MYRTLE BEACH — Legal action continues against former automobile dealer Howie Lavin – the focus of a multi-million dollar check-kiting investigation – with one bank winning the right to foreclose on his home in the Barefoot Resort subdivision and another bank preparing for a court hearing over an alleged unpaid debt owed by Lavin and his brother.
Meanwhile, a criminal investigation into the alleged check-kiting scheme continues, according to Lavin attorney Tommy Brittain. Myrtle Beach-based CresCom Bank and Carolina Trust Federal Credit Union have said they lost as much as a combined $7.8 million from the alleged scheme, which took place over several years.
“He [Lavin] has been cooperating with federal authorities in the investigation, which has been going on for quite some time,” Brittain said Thursday. Brittain said he does not know when the investigation will conclude.
BB&T bank got the go-ahead to foreclose on Lavin’s home during a hearing in late March, although an auction sale has not been scheduled. Lavin owed the bank $848,969 from a mortgage he and his wife received in 2006. The bank has agreed not to file a deficiency judgment against Lavin if the auction does not bring enough money to cover the full debt.
Meanwhile, CresCom Bank is scheduled to enter into court-mandated mediation hearings with Lavin and his brother – dealership co-owner John Lavin – beginning June 9 in Conway. Such hearings – called alternative dispute resolution – usually are confidential and give both parties a chance to resolve their differences without further litigation. CresCom alleges in its lawsuit that the Lavins defaulted on more than $1.9 million in loans made to them and their dealership.
CresCom spokesman Scott Brandon said the bank intends to pursue court action and “has no plans to drop anything” against the Lavins.
Brandon said the bank’s internal investigation has concluded but he cannot comment on its findings because of the pending criminal investigation.
Another civil lawsuit, filed by a group of investors in the automobile dealership, is pending. Those investors say the Lavins cheated them out of at least $365,000 that they invested into the dealership after it emerged from bankruptcy reorganization in the mid-1990s.
The Lavins deny any wrongdoing in court documents.
A worthless check charge filed against Howie Lavin remains pending in criminal court. That charge is related to a $20,000 check Howie Lavin wrote to an auto parts store just as his CresCom account was frozen.
It has been nearly a year since Lavin Cars abruptly shut its doors in early May. At that time, dealership employees told curious customers that the business was simply in a “transition phase.” But as the days wore on and cars started disappearing from the lot, news started leaking of a financial scandal at the Jason Boulevard dealership. It turned out the dealership had not shut down voluntarily but its assets had been seized by CresCom in the bank’s attempt to help recover some of its losses.
The bank later announced to shareholders that it had been the victim of an alleged check-kiting scheme involving Howie Lavin.
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. Most banks now have computer software that can quickly detect potential check kiting.
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. Harry Lavin was the father of Howie and John Lavin.
Contact DAVID WREN at 626-0281.