Local attorney surrenders licenses in lieu of punishment

Local attorney Harry Pavilack has resigned from the South Carolina Bar Association amid an investigation by the South Carolina Commission on Lawyer Conduct.

The investigation found that Pavilack violated two of the American Bar Association’s rules of professional conduct after his actions during an investment deal and subsequent bankruptcy filings.

Pavilack would not comment on the allegations on Monday, saying that they were confidential.

The deal

Pavilack was the registered agent for the Pier View Resort Development LLC, which was formed in October 2005.

In 2008, Pavilack, Bhupendra Patel and another party signed a confession of judgment at the request of investors Shaul and Meir Levy, who had put up $2.5 million for the development of Ocean Front property in Myrtle Beach, resulting in a 30 percent ownership interest in the company, according to court documents.

The confession of judgment held that Pavilack, Patel and the other defendant would have to repay all the money with interest by December of 2009, according to court documents. By February of 2010, the Levys had not been paid and they executed the confession of judgment against Pavilack and the other defendants.

However, in a signed affidavit, Patel stated that he had turned over his 35 percent ownership to Pavilack with Pavilack’s assurance that Patel would be “released of any and all liability to his friends, the plaintiffs herein.”

Patel stated that he believed he had signed release of liability in Pavilack’s office, rather than the confession of judgment.

“If I had known the signature page was to be attached to a confession of judgment on my part rather than a release of liability, I never would have signed my name to the page,” Patel stated in the affidavit.

Moving money

In November of 2009, a month before the deadline to repay the $2.5 million, Pavilack began emptying and closing several of his bank accounts by writing checks and cashier’s checks payable to himself, according to the Commission on Lawyer Conduct investigation. Pavilack put the cash in various safe deposit boxes, which he later transferred into his office.

Pavilack also transferred ownership of many of his properties into new companies that he had formed, according to the commission. At the time, Pavilack and his companies were facing more than forty lawsuits.

Pavilack moved around his money and properties for the purpose of “protecting them from attachment in connection with the levy judgment and pending litigation,” according to the commission’s disciplinary counsel. Pavilack later admitted to the allegations.

Bankruptcy

In August of 2010, Atlantic Bank and Trust, Wells Fargo Bank, First Bank and First Federal Savings and Loan Association of Charleston filed an involuntary bankruptcy petition under Chapter 7 against Pavilack, according to court documents.

The largest was First Federal Savings and Loan Association of Charleston’s $9.7 million claim against Pier View Resort Development, LLC for a $10.4 million loan made in December of 2005, just two months after the company was formed.

In September of 2010, Pavilack filed for bankruptcy under Chapter 11.

Cash in the Closet

On September 30, 2010, Pavilack’s bankruptcy attorney told a court-appointed examiner that Pavilack had tried to pay his attorney’s fees with $75,000 in cash, according to the commission.

The bankruptcy court told Pavilack’s court-appointed debtor’s accountant to inspect all of Pavilack’s safe deposit boxes and collect all the cash they could find, according to the commission.

But the boxes were empty.

Pavilack admitted that he had put his cash in a closet in his office.

On Oct. 7 of that year, Pavilack handed the debtor’s accountant a duffel bag with $994,400 in cash, according to the commission.

After Pavilack’s court-appointed debtor’s accountant stressed the importance of disclosing all of his cash, Pavilack turned over two more bags containing over $170,000. The three bags of cash contained a total of more than $1.17 million, according to the commission.

Resignation

On June 23, Pavilack was charged with violating the American Bar Associations rules of professional conduct, including rule 8.4 (d) prohibiting engaging “in conduct that is prejudicial to the administration of justice.”

Pavilack motioned to resign from the bar in lieu of punishment on June 27, according to commission documents.

On July 15, the Supreme Court of South Carolina granted the motion to resign, and Pavilack has since given up his membership in the South Carolina Bar.

This story was originally published July 26, 2016 at 9:11 PM with the headline "Local attorney surrenders licenses in lieu of punishment."