Lenders accused of fraud agree to surrender licenses
October 21, 2008
By KAREN VELIE and DANIEL BLACKBURN
Hurst Financial Inc. president James Hurst Miller Jr. and his daughter Courtney Lee Brard admitted to state regulators their complicity in fraud.
The pair agreed to forfeit their real estate licenses rather than dispute a large number of fraud allegations filed against them by the California Department of Real Estate (DRE), according to an October 14 order giving the pair 22 days to surrender the licenses.
State regulators, in an action filed August 27, accused Miller and Brard of failing to follow through on contracts with investors, of engaging in fraud, and of disregarding real estate law.
More than 1,200 investors, primarily seniors, have placed nearly $100 million with Miller for funding construction loans. According to the DRE, Miller failed in his contractual agreement to protect investors by funding projects only as work was completed, with progressive payments. Instead, he paid developer Kelly Gearhart in lump sums without any monitoring of the construction.”
In addition, state regulators accuse Miller and Brard of working with or under the direction of Gearhart to pay off two investors in the so-called Montecito Plaza II on El Camino Real in Atascadero, while failing to notify the remaining 16 lenders. It is a crime to reconvey a lot and not alert all the investors.
Miller and Brard agreed not to dispute the charges in a matching set of September 29 declarations. “We fully agree that upon acceptance by the commissioner… all affidavits and all relevant evidence obtained by the department in these matters… may be considered by the department to be true and correct for the purpose of deciding whether to grant relicensure or reinstatement pursuant to government code section 11522.“
The Federal Bureau of Investigation and the San Luis Obispo County District Attorney’s Office have also mounted investigations, although no criminal charges have yet been filed against Miller, Brard, or Gearhart.