McCarthy of Columbia. Pavilack did not schedule the interview and McCarthy did not respond to requests for comment. Court records show a Myrtle Beach attorney well known for his television commercials and highway billboards is almost $73 million in debt.
[Bankruptcy examiner] DuRant, in his report, said Pavilack has been conducting mainly cash transactions since February 'in order to frustrate the collection efforts of a creditor.'
That creditor is Shaul and Meir Levy, the owners of the Wings beachwear stores, according to court records. The Levys obtained a $2.5 million judgment against Pavilack and others this year over a failed condominium project. Pavilack - who has refused to say how much cash he has on hand, according to DuRant's report - handed the examiner three stashes of cash totaling $1.1 million this month after another court-appointed investigator stressed to Pavilack the importance of disclosing assets.
Pavilack retrieved one of those stashes - totaling $994,400 - from the closet in his law office, DuRant said. DuRant told The Sun News that he did not want to comment on his investigation. 'The report will have to speak for itself,' he said. In his report, DuRant said Pavilack's financial records are in such disarray that it might be impossible to determine how much money exists and where it all is.
Among the problems, according to DuRant's review of 39 general ledgers for Pavilack's businesses: Deposits and withdrawals are incomplete, inaccurate and lack documentation; asset transfers between Pavilack and the entities he controls are poorly documented and remain unaccounted for; real estate transfers are not recorded; and at least $3 million in certificates of deposit have been unaccounted for since the end of 2007. In addition, a court-appointed accountant said she is not able to complete Pavilack's 2009 personal tax return because 'his income and expenses could not be determined,' the report states. 'At this stage, it is impossible for the examiner to determine if the cash turned over to date is all or only a portion of the total amount of cash held by [Pavilack],' DuRant said in his report.
'Unfortunately, the trail for [Pavilack's] cash transactions is cold, and accurately reconstructing the trail from [Pavilack's] memory and from third parties seems a pipe dream,' DuRant stated.
Pavilack - a W.Va. native who grew up in Pittsburgh and earned his law degree in 1966 at the University of South Carolina - initially estimated that he had assets totaling $50,000 or less, according to a bankruptcy court petition he filed in September. Less than two months later - after disclosing at least some of the cash he was holding to the examiner - Pavilack filed another court document showing about $8.9 million in assets.
Those assets include a condominium in New York City; two homes in Myrtle Beach, one along the oceanfront and another along the Intracoastal Waterway; and eight automobiles, including three Bentleys and a Lexus. Although Pavilack's vocation was the law, property records and court documents show he also was one of this area's most prolific real estate investors.
Pavilack says in court documents that he owes about $72.5 million to creditors, most of it mortgages and personal guaranties on real estate loans. DuRant estimates that Pavilack has created more than 60 corporations that own more than 400 homes, commercial buildings and real estate parcels in at least six states. Some of those corporations are empty shells that have no purpose other than to provide an entity for a bank account, DuRant said." [ . . . ]
Do not screw around with the bankruptcy court. Pavilack's retrieval of the $994K from his closet during his bankruptcy deposition is documented acknowledgement of fraud. He's screwed.
By the way, my take on this story is that Pavilack was running a classic "legal services brokerage," while actually trying to make and protect his real estate fortune. Things must have been rockin' for him for a long time--that is, until the real estate market collapsed. I wonder what culpability the creditors had in terms of due diligence prior to making he loans that provided the structure for this house of cards?