Myrtle Beach area renters could see return of some deposit money to Hart Realty

dwren@thesunnews.comJune 4, 2013 

— Grand Strand residents who leased homes from the former Hart Realty & Property Management group will get at least some of their security deposits returned to them, according to the trustee overseeing a bankruptcy liquidation case that stems from apparent poor bookkeeping and mismanagement.

There have been 79 bankruptcy court claims totaling $213,847 filed against Hart Realty. Most of those claims were filed by people whose security deposits were lost when the company’s escrow account was nearly drained of all its cash. So far, bankruptcy officials say they have not uncovered any evidence of criminal wrongdoing.

“It appears that the money was spent on normal operating expenses and that the loss and the inability to monitor the loss was due to bad bookkeeping and failure to monitor the bookkeeper properly,” said Suzanne Chisholm, spokeswoman for trustee Kevin Campbell.

George DuRant, a Columbia accountant hired to review Hart Realty’s finances, “concluded that it would be a herculean task – if not impossible – to reconstruct the books and records to a useful condition,” Chisholm said. “There were just too many transactions flowing through the management escrow accounts.”

Christopher Hart, the company’s owner, and bookkeeper Pamelin Nettleton have denied any wrongdoing or mismanagement of the funds. However, the two have agreed to make payments to settle a lawsuit filed against them by Campbell’s lawyer in the bankruptcy case. The proposed settlement calls for Hart to pay $5,000 to the bankruptcy trustee while Nettleton will pay $2,500. Those funds have already been deposited into a trust account, according to court records. The proposed settlement still needs approval from a bankruptcy court judge.

“Because of the additional costs and attorney fees in pursuing this matter, the sworn distressed financial position of Hart and Nettleton and the potential that there may be no greater benefit to the estate if this matter is pursued, the trustee is informed and believes that the settlement of this dispute on these terms is in the best interest of the estate and its creditors,” Campbell said in court documents asking for approval of the settlement agreement.

Campbell also has secured $25,045 that remained in Hart Realty’s bank accounts, which will be used to help pay creditors, including former renters.

“The trustee would have liked to have gotten more money for the creditors,” Chisholm said. “That being said, with just the money he has received thus far, he will be making more than a 5 percent distribution to the unsecured creditors, which would be considered a ‘meaningful distribution’ to the creditors, which is not always possible in a chapter 7 bankruptcy.”

Chisholm said the trustee also is investigating a possible fraudulent payment of roughly $50,000 to an unnamed payee, and expects to file a lawsuit against that payee to recover the money. It that money is recovered, it would be added to the funds available to repay creditors.

Court records show Hart Realty’s renters paid deposits ranging from $600 to $3,900 depending on the type of property.

Hart Realty filed for bankruptcy protection in April 2012 after Hart said he discovered most of the company’s money was missing.

Hart filed a police report over the missing money, but no charges have been filed. Hart told police that he was in the process of selling his business to a company in Charlotte, N.C., and noticed the money was missing when he went to transfer the bank accounts to the new owner. Nettleton, Hart and Hart’s wife were the only people who had access to the bank accounts, according to the police report.

Contact DAVID WREN at 626-0281.

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