MYRTLE BEACH, SC (WMBF) - When one of the Grand Strand's oldest and most respected used car dealerships suddenly disappeared, there was no notice, no explanation and no details of why Lavin Cars was here one day and gone the next.
As it turns out, the dealership's fall was years in the making and may have cost those who trusted the Lavin family, millions.
The fact that a local business closed up shop here in Myrtle Beach is not what makes the Lavin Cars story so impossible to believe. It is more the reason this decades old dealership just vanished into thin air. It was the millions of dollars that just vanished into thin air and it's the accusations of a scheme that in this day and age should have been impossible to pull off for a week, much less a decade.
It was back in early May, that officials from Crescom Bank stormed into one of Myrtle Beach's most successful used car dealerships, released the staff, locked the doors and systematically removed every car and anything of value from the lot.
Crescom was accusing Howie Lavin, the current owner and operator of Lavin Cars of an age old scheme called check kiting.
Scott Brandon is a board member and spokesperson for Crescom.
"I can tell you that check kiting did occur and that we're actively investigating that check kiting to understand how it happened within the bank," says Brandon.
And Brandon claims the bank's losses totaled nearly $4.5 million. But check kiting takes two banks. The other alleged victim was Carolina Trust Federal Credit Union. Here's how the scheme worked, according to Crescom.
Taking advantage of the lag time between when a check is deposited and when it actually clears, the bank customer was able to cash worthless checks at Crescom, written from an account at Carolina Trust.
With no hold on the funds, the customer immediately withdrew the cash, then deposited an even larger bad check into his Carolina Trust Account written on a Crescom check. Again, with no hold on the funds, the cash was immediately withdrawn and the cycle was repeated over and over and over again, and the customer allowed to slowly but surely build a fortune on the side as long as the shell game continued.
Carolina Trust would not speak on camera but issued this statement when asked about Howie Lavin, saying in part:
Carolina Trust Federal Credit Union has been " the victim of a check-kiting scheme perpetrated by an account holder. The issue was contained. We are cooperating with federal investigators."
Dr. Marvin Keene runs the finance department at CCU. He says kiting is tough today because most banks can confirm funds electronically, within hours.
"In the past it's been up to three or four days," say Keene. "In this day and age it's really quick. So, essentially it would have to be planned out pretty well."
Meaning both banks had complete trust in Howie Lavin and gave him unheard of access to money, or bank employees simply looked the other way according to Keene.
Again, Crescom claims Howie Lavin, a longtime and trusted bank customer, got away with this for nearly 10 years, costing the bank more than $4 million. Tommy Brittain is Howie Lavin's attorney. He spoke for Howie Lavin who declined an interview request from WMBF News.
"He's made some serious mistakes it sounds like but this is a kind hearted, generous man that has so many friends and people that care about him," justifies Brittain.
And while neither the FBI nor the US Attorney's office will confirm they are investigating Lavin for check kiting, Brittain confirms the feds are asking for key financial documents from everyone involved.
WMBF News Anchor David Klugh asked Brittain if Howie Lavin or anyone in his employ did anything wrong here or have anything to worry about.
"I wouldn't answer that question yet, but we certainly are dealing with a very bad situation here," conceded Brittain.
The Lavin mess, whatever it turns out to be was complicated further when Crescom Bank called in it's loan and took the cars that once filled the lot as collateral. You see the Lavins had another group of investors who had put up hundreds of thousands of dollars to help the dealership buy inventory when the banks would not.
These individual investors, mostly seniors who bought cars from the Lavins in the past, were told those same cars would serve as their collateral.
Don Harrell is the largest of those investors. His family lost $160,000 when Lavin Cars closed. He was promised 12% interest on that investment from the Lavins and for years he got just that. Then earlier this year, things began to change.
"They had a fire that was suspicious, they had things happening that would indicate something's up," says Harrell. "And by the time I got to the point; I said, 'better start giving this some thought', it was too late."
Attorney Gene Connell represents Harrell and 10 other Lavin investors wanting their money from Lavin, or Crescom bank. He's suing both. And while he questions how the Lavin's could pay these investors a whopping 12% on their investment, he insists, a deal is a deal. Connell claims his clients have first dibs on the proceeds from the cars.
"A lot of them have documents where they were promised to have a lean on the cars themselves, so if something happened they could get their money back," says Connell.
Crescom Bank says it will fight those investor claims. It will not sustain any more losses over the Lavin Cars deal.
"It's not a frivolous lawsuit over a hot cup of coffee burning somebody. This is just their stuff. they're trying to recover what belongs to them and that's all," declared Connell.
Lavin Cars is likely never coming back. As of this moment, the FBI investigation into check kiting continues and federal investigators could be months away from showing their hand in what could turn into one of the largest financial scams in Myrtle Beach history.