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.
Shell companies created
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.
For example, DTP LLC - a corporation that Pavilack formed in December 2009 - has never commenced business, according to statements Pavilack accountant Michelle Stoebling made in court documents.
Even though DTP is a shell, DuRant said in his report that "significant amounts of funds and other assets have passed through it."
DTP is one of the corporations DuRant chose to test the validity of Pavilack's financial statements. DuRant chose 13 disbursements over a one-month period totaling $900,010 - all of them checks made out to either Pavilack or "petty cash" - and asked Pavilack to produce substantiation for each transaction.
Pavilack did not produce any substantiation for the disbursements from DTP and four other corporations despite repeated requests, DuRant said. Instead, Pavilack spoke in general terms about his income and expenses.
"Because the ... accounting records are not accurate, complete or current and cannot be relied upon to reflect accurately his income and expenses, [Pavilack's] representation lacks credibility and cannot be verified at this time," DuRant stated in his report.
Transferring assets
Pavilack also is using corporations to transfer his assets to other people, DuRant said.
For example, Peru Global LLC is a corporation that was formed on Jan. 27 and its registered agent is Jacob Mullins, who is Pavilack's nephew, according to DuRant's report.
Pavilack gave Mullins a 10 percent interest in Peru Global upon its formation, the report states, and then transferred the following assets into that corporation: a one-eighth interest in 5,080 acres and mineral rights in Texas; two homes in Georgia; two lots in Conway; and a home in Florida.
Mullins also is part-owner and the registered agent for Imperial Holding LLC, another corporation Pavilack formed on Jan. 27.
DuRant said Pavilack has transferred the following assets into Imperial Holding this year: 123 lots in Ocean Isle Beach, N.C.; 949.5 acres of land in Marion; a home in W.Va.; and 100 percent interest in Pavilack Finance Corp.
In another example, DuRant said he asked Pavilack to explain five consecutive checks totaling $248,000 that were made payable to Sharon LLC - a corporation Pavilack formed on Feb. 25 that is named after Sharon Johnson, his office manager and 25-year employee.
Pavilack "explained that he intended to lend that money to Sharon Johnson for her to purchase her interest in Sharon LLC," DuRant said in his report. Pavilack then said he decided to give Johnson a 10 percent interest in the corporation "more or less as a bonus," according to the report.
DuRant said he has not been able to determine what Sharon LLC did with the five checks totaling $248,000.
In addition, DuRant said Pavilack Finance Corp. has made at least 15 mortgage and loan assignments this year to potential insiders including a corporation wholly owned by Pavilack and co-investors in real estate deals.
Most recently, DuRant said, Pavilack has opened two foreign bank accounts in Peru, each with initial deposits of $200.
"[Pavilack] has not explained the purpose or need for foreign bank accounts," DuRant said in his report.
Subject of 48 lawsuits
A trio of creditors - Wells Fargo Bank, Atlantic Bank & Trust and First Federal Savings & Loan of Charleston - forced Pavilack into bankruptcy when they filed an involuntary petition on Aug. 20 to liquidate his assets under a Chapter 7 filing.
Those creditors - who have given 33 loans totaling $22.1 million to Pavilack since 2003 - said in court documents that they are concerned that Pavilack "has been transferring assets beyond the reach of creditors" and they asked a judge to appoint a trustee to oversee the case.
The creditors said Pavilack has not paid property taxes in six years on property he and his corporations own.
And they pointed to Pavilack's financial statements, which showed a loss of more than $7.6 million in cash during 2009.
The creditors also said 48 lawsuits that have been filed this year against Pavilack and his corporations "represents a further indication of the perilous financial circumstances he occupies and the likelihood of serious dissipation of his financial assets."
Pavilack, in court documents, has said much of his financial losses stem from real estate deals that went bad during the national economic recession.
DuRant, however, said in his report that such deals do not explain why Pavilack's cash reserves decreased by so much in one year.
DuRant stated that he "has not been able to analyze those changes due to [Pavilack's] incomplete accounting records."
On Sept. 7 - one day before a judge was scheduled to rule on the creditors' request for a trustee - Pavilack filed his own bankruptcy case, seeking a reorganization under Chapter 11 laws.
Both bankruptcy cases now are pending.
A pre-trial conference is scheduled for 1:30 p.m. Wednesday in bankruptcy court in Charleston.
Wings owners unhappy
The creditors who filed bankruptcy proceedings against Pavilack also allege that he or one of his employees altered the date on a bank document that was sent to the Atlanta Housing Authority, a government agency that leased homes Pavilack owned to low-income residents.
Court documents do not specify what document was altered or why, and housing authority spokesman Rick White did not return telephone calls to The Sun News.
Elizabeth Montano, the finance director for Pavilack Finance Corp., said in a court affidavit that employee Michelle McDade altered the document without Pavilack's knowledge. Montano said she fired McDade the next day after Pavilack learned of the incident.
McDade did not return telephone calls to The Sun News. In her application for unemployment benefits, which is included in court documents, McDade said the reason she was fired is: "I was told to do what I had to, to get something done and I know now that I shouldn't have done it."
A similar incident involving an alleged altered document is one of the issues in the Levys' $2.5 million judgment against Pavilack and other investors who wanted to build the failed Pier View Resort condominium project at 202 N. Ocean Blvd. in Myrtle Beach.
The Levys wanted Pavilack and the others to sign a confession of judgment - a legal document admitting a debt - in case the investors did not pay back the beachwear store owners' $2.5 million loan for the Pier View project, according to court documents.
The Levys filed those confessions of judgment on Feb. 10 at the courthouse in Conway.
Bhupendra Patel, one of the project's investors, said in court documents that he did not want to sign the confession of judgment.
Patel, in an affidavit, said Pavilack told him he did not have to sign the confession of judgment. Patel said Pavilack asked him instead to sign the signature page for a document that had no cover page. Patel said Pavilack led him to believe that the signature page would be attached to a document releasing him from liability for the Pier View debt.
Patel said in court documents that he later learned Pavilack attached the signature page to a 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 said in an affidavit.
Pavilack and the other investors are disputing the Levys' judgment - they say the $2.5 million was an investment in the project, not a loan - and a judge is scheduled to consider a request to void the debt during a Nov. 29 hearing in Conway.
Pavilack started using cash for most of his transactions after the Levys filed their judgment, DuRant said in his report.
"When Levy elected to execute the judgment in February . . . [Pavilack] began converting his demand deposit accounts to cash which he kept in safe deposit boxes and elsewhere to avoid having it attached or taken by Levy," DuRant stated in his report.
Pavilack's financial future likely will be determined in the coming months during a series of bankruptcy hearings in Charleston. Those hearings come at a time when Pavilack's law firm is marking its 43rd year in Myrtle Beach.
In addition to this week's hearing, Pavilack is scheduled to be questioned under oath about his assets during a Nov. 13 hearing in which creditors will be allowed to delve into DuRant's findings.
Two of those creditors - Wells Fargo Bank and Atlantic Bank and Trust - filed court documents on Friday asking a judge to bar Pavilack from having any further control over the assets in his bankruptcy estate. Those creditors said DuRant's report makes it clear that a trustee should take over Pavilack's finances.
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