Banks on thin ice after risky loans to developer

May 17, 2008

By KAREN VELIE and DANIEL BLACKBURN

Bank loans which appear inadequately secured made to a well known North County developer — as well as an accompanying tangled web of loan transfers — may have created significant problems for some San Luis Obispo County banks.

Kelly Gearhart owns an 884-square-foot house on a small, oddly shaped Atascadero lot at 5120 Traffic Way. The property transferred several times between Gearhart family members before San Luis Trust Bank, in 2005 and 2006, lent Gearhart a total of $3,696,677 on the house. The property is worth approximately $250,000 in today’s market, according to real estate experts contacted by UncoveredSLO.com.

According to court records, the loans have not yet been repaid. Neither Gearhart nor bank officials returned calls and e-mails from reporters.

San Luis Trust Bank reported earnings of $1.03 million for the first quarter of 2008, down from $1.08 million for the same period in 2007. In a recent press release, bank officials boasted of their $3.4 million loss reserve fund.

However, due to a recent $1 million hit linked to the failure of Cameron Financial Group’s First Choice Mortgage, coupled with $3.7 million in what may be under-secured loans made to Gearhart, San Luis Trust Bank’s “cushion” is stretched thin during the current climate of economic uncertainty.

Federal authorities began keeping tabs on the fledgling bank not long after its inception in 1999.

Following a lengthy examination of San Luis Trust Bank, the U.S. Treasury’s Office of Thrift Supervision (OTS) determined the bank had engaged in unsafe and unsound acts and practices. The OTS and San Luis Trust Bank signed a 16-page agreement in May 2006, written to bring the struggling lender back into compliance.

Heritage Oaks Bank also has made arrangements with hard money lenders and their developers that appear to be overly-risky.

Heritage Oaks Bank loaned Gearhart $1 million on Jan. 16, 2008, on his 14-acre Vista Del Hombre project — located near the airport in Paso Robles — with a deed of trust to secure the indebtedness.

(Vista Del Hombre’s problems were detailed in an April 29 UncoveredSLO.com article.)

Gearhart has stopped interest payments to hundreds of private investors who put $27 million into the project through Hurst Financial in 2005 and 2007. Those investors, though, are positioned above Heritage Oaks Bank in case of a default.

Gearhart claims his Vista Del Hombre project is worth between $100 and $150 million. However, real estate experts contacted by UncoveredSLO.com estimate the property to have a value closer to $5 million.

That property now includes some infrastructure, a golf course, three temporary buildings, a group of Porta-potties, and a small trailer housing both a pro shop and a cafeteria.

A cursory search of Gearhart’s holdings could have alerted bank officials to his current financial standing. Of dozens of properties Gearhart owns throughout the county, many have intertwining title profile histories.

Between 1994 and 2003, a residence located at 6305 Alcantara Avenue in Atascadero was transferred nine times between different Gearhart family members. At various times, it was listed in his wife’s name, Tamara Gearhart. Then the property’s ownership transferred frequently, listed to either June or Raymond Knight, Gearhart’s relatives, according to a title report. Because of state regulations governing interfamily transfers, these exchanges cost Gearhart nothing.

On November 7, 2006, Gearhart deeded a residence on Encinal Avenue in Atascadero to his son, Jeremy Gearhart, at no cost. A month later, on December 8, 2006, Central Pacific Mortgage Company provided the junior Gearhart with a $250,000 loan on the property. Later that same day, the property was deeded back to Kelly Gearhart, according to the title profile history.

Anticipating a rash of bank closings nationally, the Federal Deposit Insurance Corp. recently announced plans to beef up staff by as much as 60 percent, according to the Wall Street Journal. The key concern is not residential lending, but commercial and construction loan concentrations at smaller, locally-owned banks.


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Stefan

By: Anonymous on 6/1/08

Maybe I'm wrong but how much more would have been recovered for the investors had they put a stop to this 2 years ago. Now how much more will be recovered for the investors if they put a stop to this right now verses 2 years from now. The cost of atorneys would have been minor compared to the losses that have taken place by letting the fox watch the hen house.

By: Anonymous on 6/1/08

No one is talking their way out of anything. Just given all the facts what is the logical conclusion.

A little white collar no previous record jail time = sense of satisfaction but no more money!

Assets disappearing quicker than Houdini = lawsuit won but no more money. Do whatever you want your going to anyway. More money spent on attorneys = less return on investment. Enjoy this beautiful day I'm going to the beach, late.

By: Anonymous on 6/1/08

Sounds like Gearhart/Hurst think they can talk thier way right out of this and just move thier operations to another state. They already have planted the seed that you will be lucky to get back 10% of your investment and that all they plan on doing for you if your lucky is giving back the unimproved or partially improved property. Sounds like the blueprint for future acts.

By: Anonymous on 6/1/08

ROI:

TO ROI is correct, 'Only a fool would follow you into battle!' My mother once told me, "Becareful whos advise you follow, the wrong kind can kill you!" Wise words to live by.

Your grandiose sense of self importance is exposing your narcissistic personality disorder.

Remember, hearsay, and opinion, do not equal fact.

By: Anonymous on 6/1/08

Your a real piece of work. Only a complete fool would follow you into battle.

By: Anonymous on 6/1/08

You will get back the property you invested in.

By: Anonymous on 6/1/08

Well, you two last posters, as is proven by your comments you have nothing to say. You didn't come up with one 'fact' of mine and disproved it. You are apologists for a deceitful industry full of short sited crooks at almost every level.

I have no idea how Hurst handled its business over the years-that isn't the issue. When and how I sleep isn't the issue. The overall lending industry is NOT the issue.


The issue is whether or not Hurst has, in the last year or two, and continues to, handled its business in a manner against all of its agreements with the lenders and contrary to licensing requirements that are designed to protect the lenders from crooks and fools (both of which Hurst has been).

I figure because of their business practices they will soon be out of business, and many of them will be doing time (maybe Kelly too).


None of you answered my questions nor provided the slightest response to my challenge. Figures, just a couple of lonely (guys?) with nothing better to do than beat up the victims of a fraud.

I will respond to your main point of the declining market. If the projects had been appraised correctly, the LTV of the loans and that would have protected the lenders from most or all of the market shock. But, of course, nothing was built, the money is gone and the Hurst people continue to stonewall and lie to its customers. They mismanaged everything from the beginning, using new money to pay for old obligations-that is a Ponzi scheme, a felony. This has been discussed at length by many people and it is done-the market exposed the scam, it did not create these problems.

I wonder why you 'odd' people cannot discern the difference between bad market conditions and fraud, neglect and mismanagement.


Stefan

By: Anonymous on 6/1/08

ROI,

Ok, you want something credible to consider? Consider what 'TO ROI' has just said. FACTS, right? Can you dispute that post? And yet, you think you haven't been off base? I'm not trying in anyway to minimize this mess. It's terrible, and lots of peoples lives are going to be changed forever. But you come off as an arrogant expert that has all the answers, when you are seeing only one, very narrow side of the big picture, thus missing important facts. I agree, there is reason to be alarmed, but to panic is to lose reason, and ability to think clearly.


Do you ever sleep?

By: Anonymous on 6/1/08

Most likely a 40% drop in real estate values will translate into a 40% loss of your investment. What happens when your mutual funds take a 40% hit, your investment continues to grow? Where does that logic come from? Certainly not Investments 101. Investments 101 : Rule#1 never invest more than you can afford to lose.

Rule #2 A little more risk is ok when young, but as you get older move more money into safer more consevative investments. We all hate to lose money, its just to hard to earn those investment dollars back. But there is a reason why hundreds of hard money lenders statewide are in trouble thousands Nationwide. So you think they all just woke up one morning and decided to become crooks? The entire industry nationwide? Very , very logical.

By: Anonymous on 5/31/08

I don't think investors are lame or stupid. Hurst has been in business about 25 years and I got a loan from him in 1983. Honestly don't you think if he was a crook, a scam artist, a ponzi schemer, or any type of un reputable business man i't would have shown up a little sooner than 25 years later? Were supposed to believe that after 25 years in business and the friendships he's developed along the way he woke up one morning and said " ya know this seems like a really good day to start ripping people off." Forget that i've already set up my retirement and i'm ready to hand the reins over to my daughter, lets just start stealing money. And what do you mean it has nothing to do with the economy? A friend of mine just bought a house for 257,000. in Atascadero from the bank (repo) that had previosly sold for 450,000. You can buy houses all day long (3 bdrm, 2 ba.) in the mid 200.000's FROM THE BANKS. You want people to believe that a 40% drop in value hasn't affected their investment, it's all just some sort of sham? I think most people are smarter than that.

By: Anonymous on 5/31/08

To Texas Bound-let's have some straight talk and leave the unsupported assertions aside.

OK. Which of my 'facts' are wrong? As with some other bloggers I am all ears if someone has something of value to offer. Tell me where I have been off base.

And there is plenty of reason to be very alarmed, millions are at stake. Many investors have no idea what to do, many others don't even know the disaster that is about to envelope them. Just what would you have us do, sit on our hands and hope?


Are you an investor, have you lost out? What is your stake in this, as well as the others who castigate me and others for trying to find solutions to a big problem?

I'm all ears, give me something credible to consider.

By: Anonymous on 5/31/08

to ROI:

Ah…right, I think I need to clarify myself. ACTUALLY, I was writting to TO ROI. I am very aware that you,ROI, have been posting on the blog forever. And YOU my friend, don't always have your facts straight. As a matter of fact, you are as guilty as anyone else who has been reckless with useless talk! Most of your post seems to have the ultimate goal of whipping people into a frenzied panic! If you really want to help 'avoid ruin', think before you post!

By: Anonymous on 5/31/08

He bought that jet 3 years ago when it looked like an Endless Summer for developers. The jet was leased to a charter service in SLO to help offset payments, and often times wasn't even available when he wanted to go someplace. Jet was sold about 1 1/2 years ago when it was clear summer was over. No doubt it was sold at a loss, since it was purchased new from factory

By: Anonymous on 5/31/08

My investors paid for it, welcome aboard.

Captain KG

By: Anonymous on 5/31/08

I feel you my brother, I feel you


Stefan

By: Anonymous on 5/31/08

To Texas Bound.

I have been posting all the time, trying to encourage some sanity and discourage the reckless and useless talk about how lame the investors were. This is a simple case of fraud and/or gross mismanagement. Nothing to do with the market other than exposing the above issues.

A few ripped off investors have banded together to find some clarity and explore our options.

Anyone who wants to join our little band can email me at rippedoffinvestor@yahoo.com. Sometimes we get 'moles' that share our info with Hurst, I guess to cozy up to the thieves. But we have nothing to hide, unlike Hurst. There are many things we can do to fight back. Wasting time arguing with fools who can't resist criticizing us is a bummer but I will not let idiots roam on this site unchallenged. I say again, if anyone is not engaged in the spirit of this blog, to recover our assets-then get off and whine to someone else. We are trying to help each other avoid ruin.

By: Anonymous on 5/31/08

Yes, I understanding the math of "interest" and risk. The problems are with ethics and accounting.

By: Anonymous on 5/31/08

To, To Texas Bound

Ahhhhhh! Texas has the best surf in the world! Just say the word, I'd take you there in a New York minute!

By: Anonymous on 5/31/08

Texas Bound

Been out surfing Is there any good surf in Texas? Take me with you.

By: Anonymous on 5/31/08

regarding TO HUMBUG says:

Appears to be fraud according to my loan docks, BTW it was a construction loan by my group, not a commingle, get done what you feel like, or "works in progress" as Mr Gearhart has referred to it in his sparse communications.

By: Anonymous on 5/31/08

Well, what do you know? At last someone who actually has a head on their shoulders, can think, AND spell, has spoken up! TO ROI, where have you been? Most of this blog has been wasted on speculation, assumption,and trying to whip people into a panic. Nice to have a voice of reason and obvious credibilty show up at last!

By: Anonymous on 5/31/08

I didnt do it in 2 years, I didnt do it at all. I'm trying to make sense of it. 8.33 years is correct but not if you've spent the last few years robbing Peter to pay Paul, and have been losing money on everything you do. You can't borrow your way out of this one, and thats clearly what some people were trying to do. It has all caught up and there will be legal consequences. But anyone that thinks these guys are going to be frightened into handing over millions in assets is dreaming. The assets are all for sale and disappearing faster than Billy Beer. By the way Insider a very stellar job on the O'malley versus the freak show blog

By: Anonymous on 5/31/08

I was told this afternoon the office is empty. Just the other day Courtney said all is fine but then 'disappeared'. So, whoever lives nearby can go to the office, look in the windows and end this controversy. They are there or they aren't, anyone nearby can find out.

It's way too soon to say we should or should not do a lawsuit. No one knows what will happen or be appropriate. Keep options open and file those complaints with the DRE and DOC, maybe our lazy DA will do something.

There should be news soon about a class action suit, hopefully at minimal up front cost. That and other options all deserve the attention of investors.


By the way, the best and first thing investors should do is contact your co lenders and try to forge a cohesive group in case you want to take the reins away from Hurst. Try whitepages.com, it works really well for finding people.


Stefan

By: Anonymous on 5/31/08

to to ROI


Geatharts gone? Where is he?

By: Anonymous on 5/31/08

to to humbug


The answer to your question is 8.33 years. So how did you spend it all in 2 years.

By: Anonymous on 5/31/08

Your right, they have violated their license, and those licenses will be lost forever. And i'm sure monies intended for one job have been used to pay interest and expenses on another job, and i'm sure there was more than a little negligence. All of which is going to carry serious consequences. But I'm also sure what you will get other than the satisfaction of seeing legal punishment handed down is the property you've invested in, given back to you and you will be able to develop yourself.

By: Anonymous on 5/31/08

Sorry my friend.

look at it this way:

if you borrow 1 million dollars at 12 1/2% interest your paying 10,000. per month in interest.


If you borrow 50 million dollars at 12 1/2 % your paying 500,000. per month in interest. How long does it take at 500,000. a month to eat up all the loan proceeds. This is what everyone is going to find out after spending hundreds of thousands in legal fees. With the crash in real estate theres no way to generate this type of income. No one planned it this way, noone concocted a scheme to cheat people. The facts are as i've written here.

By: Anonymous on 5/31/08

I'm not Kelly, Jay, or Courtney, but i know this, Jay sold the building he and Kelly occupied to Larry Wysong Construction. Jay will stay in the office he's in. Larry Wysong will move into the office Kelly occupied. And Kelly is moving elsewhere, so possibly your amazing sources of information have noticed that that Kelly's old office is empty. I'm here for you if you need credible info.

By: Anonymous on 5/31/08

On another note, I cannot afford any type of suit, clothing or suite "law suites" at this time. I imagine Hurst/Gearhart still can and enjoy the life they are accustomed to. Thanks for ruining my families life.

By: Anonymous on 5/31/08

In regards to TO ROI says:

The question remains, WHERE IS THE MONEY? Working with Hurst/Gearhart has not brought any answers to this very BASIC question??

By: Anonymous on 5/31/08

Well, I see Gearhead and friends are back.

I heard today the office is empty. I have not confirmed this. If the joker who likes to waste our time has any proof they are still there we are all ears.

And you are wrong about all your comments. They have violated their license at every turn (admitted by Jay Miller numerous times) and probably committed multiple felonies in stealing (misallocating it etc) the investment money. They probably inflated the property values, they never disbursed the money correctly nor did they ever check to see if any borrower was performing.

How's that, Kelly, Jay or Courtney? Any other dumb comments?


Stefan

By: Anonymous on 5/31/08

Hurst

has not disappeared why are you lying to everyone. There are employees, and most of the time the owners at Hurst mon.- fri. Its a rare exception that that is not the case. You can continue trying to whip people into a frenzi all you want. Depreciation and delays, but especially depreciation in real estate values have hurt the hard money investors, borrowers, and lenders everyone has lost, everyone took a chance together, and it didnt work out this time. There is no ponzi scheme, no deliberate intention to fraud anyone. This will come out and you will look like the idiot you are. No one has a money tree to give you your entire investment back! No one has the assets to even cover 10% of giving you your money back. By working with the lender to sell off the property and disburse the funds you would have received far more than you'll get with your law suites.

By: Anonymous on 5/31/08

Where is everybody? Word is out Hurst has disappeared-anyone know where they are?


Anyway, any newbies who want to connect with others:rippedoffinvestor@yahoo.com

By: Anonymous on 5/30/08

Forget the DA. The number he gave out is wrong and they aren't doing jack for us, he either lied or was totally misinformed about his own office! They just refer you to the DRE and DOC, which you should do and file complaints against the crooks. Do it soon, time is running out.

By: Anonymous on 5/29/08

The SLO DA announced today on the radio we can call this number and

lodge complaints about any malfeasance concerning loan brokers:

805-781 5852. He said his office has been working with the DRE and DOC

for some time on these issues.


By: Anonymous on 5/29/08

Thursday May 29th, 5pm on KVEC radio 920am, the D.A. will be on, please call in and ask him what he's doing to help all of us out stuck in this mess!!

By: Anonymous on 5/25/08

SURPRISE….Jay Miller is personal friends with his appraiser Terry Pippin, who has done almost all the properties.

By: Anonymous on 5/24/08

Cracker


I thought you made your absolute last comment ever two comments ago.

By: Anonymous on 5/24/08

I don't give a flying f_ _ _ about kelly g not once has anything I said been in his defense about him or anything hes done. If I want to talk about kelly g which i dont I will mention him by name. What wrong with all you kelly g obsessed people?

By: Anonymous on 5/24/08

To Sobia…answer to your question is YES; Legal but not acceptable to me.

To Cracker… delays by the City have caused Kelly to spend more for interest than he may have planned, but it would take over 8 years to consume all the loan. I don't think that's what the lenders are complaining about.

By: Anonymous on 5/24/08

Employees or outsourced – it really doesn't matter. Hurst is/was paying the bill and you can get the appraisal you want when you are the lender.


Stefan

By: Anonymous on 5/24/08

There's more


Fat Boy Fat Boy what you gonna do what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do what you gonna do when they come for you.

Investors Aint gettin no payments.

Construction not completed per Agreements.

Murray Powell says give me my money.

Kelly Gearhart says you're funny.

Fat Boy Fat Boy what you gonna do what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do when they come for you.

Foreclosure by Hurst Proceeding.

Investors or Lenders? still bleeding.

Is there another piece of dirt worth turning.

I gotta keep this deal churning.

Fat Boy Fat Boy what you gonna do what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do what you gonna do when they come for you.


By: Anonymous on 5/24/08

OK Insider,

You have redeemed yourself for a moment. That was really funny. I got a phone call telling me to come take a look at the post.

By: Anonymous on 5/24/08

Hurst has no appraisers on staff. They hire independants.

By: Anonymous on 5/24/08

Let's not forget who was doing the appraisals on the property – employees of Hurst. That $1 million property that has a 65% LTV note was probably only worth $500K – the equity was never there.


On a side note, click on my name for latest default regarding Estate Financial.

By: Anonymous on 5/24/08

My absolute last comment ever. The facts will all come to the surface, that I'm sure of. Insider will probably turn out to be right 90% of the time. I take no issue with that 90%. Good-by old friends.

By: Anonymous on 5/24/08

to Cracker


Sounds like you want to justify some actions on your own part.

By: Anonymous on 5/24/08

to Gearhart Supporters


I've been working on that song. Remember the tune is the"Cops" theme


Fat Boy Fat Boy what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do when they come for you.

Investors Aint gettin no payments.

Construction not completed per Agreements.

Fat Boy Fat Boy what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do when they come for you.

Murray Powell says give me my money.

Kelly Gearhart says you're funny.

Fat Boy Fat Boy what you gonna do when they come for you.

Fat Boy Fat Boy what you gonna do when they come for you.

By: Anonymous on 5/24/08

To my fellow bloggers it is with a heavy heart i bid you all farewell. I thought this was a place for discussion and exchange of ideas but i can see its just a place where you can go to agree 100% with the hardcore bloggers. 90% is not enough, 95% is not enough. Have fun


Stefan

By: Anonymous on 5/24/08

To insider and not a stupid investor. all the hard money loans i know about are made at the time the land is purchased and before it even has entitlements (in the case of a sub division) this means interest is clicking away from day one. The assumption is the lender is explaining this in detail to the investors. Is this a good idea, absolutely not. Its a terrible idea in a good market, catastrophic in a bad market as we are now seeing. Again, what i'm saying does not excuse fraud of any kind. No doubt some will be punished when this is over. Contractors go to hard money lenders when the bank says no, you dont have enough collateral. Having a lot payed for and permit in hand most of the time is enough collateral. Therein lies the true risk in these investments. I dont believe investors are stupid, they dont always get all the information they need to make a decision.

By: Anonymous on 5/24/08

to Crackers


No ones saying you didn't return some of the money to investors through interest payments. Everyone knows the essence of a good Ponzi scheme is to funnel half the money back to the investors while your stealing the other half.

By: Anonymous on 5/24/08

to Cracker


Why the hell are you funding the entire loan for a process that takes 24 mo. to get a permit and 24mo. to build. Why not wait untill the builder has the permit in hand before funding. Geeze how would you live. You can tie a pretty ribbon around a bag of sh@t but you still have a bag of sh@t. I will give it to you, you have proven to be quite incompetant however it won't excuse your thievery.

By: Anonymous on 5/24/08

HELLO CRACKERS

wouldn't you get all your

ducks in order before you got a loan.you know Hurst will get the loan whenever you need it. Why pay interest on a project not approved? without permits.

we know the answer… SCAM


By: Anonymous on 5/24/08

Insider you need to chill out. Larger loans typically go to new sub-divisions not just a simple building permit. You have to rely on time lines city planning staff commits to upfront. After you make the commitment to go forward everything thing youve been told goes right out the window. 30 years cant prepare you for just hou bad it gotten in the planning dept. Worse and worse as time goes on. God forbid you ask for a meating with wade m and staff to get things moving in right direction. Wagons get circled and you really pay with time now. ps I have absolutely nothing to do with Gearhart

By: Anonymous on 5/24/08

wouldn't you get all your ducks in order before you got a loan.you know Hurst will get the loan whenever you need it. Why pay interest on a project not approved? without permits.

we know the answer… SCAM


By: Anonymous on 5/24/08

to Cracker


First of all these guys now how long it takes to get a project off the ground they have been doing it for 30 years. Anyone who can't get a permit in 24 mo. doesn't know what they are doing or doesn't want the permit in the first place. There was still a missing 1.5 million in your little story so I'm guessing you are a cracker maybe the one they call FatBoy. Oh I have a song for you. It goes to the tune of the "cops" theme song. FatBoy FatBoy what you gonna do when they come for you. FatBoy FatBoy what you gonna do when they come for you. You got the idea I'm sure some of your fans could participate in writing the lyrics. Anyway we have the corus and the music.


Stefan

By: Anonymous on 5/24/08

to sobia


Sorry you're one of the investors in this deal. I think Gearhart is the King Pin on this one and Hurst became his lackeys.

By: Anonymous on 5/24/08

Everyone with real estate is losing equity in this slide, that certainly doesn't excuse any wrong doing. But not all situations even with hard money involved, include some type of wrong doing or fraud. Do the math: a 2 million dollar loan at 12% pays 20,000./month in interest after 24 months when you include points, escrow, etc. that 500,000.00 The lenders take the interest payments out of the loan. City of Atascadero with endless delays and plan check corrections from anyone of about 10 staffers keeps the project in limbo untill the loan proceeds are all gone. Now maybe the lender should have stepped in much sooner on the behalf of the investors and seized the property before the loan proceeds were gone but we all know that wasn't the case. Its a bad situation I feel for all whose standard of living will be changed forever. Painful down cycle, it will be interesting to see how many people come back to the hard money lenders when the market rebounds. I think a lot of them will be lured back even though they lost money on the last go around. 12% is hard to ignore if you have money to invest.

By: Anonymous on 5/24/08

to: got a life

get a lesson

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 5/24/08

sobia, the properties can be offered for sale and investors would have to approve the sale price. or investors could choose to hold the properties

to a date uncertain when the market becomes stronger. In any event you will have a say

By: Anonymous on 5/24/08

For those dolts who continue to say these investments were 'high risk', that we were fools and are now whining: see the new Hurst website http://206.40.207.28/.

This is what they always promised, and never delivered. What they promise is required by the DRE.

Their current callous and arrogant attitude is typical of smug crooks who cannot fathom getting caught by their victims.

Little bands of angry investors are forming to seek options and gather energy to protect their rights. Mine is at rippedoffinvestor@yahoo.com. New folks always welcome.


Stefan

By: Anonymous on 5/24/08

So can Hurst foreclose on the properties and sell them for what they are worth with nothing on them and back taxes owed, and give us pennies on the dollar and that's legal and acceptable?

By: Anonymous on 5/24/08

…"Got a Life" is Courtney. She has reportedly told investors "The money is gone! Get over it"!If I didn't want to tar and feather them before, I sure do now! That statement just did it! Hey, sure. I just lost $5000.000…I'll be sure to "Just get over it"!

By: Anonymous on 5/23/08

I think Got A Life is the one who got the money. What do you guys think?

By: Anonymous on 5/23/08

Got a life,

I have one, now I will have to work way past the time alloted. I don't mind taking a risk, I DON'T like being cheated and lied to. This is a criminal act not a bad risk issue.

By: Anonymous on 5/23/08

You obviously have no idea what it feels like to have your life savings in jeopardy. So I guess the elderly man who told me his interest payments were paying for his wife to be taken care of in an Alzheimer's home should say screw it all, and you'll tell him to stop whining and get a job?! YOUR in a bubble pal.

By: Anonymous on 5/23/08

They want nothing more than to forclose and return the property to the investors or lenders or whatever they call you such that the forclosure process settles the debt. The investors need to make sure whatever process allows them to sue on the basis of fraud for the remainder of thier loss from both the lender and the developer. Or you can just suck it up like GOT A LIFE wants you to. Who do you think GOT A LIFE is?

By: Anonymous on 5/23/08

You people have been living in your little bubble for way too long! You made an invesment-took a risk. You lost, MOVE ON! Stop being pathetic whiners and go get a job to recoup your money.

p.s. you better hope the FBI isn't reading this site, releasing bank account # and ssn#'s is ILLEGAL!"gloria" give me your account # and ssn# see if you like it!

By: Anonymous on 5/23/08

Good points about the foreclosures. Let Hurst do the NOD process but tell them not to do foreclosure without consulting the lenders. A Judicial foreclosure allows us to get the property and sue for money owed, maybe a better way to go but Hurst may want to do the simple way out to 'show' us they are active. Google FCI for one option if you want to take the reigns out of Hurst's hands.

Have you seen the new Hurst site? What a joke, they offer all the services we never got! http://206.40.207.28/

e me to join our band of angry investors : rippedoffinvestor@yahoo.com

By: Anonymous on 5/23/08

Hurst is filing Notice of Default and Election to Sell our secured properties. This is the beginning of Non-Judicial foreclosure. At the end of this process, the note holders will be paid(probably very little) and Hurst and Gearhart have settled your account…end of story, No recourse! Maybe we need a new Trustee.

By: Anonymous on 5/23/08

I already assume they have all blown the money, I have been told as well as the rest of you the money was given out, nobody claims to have it. Hey Hurst, if all involved don't get back any money, then you better be ready for the fight of a lifetime to keep all your butts out of the slammer. You knew what you were doing, and it will be too easy to prove once all your books get split wide open. Pay back, or get locked in a cell, which is it? One of the two is going to happen, and we better ALL make sure that is does.