Gearhart’s $28 million Paso project imperiled

April 29, 2008


It’s only a few second’s drive time between the weathered plywood sign on Paso Robles’ Jardine Road announcing the imminent approach of “Vista del Hombre,” and its equally unimpressive, unmarked entrance, but that brief moment is sufficient to show passersby that they have encountered one truly unremarkable piece of real estate.

What is remarkable, though, is that hundreds of local investors have put big money and faith into Hurst Financial of Atascadero, and in turn into Vista del Hombre — approximately $28 million already for this project alone — yet have seen only minimal progress on the Kelly Gearhart golf course-business park development over the past several years.

Hurst has doled out to numerous investors approximately 8,000 percent beneficial interest in the planned 32-building development, according to the title report. It appears that investors hold more than 200 percent interest in each structure.

“It’s the lender’s responsibility to make sure beneficial interest adds up to 100 percent,” said one local escrow officer. “You see a lot of this with Hurst and Estate Financial title reports.”

And now recent developments, including both a looming recession and what may prove to be misleading reports of progress on the project, are casting foreboding shadows on the very future of this once-ambitious project.

Just a few months ago, Gearhart was maintaining an optimistic public front regarding Vista del Hombre. In a letter delivered to investors, Gearhart reassured stakeholders that project requirements of the city had been satisfied, and then asked for an extension of 24 months to allow him to “market and sell units.”

He even enlisted the help of a local daily newspaper to validate his “progress” claim.

“This letter is written to update you as to the progress of my major project, Vista Del Hombre, located in Paso Robles,” Gearhart wrote in the letter. “I have attached to your information an article from a recent San Luis Obispo Tribune story. As the article states, the first phase of the overall project is slated for completion by mid-2008. We have installed the entire infrastructure per the city of Paso Robles requirements including a road from the project site all the way to Aerotec Road. This creates an easier pathway.”

However, Gearhart has not yet submitted plans to the city for the required conditions of approval, which include two large expenses — connecting to the city’s sewer system roughly two miles away, and repaving approximately two miles of Dry Creek and Aerotec Roads. Conditions of approval are required prior to occupancy, said Paso Robles City Engineer John Falkenstien, who confirmed that Gearhart’s development currently is not approved for occupation.

“Buildings associated with the golf course, such as the clubhouse, fall under past approvals,” Falkenstien said. “We have approved plans for three buildings for the golf course. We have not approved conditions of use plans for any of the tract.”

Also of growing interest to some Hurst Financial investors is the seemingly cavalier manner in which huge amounts of their money have been doled out based on incomplete and apparently unverified loan application forms.

Neither Gearhart nor Hurst’s Miller have yet responded to telephone calls and detailed e-mails from asking for explanation or clarification.

Gearhart, a major North County developer, recently stopped making interest payments on many of his Hurst Financial loans. That includes payments to Vista del Hombre investors. Some investors have expressed concern that recouping their principal may be impossible.

The developer owns or controls interest in approximately 100 San Luis Obispo County properties, according to tax and escrow records. Those records suggest that many of Gearhart’s properties are financed well beyond their value.

Gearhart purchased the 35-acre parcel incorporating The Links in 2006 for about $2 million, according to sources. Experts interviewed for this article estimate the property’s current value at no more than $5 million. talked to escrow and title officers, individual local investors, contractors, and lenders during the article’s preparation.

Located six miles east of downtown Paso Robles, the “new” Vista del Hombre project is on the site of The Links golf course, a flat, dust-blown, tree-bereft expanse of land situated a stone’s throw from the airport. Looking more like a property on the decline than a multi-million-dollar development-in-progress, Vista del Hombre begins with a blacktop road winding through the existing golf course, which was opened in 1996. The narrow road terminates at a group of drab, temporary buildings featuring Porta-potties and a small trailer which houses both a pro shop and a cafeteria.

The Links is promoted on its Web site,, in a much more colorful manner: “Designed in the tradition of the historical Scottish layouts like St. Andrews and Royal Lytham, The Links at Vista Del Hombre is both fun and challenging for any level of golfer. Four sets of tees accommodate the novice and challenges the advanced player. The Links at Vista Del Hombre is in the heart of the California’s Central Coast wine country. Surrounded by vineyards, The Links Course is just minutes away from wine tasting at its best.”

Some of Gearhart’s investors say they have been informed that the entire project is just “months away” from completion.

However, most of Vista del Hombre’s commercial zone remains vacant land. Three larger steel buildings have been erected near a driving range. Plans –- yet to be approved by city officials — call for eventual construction of the 32 buildings within a 14-acre expanse.

Earlier this month, Gearhart admitted to some investors that he is financially strapped and unable to pay interest on many of his Hurst loans. Numerous investors claim they stopped receiving interest payments months ago, and no principal has been recouped.

In an April 1 letter to investors, Gearhart detailed his plan for financial recovery:

“Obviously, I have formulated a detailed strategy to work my way through liquidating my large portfolios,” Gearhart wrote. “Several of my properties are in escrow at this time, and the sales of these properties will enhance my ability to move forward. I realistically see only these options at this time: 1. Elimination of interest payments, while I work to liquidate properties as fast as possible. 2. As offers are made on properties, I will notify you and we will make a joint decision as to whether we should accept the offers presented. 3. Foreclosure.”

A closer look at the funding methodology involved with Vista del Hombre — considered by Gearhart to be his “major” project –- offers clues about some hard-money lenders’ extraordinary management of investment funds entrusted to them.

(The ongoing woes of another hard money lender, Estate Financial of Paso Robles, have been detailed in a number of articles beginning March 14.)

Gearhart got his first loan for Vista del Hombre’s purchase and initial infrastructure construction in May 2006 from Atascadero Realtor Jay Miller, owner of Hurst Financial, in the amount of $15 million. Miller in turn had secured that money from private investors lured by promises of high interest returns and placated by Miller’s pledge of a loan-to-value ratio of 44 percent, according to one loan agreement. Translation: the hard money loan could fund no more than 44 percent of the project’s total value. That initial loan was slated to mature in late 2006, but Hurst has not reimbursed investors and ceased providing interest payments.

But by then, Hurst had already lent Gearhart another $11,850,000 for the Vista del Hombre development – escalating Gearhart’s annual interest payments to $4 million. That pact was inked on June 22, 2007, after Hurst attracted more than 100 investors with the same loan-to-value promise. These investors received interest payments for only six months before the payments abruptly ceased.

It apparently wasn’t hard for Gearhart to get the two loans, documents obtained by show. In his loan applications to Hurst, Gearhart’s reported monthly income and expenses varying dramatically from loan document to loan document.

According to the first Vista del Hombre agreement in 2005, Gearhart claimed a salary of $31,667 a month. Another Hurst agreement dated January 14, 2008, set Gearhart’s monthly income at $240,000. Two weeks later, according to yet another Hurst contract, Gearhart’s income had dropped to only $138,000 a month. Most of the other information lines on the loan applications, copies of which were supplied to investors only after repeated requests, contained no information.

Tags:, Gearhart, Hurst Financial, Paso Robles

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By: Anonymous on 6/18/08

to insider you have over stayed your welcome on these blogs . all of the credible people on these blogs are asking you to go away. please enough is enough

By: Anonymous on 6/1/08

So how's this deal going. Is he trying to sell it? Is he continueing to develop it? Is it in foreclosure? Is the grass still green on the course and is somebody still cutting it?

By: Anonymous on 5/29/08


You may want to revise your idea of a "no-risk" deal. Inflated appraisals and interest payment should have been your first warning.

Take comfort in the fact that you and some other "investors" own some 32 acres near the airport.

By: Anonymous on 5/11/08

from Dan and Karen's Article

Rita is a 65-year-old Cambria resident who suffers from multiple sclerosis and can no longer walk. Her husband placed the couple’s savings, $830,000, with Hurst Financial prior to his death from a long term illness, thinking he had guaranteed his wife’s financial security.

“I need 24-hour care,” Rita explained. “Without my interest and possibly my investment, I’m not going to be able to afford my caregivers and I will have to sell my house. I don’t know where I will end up. I am scared.”

According to Rita, Miller failed to return numerous calls she placed to him requesting information. In the midst of the financial turmoil, Miller took a 10-day trip to Hawaii.

By: Anonymous on 5/11/08

to reality

You sound exactly like that idiot that calls himself Sloww Bear. He has his own blog, you know, where a person like you, you know, one who has no empathy at all for the retired people who have been systematically been ripped off by these scoundrels. Why don't you join him he would love to discuss this with you. Drop dead.

By: Anonymous on 5/11/08

12% interest for life, While real banks are paying 3%, While the stock market was stagnating. RISK what Risk this makes perfect sense. After all, its worked in the past why not through every up and downturn in our economy. In the immortal words of James Carvel 'ITS THE ECONOMY STUPID'

By: Anonymous on 5/10/08

To We’ve Got Pay Pal,

Have you even been reading these blogs? If you have been then you would either think that Anonymous is a full blown schizophrenic or it might dawn on you that the name “Anonymous” appears automatically if someone doesn’t enter a name or handle. You sound like the same person who was upset that someone called Kelly a fat ass and you couldn’t understand our anger. Dah

By: Anonymous on 5/10/08

Apparently the Gearhearts,Guths,Hurst,Estate,Slow Bears and the like are not going to send you any money if people don't stop picking on them. I will and so should the people that have been helped be your undercover work. Apparently I've hurt the feelings of these pilars of the comunity. Basically there is only two types of individuals I have and will continue to bring to light. 1) Those who steal from others, particularly the elderly and 2) Those who make excuses for the thieves (Slowww Bear, Duedog, You Know Who) If you fall into one of those two catagories oh well. If you are an investor who wants to hope things are going to get better leaving this den of snakes in charge I am simply sugesting I don't think so. I can see I've really gotten to the Gearhart Cheerleaders and that just makes me smile. I know I blogged excessively when Gearhart had his people jamming the blog with his future standing for Sainthood and what a genious he was at that time it was necessarry to take a stand. Good luck to all investors. Don't let up.

By: Anonymous on 5/9/08

My question is why? Do people actually pay to support this site?

After reading some of the post on this website I cannot believe that you would let someone post with blatant disrespect towards others! Does anyone censor this site?

As for the 210 comments on your recent posting it ended as this is written at 258. Close to 100 of them were from two people, Insider and Anonymous I don't believe that to be real readership!You should be so proud and so should your sponcers for I will not support either!!!

By: Anonymous on 5/9/08

If daddy was alive today all this would break his big heart! The ass he would kick is that of his lil runt kid!

Kelly has brought disrespect on what was once a proud family name!

Shame on him! Maybe the jail time will teach him something!

Drop the soap kelly! Please!

By: Anonymous on 5/9/08

To all those that know nothing about how construction loans work educate yourselves and read this. I am heavily invested into the Hurst / Gearhart deals to the tune of over $900,000. To those of you who think I am crazy or stupid you need to see this through an investor’s eye. I will try to explain this in laymen terms for those of you with half a brain (which has been proven by the blogs) will understand.

I have been doing construction loans for years in the central valley. When I moved to the central coast I looked for investments here:

1) Find lending Institute and contractor hense Hurst / Gearhart well over 20 years in business. Sounds good!

2) Talk to the title company. Escrow officer told me that she handled Hurst loans for over 7 years and had only 1 foreclosure and that when she and her husband had extra money they would invest with Hurst. WONDERFUL!

3) Get loan proposal.

Appraisal: $1,000,000

Loan Amount: $650,000.

Loan to value ratio: 65%

This means if project drops 35% of appraised value I am still covered. If it drops lower I lose that amount. That’s the RISK FACTOR. At 12% interest this means I am getting 1% of my investment back each month in the way of interest so in a 24 month loan I have collected 24% of my investment.

4) Lending institute: They hold the money in an account. As work is completed they cut checks to pay for that work. SO your money is always accounted for and the value is there.

5) When job is complete and project is sold, if the market drops more than 35% you lose. But you still have to factor in the 24% of your investment you have collected in the way of interest. So you can see this is really not high risk at all. You should at the very least get back your investment in the sale and interest collected. To further cover myself I spread my money over 12 loans so that if a loan were to go bad I would have the other 11 to fall back on. So where’s the risk? Investors are not stupid. There is only a risk if the people you are dealing with are not playing by the rules and doing things illegally. Now do you understand?

By: Anonymous on 5/8/08

"I'm sure if he was here walking this earth today he would hunt you down and kick your sorry ass from one side of Atascadero to the other."

Can you see? The violence and threats that in ingrainded in the Gearhart family! Papa John is dead and his family says if he was alive he'd "HUNT ME DOWN AND KICK MY ASS" Wow!

That family is violent and lawless from it's roots! No wonder Kelly has no problem stealing money and ruining families! It's in his blood!

By: Anonymous on 5/8/08


What was the outcome of the Wed. 1PM meeting at Luna Cafe in SLO? I didn't read about the meeting until it was too late. Seems that Hurst could help this situation if they could just provide a brief accounting of the cash left in all the unconstructed projects.

By: Anonymous on 5/7/08

I am an investor with Hurst. Their doors are open and they are setting up meetings with all of the investors. I was in Jays office yesterday and there was a revolving door of investors coming in to meet with Jay. Jay sat with me for an hour and answered all my questions. I have faith in Jay to get us through this. Jay has ran his business the same way for 22 years, nothing has changed. We are not happy with the current situation but what are we to do.

By: Anonymous on 5/7/08

Yeah we're worried about that.

Smelly Queerhart, on the other, is wondering when he'll be hooked up, hauled off, and thrown in a cage.

He'll soon have his day in court to "get the facts straight".

By: Anonymous on 5/7/08

I knew John Gearhart very well, AKA; Papa John, Johnny Harper, and I know for a fact he would be PISSED if he read your comments. I'm sure if he was here walking this earth today he would hunt you down and kick your sorry ass from one side of Atascadero to the other. Lucky for you he's not, but if you make it to heaven you piece of —-, I'm sure he'll be waiting at the pearly gates for you! You better hope you live forever!!! Think about that when you take your last breath.

By: Anonymous on 5/6/08

to Mr. & Mrs. Mouse

It appears you have your tail between your legs.

By: Anonymous on 5/6/08

Unfortunately, "Too bad, so sad" is probably right. We went for the 'big one' and maybe got greedy. Who wouldn't? It seemed like a great deal at the time. And it still would be if Americans weren't spending all their money on the war in Iraq. They'd still be buying new homes and investing in the infrastructure. I am so pissed off my money got squandered, but what can I do? I don't advocate putting Jay and Kelly or any of the contractors in jail…what good would that do? These guys are money men. They know what do do with money well….MAYBE! I say they be given a chance to make good on this situation. Who knows….maybe it isn't as bad as we think. The media loves to scare people.

By: Anonymous on 5/6/08

Wow, looks like a number of investors are finally getting it. It looks like Hurst and Gearhead are crooks and liars. Dispensing our funds outside of carefully moderated construction draws is a violation of their contract with us and license with the DRE.

A lawsuit has been filed against them and we are seeking others to join a class action. Since the crooks will not give us ready access to each other we have to use this blogsite and the damn phone book to meet up.

If you want to join with others to see what can be done and avoid the confusion and heartbreak the EF investors had, send an e to Include name, phone, city (so we can get locals together) and loan number (so we can get partner lenders together).

There is an initial meeting in SLO on Wed at the Luna Cafe at 1 pm.

For sure, everyone review this doc, it is very powerful:

And don't forget, if he doesn't chicken out, Gearhead will be on Congalton on Wed at 5pm (am 920).

By: Anonymous on 5/6/08

This is just a guess but I'll bet in the EFE deal EFI will have taken most of the money stringing the builders out. In the Gearhart deal I'll bet Gearhart took the most money with Hurst foolish enough to give it to him.

By: Anonymous on 5/6/08

This is a test

By: Anonymous on 5/6/08

too bad too sad

You signed something that said there would be risk. Did you however sign something that suggested fraud and mismanagement were part of the deal. If so,you got what you deserve.

By: Anonymous on 5/6/08

Can we say AMERICAN GREED?? You all know that applies to each one of us. We have $ and rather than be glad to get the meager (but safe) earnings the bank will offer, we go for the BIG one! Double digit interest baby! Heck, why don't we take advantage of the EQUITY we have in our house, refinance and invest 100k and accept and spend that check for $1000 every month…forget saving…we'll have our 100k at the end of this all…an investment could never go bad on ME!! Nah, lets not bother to actually look at the land we've invested our money in,…we'll just sit back and live on that $ and ASSume that the $ will still be there…even though we DID sign something (I can hardly remember) that said that this investment is a RISK…I'll take the nonchalant approach to this life and risky INVESTMENT and just TRUST that it will all be fine. Helloooo, anyone out there? —Remember, we did all know this was a risk. I should have just been happy with what I had. I think CONTENTMENT is the word.

By: Anonymous on 5/6/08

Well, it seems we are just going to have to take it. If Hurst is not going to communicate with anyone someone needs to step in and make it happen. I have been attempting to communicate via email and telephone. Nobody responds to email or telephone anymore. The crooks have access to our money and all records. Not to mention the money that may exist in accounts yet to fund some projects. Don't be surprised if they have the doors locked, shredding papers and moving money. TAKE CONTROL! Contact other investors on your loans and begin the process of foreclosing on properties. Hurst will do nothing for your best interest!

By: Anonymous on 5/6/08

I am currently part owner of four properties due to the meltdown of 21st Century. It is important to be patient because there is a lot of expense and time with foreclosing on property. The best way to go about it is to create an LLC and then there is a smaller group of people with the power to perform on the properties. Otherwise, if a small investor never signs a purchase agreement on an offer the offer expires and the deal goes away. You need to get a list of investors and get all of them on board. I've been fortunate with 21st Century because there are a couple of great people spearheading the tasks.

By: Anonymous on 5/6/08

I understand that they are back from Hawaii now. Rumors are flying, of course. But there will be tons of "finger-pointing" going on you can be sure. Some of us know Jay loaned out our money without following up on the contractors to be sure they were infact using our money to build homes and finish projects they had started. Jay made absolutely millions and millions of dollars, and where is it now? Buried under 6 feet of legal loop-holes. He will blame the contractors for not finishing their work, leaving us, the investors with vacant lots worth nothing. The contractors themselves don't have a dime since they took all our money either to Vegas or bought expensive toys which are now worthless as well. So who's responsible for our money? Hurst's is the place I trusted to keep track of my money. I look to them to make good on it, but lot's of luck….?….right? Here's an example: The contractor buys a big plot of land and wants to split it up and build x amount of homes. before the lot split is even approved, Jay loans out our money on the proposed project. The contractor takes the money and….and…well he's going to start the project but ooops! The lot splits don't get approved! So then what? Does he give the money back? Nope! And did Jay make sure the project was approved and was safe before he loaned out out money? Nope! Good old boys figured they'd 'fix' it later. Sorrrrry. I am furious.

By: Anonymous on 5/6/08

to Can't catch a break

What exactly happened to your investment at 21st Century. Did you get some of your money back? did you loose it all? Did you get the property back? Is it all still up in the air? Who is handleing it? Sorry to pry but you may shed some light on what may come to be for these other situations for those in your same place. In fact your answers may help people act in a different way to effect a better outcome.

By: Anonymous on 5/6/08

I have been taken by 21st Century and now Hurst. Up until a couple of weeks ago I was receiving communication via email from Courtney at Hurst. When they went away to a "wedding" that was the end of any type of communication.

By: Anonymous on 5/5/08

Sigh. Kelly and Jay AND Royce Construction took our money and played ducks and drakes with it. They bought fancy cars and beautiful homes and set their kids up in businesses and never finished projects that they said they were building with our investments. Now they have their assets so buried, it will take literally millions of dollars in legal fees to even TRY to recoup our money. The money is gone. This was our nest-egg, our retirement, our education for our kids. Even if we COULD force them to sell a few cars or vacation homes, it still wouldn't come close to repaying all of us. I think we are majorly screwed.

By: Anonymous on 5/5/08

It isn't just Gearhart with Hurst Financial there are others who have stopped payment also. I know because I am an investor with Hurst. It was expained to me that the money was to be placed in a sperate construction account and funds were only released as a percentage of completion and part of Jay Millers job was inspecting the projects before releasing the next payment. I am over 65, retired, and hope I don't have to go back to work.

By: Anonymous on 5/5/08

oh by the way are they setting up a new loan at Hurst to bail out Gearhart again or have we run out of sheep?

By: Anonymous on 5/5/08

to site moderator

Gearhart has lost millions of peoples retirement funds. Ruined lives. Taken away a better future for the young families that would have ultimately inherited these funds through the trust funds that were carefully set up by these families and your concern is somebody could offend his family name. OMFG we wouldn't want to offend someboody. Take them for thier intire life savings but don't offend the perp. Gearhart Gearhart GEARHART GEARHART GEARHART HURST HURST HURST HURST. Take that!!!! LOL in Atascadero

By: Anonymous on 5/5/08

Having access to borrowed money is not the same thing as having wealth.

The only people who think otherwise are idiots and crooks.

Which is Kelly?

By: Anonymous on 5/4/08

Was it not Mayor Brennler who, several month ago, requested an investigation into how Kelly Gearhart was handling some of his real estate affairs?

If I remember correctly, Brennler was critized for his over zealous handling of the issue.

Looks like he may have been on the right track.

By: Anonymous on 5/4/08




By: Anonymous on 5/3/08

Dewdog…Put down the Kool-Aid and wake up!

The "Kelly Gearhart hole" gets deeper each day.

This rapscallion doesn't have an honest bone in body!

I wonder if Tammy is still on the scene and how she feels having married such a buffon!

This clown is going down!

All short men usually do!

By: Anonymous on 5/3/08

Well guys I'm waiting for ALL of the facts to come out. It's difficult to varify the information on the blog as I have not been able to gain access to it on the internet. I've attempted to find this information thru my sources since the beginning but have not been able to obtain the information. There appears to be many investors on this issue stating they were willing to ride it out. Most of the comments so far have come from the Atascadero haters of Gearhart who are talking there hate and actually not providing any facts. I have no problem accepting whatever becomes of this. Although there needs to be more information provided. As with the case of Estate Financial that was pretty clear from the beginning and now ALL of the facts are out and that case is pretty simple to understand. Time will take its course and we will all know what has happened and we will all accept its outcome.

The personal attacks on Mr. Gearhart's family and father almost wants you to think twice about the "people" making them-very sick.

By: Anonymous on 5/3/08

dewdog is a poodle who eats from Gearhead's hand.

By: Anonymous on 5/3/08





By: Anonymous on 5/3/08

dewdog I think you owe everyone some kind of explanation as to why you are so tough on Estate but want to handle Gearhart with kit gloves. Come on we can take it.

By: Anonymous on 5/3/08

The thing that Kelly did better than Estate was complete his construction on most projects no matter how poor the project was. It appears however he just moved all his previous losses into these last projects by over borrowing to cover his previous poor decisions."The chickens have come home to roost"

By: Anonymous on 5/3/08

Gearhead's comments on congalton's show:

"We're out there working every day". The only work being done out there every day is on the golf course, not Vista del Hombre which investor's have loaned him money on. He's simply being purposely evasive and dishonest.

Regarding the road / sewer extension he says "that's not part of my project". Investors may want to read the loan covenants to determine if the Paso Conditions of Approval which require the infrastructure extensions are part of Gearhead's responsibility. If that requirement was not included as his responsibilty, he can indeed claim it is "not a part of my project" even though the work will be required before any Certificate of Occupancies are issue.

Again it is Gearhead simply being purposely evasive and dishonest, as usual.

By: Anonymous on 5/3/08

Just listened to the podcast with Kelly Gearhart….can't say his aggressive/bullying demeanor or useless responses were any surprise.

Can't wait to see him dragged into court and actually have to answer questions truthfully instead of pounding the phrase "get your facts straight" without ever offering any specific answers to some very clear allegations.

Interesting how he was not available for comment before the article was posted and Karen spoke on KVEC but had plenty of time to phone in and have a public hissy fit.

My prediction: There is no way he'll show up next Weds. on Dave's show; I'm sure he'll have a "legitimate" excuse though (insert sarcasm here).