Johnston developer Daniel Pettit accused of fraud still missing, despite nationwide warrant

An Iowa judge who ordered Johnston developer Daniel Pettit to serve six months for contempt has issued a nationwide warrant for the arrest of the 43-year-old businessman, who failed to report for his jail term more than a month ago.

Though the warrant was issued at the end of December, Pettit, widely accused of fraud, remains at large.

A Watchdog probe found the owner of Encompass Holdings and controlling partner in numerous limited liability corporations allegedly owed about $70 million to banks, investors and former business partners with judgments against him ― a number that has grown since the report was published Dec. 4, according to court documents.

Licensed until August 2023 in Iowa as an insurance salesman ― but never as an investment adviser ― Pettit befriended and enlisted a wide mix of investors in Iowa, New York and other states to take advantage of investment opportunities, developments and other businesses, including a legal cannabis operation in Las Vegas, court documents show. He's under investigation by the FBI, Johnston police and the Iowa Insurance Division after numerous allegations of swindling in deals that fell through.

Last month, the insurance division sought the public's help in gathering evidence in its probe.

"I highly encourage any investors with complaints concerning Mr. Pettit to file a complaint with our office," Chance McElhaney, a spokesperson for the division, said in a statement, citing its online filing portal at iid.iowa.gov/consumers/filing-complaints.

However, several investors who have sued Pettit in civil court have complained to Watchdog they haven't been contacted by the insurance division after seeking to help with the investigation.

Where did Daniel Pettit go?

As for Pettit's whereabouts, an FBI spokesperson in Omaha, Nebraska, did not respond to a phone message on Tuesday seeking comment about whether Pettit was now considered missing.

A police spokesman in Johnston, where Pettit has a mansion with a nine-hole golf course, said his department had no knowledge of the national warrant. And the police chief in the Iowa City suburb of North Liberty, where witnesses reported Pettit moved last month, said officers have been unable to serve him at a house there.

"We have been made aware, but have not been able to locate him at that address as of yet," Chief Diane Vanenga said in an email. "We will continue to make attempts to serve the warrant and will arrest him if he is located and the warrant is still active."

A one-time mayoral candidate in Waukee, Pettit announced some of the most ambitious projects in the fast-growing city before the pandemic hit ― from a massive 40-acre, $101 million entertainment district called The Quarter to an 88,000-square-foot event and office space nearby. In 2021, he convinced West Des Moines leaders and lenders to back two major commercial-residential projects, The Village at Sugar Creek and Banks Landing on Booneville Road and South 88th Street north of Des Moines University’s new campus.

Now 56 acres at the Village at Sugar Creek is in receivership while city officials and others try to salvage the development project.

Judge Jeanie Vaudt ordered Pettit to serve the contempt sentence after he didn't follow court orders or respond to subpoenas in three different cases.

Among the willful conduct by Pettit that Vaudt noted: He liquidated accounts this spring and summer, tried to write a check for a $275,000 Michael Jordan jersey, and transferred around $100,000 from a personal account to a joint account with a woman in Nevada, where he'd headed up a failed cannabis cultivation business. In August, Pettit also applied for life insurance with a $10 million death benefit to be awarded to his own revocable trust, the judge found.

"To put it plainly, it appears that defendant Daniel E. Pettit has consistently not been forthcoming to plaintiffs about his true financial condition and the kinds of results he could deliver to his investors," Vaudt's ruling said. "Many individuals and companies ― big, medium and small ― potentially have been economically damaged by (his) empty promises and lack of candor as to his true financial position. ... It is reasonable to assume that some of the money funding that lavish lifestyle came from defendant Daniel E. Pettit's investors."

Back in September, Pettit claimed in a financial statement submitted to the court to have cash assets of $2 million and total assets of $56 million. He listed his liabilities at $68,000, court documents show.

But documents Watchdog reviewed in more than two dozen cases filed in Iowa courts show banks have foreclosed on properties he or his corporations purchased. Contractors for work ranging from consulting to construction have filed mechanic's liens on his property. Investors from Illinois, Minnesota, New Jersey, Nevada, New York and Utah have obtained court judgments for millions. Several former business partners have accused him of fraud while Pettit defaulted on tens of millions he borrowed.

Investigators question burglary allegation

Pettit, who has not responded to emails and phone calls seeking an interview, has no criminal record in Iowa. But as his financial troubles have escalated, he also is at the center of a burglary case at his home that police said they think may have been staged.

Search warrant documents filed in Polk County District Court show Johnston police seized Pettit’s cellphone in late September to conduct a data search after he reported an armed robbery at his home Sept. 10. A search warrant application made after the robbery shows he reported the theft of three handguns, two Rolex watches worth almost $100,000, about $25,000 worth of Cartier jewelry and a Bentley he was driving but did not own.

A preliminary search of Pettit's phone after the robbery showed he “promised and/or made payments” for sex and sexually explicit photographs, police allege. The officer involved in the investigation said he had probable cause to believe further evidence of prostitution would be found in the phone, according to search warrant documents filed in Polk County.

Since that time, two former business partners who were at the house on the night the robbery was reported to have taken place have said the alleged thief, Moustapha Moustapha of California, did not appear to have stolen all the items Pettit alleged.

Moustapha is set to be arraigned on several felony charges Feb. 8.

Lee Rood's Reader's Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Reach her at lrood@registermedia.com, at 515-284-8549, on Twitter at @leerood or on Facebook at Facebook.com/readerswatchdog.

This article originally appeared on Des Moines Register: Accused of fraud, Iowa developer still missing, despite tips to police