Johnston developer Daniel Pettit jailed in Polk County after more than a month on the lam

After more than a month as a fugitive, Johnston developer Daniel Pettit was in jail Thursday afternoon on three counts of contempt.

The 43-year-old's arrest comes after Polk County Judge Jeanie Vaudt issued a nationwide warrant at the end of December for the arrest of Pettit, who failed to report for a six-month jail term at the beginning of the month. Vaudt ordered Pettit to serve the sentence after he failed to follow court orders and respond to subpoenas in three different civil cases.

It was unclear Thursday evening how Pettit was picked up, but he was arrested in Waukee, jail records show.

FBI, Johnston police, Iowa Insurance Division conducting investigations

A Watchdog probe in December found Pettit, 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 array 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.

More Watchdog: Johnston woman to be arraigned in connection with November seizure of neglected horses

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

Among the conduct by Pettit that Vaudt noted when sentencing him to six months in jail: Even while investors were seeking repayment, 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."

Banks foreclosing, contractors seeking payment, court judgments for millions

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.

More Watchdog: For West Des Moines condo owners, a year-ago fire was only the beginning of their troubles

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

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 mechanics' 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 as he defaulted on tens of millions he borrowed.

Police probe questions robbery 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 the alleged armed robbery Sept. 10. A search warrant application 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.

More Watchdog: Iowa to pay $10M to settle lawsuits of siblings of teen who was starved to death

A preliminary search of the phone showed he had “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: Missing Johnston developer Daniel Pettit jailed on contempt charges