Stewart Title $10.5 million settlement in the works

June 10, 2014
Kelly Gearhart

Kelly Gearhart

By KAREN VELIE

More than 400 investors who were defrauded by former North County developer Kelly Gearhart will receive a portion of their losses if all parties agree to a proposed $10,530,570 settlement claim to be paid by Stewart Title.

Gearhart and James Miller, the former president of Hurst Financial, defrauded more than 1,200 investors out of more than $100 million in an alleged Ponzi scheme. Both men plead guilty and are awaiting sentencing.

Multiple lawsuits claim employees of Cuesta Title – now Stewart Title – aided and abetted and/or conspired with Miller and Gearhart. Cuesta Title created false escrows, falsely closed active escrows, and illegally filed clean title reports before placing additional loans on already encumbered properties, according to the lawsuits.

Several years ago, Stewart Title settled with a group of Hurst Financial investors for $460,000, approximately 27 percent of their investments in loans on seven lots off Highway 41 near U.S. Highway 101 in Atascadero.

In 2009, San Diego based attorney Steven Sanchez filed a suit on behalf of approximately 400 investors. Since then, at least seven other lawsuits have been filed against Stewart Title by former Hurst Financial investors.

In Oct. 2013, the Sanchez lawsuit trial, which lasted more than two months, ended in favor of the title company. Hurst Financial investors, many of whom lost their nest eggs in the Ponzi-type scheme, looked stricken as the verdict was read. Many broke out in tears.

Shortly afterwards, Sanchez filed an appeal and San Luis Obispo County Superior Court Judge Charles Crandall ordered arbitration which if successful would end the possibility of another lengthy trial.

San Luis Obispo County Superior Court Judge Martin Tangeman then set two dates to meet with investors. Tangeman spent several hours encouraging investors to accept the settlement and avoid the possibility of losing again at trial.

Plaintiffs from three of the eight lawsuits, including Sanchez’ clients, are in line to accept the $10.5 million settlement, which would also cancel the appeal. If the settlement is agreed to, each client will receive between 5 and 9 percent of the money they lost.

The plaintiffs in the five remaining lawsuits, which includes former Ultimate Fighting champion Chuck Laddell, have elected not to participate in the proposed settlement.


8 Comments

  1. songbird says:

    Gearhart, his A-town buddies, and his special friends at Atascadero city hall ruined many of our lives. Life will never be the same for many of us thanks to these fine folks. It is a sad state of affairs when those associates of Gearhart profited from his corrupt business dealings. City elected officials and city staffers, for whatever motivating reason, are able to walk our streets as citizens of north county, unscathed by the Gearhart carnage and legal prosecution. Yes, I understand they were smart enough to slip out of the limelight or even leave town, but not all of them. Those still residing among us know who they are and how they aided Kelly Gearhart’s hypocrisy. Our family and friends say shame on all involved. You know who you are and we shall never forget your disservice to our community.

    Well-loved. Like or Dislike: Thumb up 43 Thumb down 2

    • Fedup says:

      Stay tuned. The federal meat grinder grinds slowly.

      Like or Dislike: Thumb up 18 Thumb down 0

    • No_More_Anger says:

      If you know who they are, what is stopping you from naming them? Really tired of bold accusations without any names. Step up to the proverbial plate and state the names, otherwise don’t complain.

      Like or Dislike: Thumb up 15 Thumb down 11

  2. justchuck says:

    OK victims on the count of three bend over and grab your ankles!

    Like or Dislike: Thumb up 17 Thumb down 3

  3. Pelican1 says:

    Crime pays for those who would dare prey upon the very hand that fed them. They are without a moral compass, compassion, ethics, conscience, or a sense of honor or humanity.
    Money is their God, their Creator, and their co-pilot…what a shame.

    Like or Dislike: Thumb up 22 Thumb down 0

  4. shelworth says:

    Wow, ten whole cents on the dollar!

    Like or Dislike: Thumb up 31 Thumb down 0

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