CONWAY — Harry Edward “Howie” Lavin III – one of the former owners of the Lavin Cars dealership, which was shut down in May amid allegations of a long-running check-kiting scheme – is facing a fraudulent check charge after he allegedly wrote a $20,000 worthless check to a local Napa Auto Parts store, according to documents filed at the Horry County courthouse here.
Lavin is charged with writing the $20,000 check on May 1 from a closed account at CresCom Bank, according to an arrest warrant. Lavin did not respond to a certified letter seeking restitution, according to the warrant.
Lavin posted a $1,000 personal recognizance bond during a hearing Tuesday in magistrate’s court. The formal charges were filed on Tuesday and the case was moved to general sessions court because of the amount of the check. Lavin faces a maximum penalty of a $1,000 fine and two years in jail and could be ordered to pay restitution.
Tommy Brittain, Lavin’s attorney, could not be reached for comment Thursday.
The alleged worthless check apparently is tied to a lawsuit Napa Auto Parts store owner David Canipe filed in June against Lavin Cars and CresCom Bank. Canipe claims his store provided Lavin Cars with between $25,000 and $30,000 of equipment needed for mixing and application of paint in the dealership’s body shop.
Canipe told The Sun News in June that CresCom froze the Lavin Sales bank account and stopped payment on a $20,000 check Lavin had written to the Napa Auto Parts store just days before the dealership was shut down by the bank.
Canipe could not be reached for comment Thursday. The lawsuit is pending.
Canipe was supposed to retake possession of the equipment if the agreement was ever dissolved, according to the lawsuit. However, when Lavin Sales was shut down in May because of debt problems, CresCom seized the dealership’s vehicles and all of its equipment – including the paint supplies and equipment.
In addition to the fraudulent check charge, there is an ongoing criminal investigation into a check-kiting scheme that allegedly took place at Lavin Cars for as long as a decade and cost CresCom up to $4.5 million, according to a letter the bank sent to its shareholders in May.
Carolina Trust Federal Credit Union also was a victim of the alleged scheme, but has not said how much money it might have lost.
Both financial institutions are investigating how the check-kiting scheme occurred and why it took so long to detect.
"CresCom has not completed its investigation at this time,” said bank spokesman Scott Brandon. “As you can imagine, the investigation is very in-depth and time consuming.”
A Carolina Trust spokeswoman could not be reached for comment Thursday.
Check kiting is an illegal scheme in which a person tries to take advantage of the lag time between when a check is deposited and when it clears. That lag time allows the person to create a false line of credit that is based on non-existent money. Check kiting schemes require at least two bank accounts and two or more banks, with worthless checks circulating back and forth between the accounts.
In addition to the check-kiting charges, Lavin and his brother, John, are facing a pair of pending lawsuits related to their failed automobile dealership.
A group of investors who gave $365,000 to the dealership when it was facing financial problems in the early 1990s claims the Lavins violated state securities laws and let CresCom repossess automobiles that were supposed to secure their investment agreements. The investors also are suing CresCom for taking the dealership’s inventory of more than 100 automobiles, even though the bank knew the investors had security liens on the cars, according to the lawsuit. The investors are seeking triple actual damages and unspecified punitive damages.
Howie and John Lavin also are facing a debt collection lawsuit filed by CresCom, which claims Lavin Sales has not repaid $3.1 million in loans.
Lavin Sales, which was located on Jason Boulevard in Myrtle Beach, was an independent dealership that sold only used vehicles. Dealership founder Harry Lavin, who had sold automobiles for others for more than 25 years before opening his own dealership in 1987, died in 2010.
Contact DAVID WREN at 626-0281.