Johnston developer, accused of fraud, seeks early release from Polk County Jail
In a letter penned this month to the judge who jailed him, Johnston developer Daniel Pettit ― drowning in debt and besieged by accusations of fraud ― apologized for his lack of respect for the judicial process, asked to be released early and promised to do right by investors he is accused of cheating.
“My behavior was out of character and I truly want to fix the situation,” the 43-year-old developer said in the Feb. 13 letter to Judge Jeanie Vaudt.
Pettit, who disappeared for a month after failing to turn himself in to serve for his six-month sentence for contempt in civil court cases, has been behind bars since he was arrested Jan. 12. In his letter to Vaudt, he asked for two days of credit off his six-month sentence for each of the 10 days he’d labored in a workers pod at the Polk County Jail “even though it is typically not given for contempt.”
The one-time Waukee mayoral candidate also asked for 60 days on electronic monitoring, instead of jail, so he could do right by his investors.
He said that “with time and less pressure,” he could address a long list of things that the New Jersey lawyer who helped him round up the investors, Steven Katz, says he needs to do so he and the investors can begin to be made whole.
“I should have done this months ago and regret my poor decision of not complying and ending this honorably with Mr. Katz when I could have,” he wrote. "It should have never got here and it is 100% per my actions."
Vaudt, who jailed Pettit after she said he'd not been forthcoming in three civil cases, secretly transferred assets and harmed investors and companies “big, medium and small,” has taken no action regarding the letter.
In the 2½ months since Watchdog first reported on the roughly $70 million in debts and judgments against the fallen businessman and the local, state and federal investigations into his activities, Pettit's legal difficulties have intensified. While he claimed back in September to have cash assets of $2 million and total assets of $56 million, some of those assets are mired in legal tug-of-wars among investors, banks and former business associates trying to recoup what they can.
Mansion given to Texas man who accused Daniel Pettit of fraud
Pettit transferred the deed to his Johnston mansion with a 9-hole golf course and heated pool to one of the people angered by his alleged deception. He signed the quit claim deed over to Brett Jacobsen of Austin, Texas, who last spring in a civil lawsuit alleged breach of contract and fraud. The lawsuit came after Pettit bought the rights to purchase from Jacobsen a rare Bugatti Chiron Super Sport, but never carried through with the deal for the French hypercar.
The $5.5 million, 26-acre estate at 7395 100th St., one of the most expensive in Iowa, has been listed for sale for the last month. But the home has liens against it, including one filed by the Iowa Department of Revenue for almost $36,000 in overdue income taxes.
Previously successful in carrying out some major developments deals in the Des Moines metro, Pettit appears to have begun encountering big financial troubles when the COVID-19 pandemic hit. By 2021, partners who'd loaned him money for development projects in West Des Moines and Waukee began accusing him of fraud, court documents show.
Banks foreclosed on properties he’d said he was going to develop. Contractors from consulting to construction filed mechanic's liens on his property. Investors from Illinois, Minnesota, New Jersey, Nevada, New York and Utah obtained court judgments worth millions.
Alleged robber and business associate arrested in California drug bust
In another twist in Pettit's case, a man who ran a luxury car rental business in Los Angeles ― and who did business with Pettit but later was accused of robbing him at his Johnston mansion last September ― was arrested this month in connection with a major drug ring in California, federal court documents show.
Moustapha Moustapha, 43, who faces charges of burglary, robbery and theft in the Johnston heist, fled Iowa after being extradited to the state in the Pettit case, only to be arrested again in Malibu by the U.S. Drug Enforcement Administration. He faces charges of possession with intent to deliver for his alleged involvement in the meth-cocaine ring, federal court records show.
Moustapha is still scheduled to be arraigned in Polk County on April 3. Moustapha's former lawyer, Nick Sarcone, previously told Watchdog the California man was an afficionado of Rolex watches, and that’s initially how he and Pettit met. He said Moustapha came to Iowa in summer 2023 to work on a development deal in Johnston.
Johnston police documents suggested the heist Pettit alleged in September may have been staged, as Pettit communicated with Moustapha both before and after the reported robbery. Two businessmen who were at Pettit's home at the time of the robbery later learned through police reports that Pettit had texted Moustapha prior, saying the two, former Pettit business partners Matt Jennings and Dr. Allen Stoye, were thieves.
Moustapha, a Johnston police report shows, responded with rough talk about both men, texting Pettit that he was going to take back what they stole and “forgive them for not knowing who u were in bed with (smiley face). I will be there with a bunch of good fellas.”
Pettit also talked to Moustapha by phone four times right after the alleged heist ― once for about an hour, the police report shows.
Clive Realtor becomes the latest to sue Daniel Pettit
Jessica Grove, an assistant city attorney in West Des Moines, said the city is still pursuing insurance payment from a surety bond posted by Pettit to develop infrastructure at the Sugar Creek residential development near Des Moines University, while the insurance company has sued Pettit in federal court.
None of the infrastructure for the development there has been completed.
In the meantime, Ryan Wiederstein, broker and owner at WB Real Estate in Clive, became the latest to sue Pettit this month, filing the litigation in civil court in Dallas County.
Wiederstein could not be reached Thursday or Friday for comment.
More: Investor: Johnston developer's business tangle included legal cannabis firm
The lawsuit names Pettit individually and his companies, Encompass Holdings and South Branch Investment LLC, and alleges breach of purchase agreement, tortious interference with contract and business expectancy, and fraud in connection with the attempted sale of South Branch Business Park in West Des Moines in 2021.
On Oct. 27, 2023, Judge Jeffrey Farrell entered a $3.4 million judgment against Pettit and his companies in favor of SBBP JV21, a limited liability corporation run by Wiederstein.
Wiederstein alleges in the civil lawsuit, which is separate from the monetary judgment in favor of SBBP JV21, that Encompass never executed a promised development agreement with the city, leaving his development partnership in the lurch. He said Pettit and Encompass paid $15,000 in earnest money to buy back the South Branch property in December 2021, but never closed on the deal after several revised and delayed contracts were signed.
More: California couple looks to collect money from developer Daniel Pettit, joining other investors
“By this time, prices had increased and the city required SBBP JV21 to renegotiate the terms of the development agreement resulting in a large increase in development and carrying costs,” the lawsuit says.
The lawsuit also alleges Pettit personally should be held responsible for damages because he abused his corporate privilege and operated “as a mere sham, as buyer was not appropriately capitalized or insured and funds were commingled between buyer entities and Mr. Pettit.”
The lawsuit seeks compensatory and punitive damages plus interest “at the highest rate available under the law.”
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: Developer Daniel Pettit, accused of fraud, seeks early jail release
