Lenders accused of fraud agree to surrender licenses

October 21, 2008


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.

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By: markthompson on 10/27/08

Roo I agree to disagree tu shay! Only time will tell bad thing is it will be some time before anything is done and set in stone. Once again I look forward to this blogging debate and Fed Up no need for name callin it doesn't do any good, nor make you look like a good person where not in a teen chat room. Is the weather man a relative of gearhart?

By: Nameless on 10/26/08

If this was a downturn, the property value would have dropped between 20 to 30%. With max LTV at build out not more than 75%, investors still could beslightly ahead or come out with a small loss.

when the scale of FRAUD is added, investor stand to lose big. No greed on the investors part at all. Very good deal for investors borrowers and brokers if operation run honestly.

By: Roo on 10/26/08

Hey, markthompson (I mean Jay or Courtney, it has to be one of you), here's a news flash: I didn't put all my eggs in one basket, but I'M STILL PISSED about being defrauded! What's jail time going to do? It'll PUT A HUGE SMILE ON MY FACE, that's what!

These stupid Victim Blaming posts show a definite pattern. I've culled a few from past entries to this blog. Check this out:

"Investors received 12% interest for 20 years and now due to the local real estate market these hard money lenders are in some trouble. These are high risk investments, many investors invested their entire life savings and then lived off the interest payments, now they are not receiving payments so they are in an uproar. Where can you get 12% on your money? You could loose all your money in the stock market in a day. Your money is secured by the property, some of these deals may be overleveraged but time is needed to sort out these problems. Do the investors want to take over these development projects and finish them?"

Then this: "I am so tired of hearing you people that invest in these risky,high interest loans bitch and complain when these loans stop making payments. You guys just sound like toddlers having a fit because you aren't getting an interest check from Gearhart. Admit it you would be bitching even if the properties where built out. Bottom line your greedy and you only care about your $$$. Deep down inside you know that's the truth. Now you want to blame these hard money lenders for your money being at risk. Hello you guys seeked them out they didn't come looking for you. These companies have doubled your money!!! Start taking responsibilites for you own investments or should I say greed. Look around us people the economy has taking a dump. Next time you decide to invest with a hard money lender remember it's a risk!!!"

Or this gem:"Why dont you all pull your heads out before you try to bring down people that are trying to improve the community and make it a better place….Spend your money on a good cause, try to cure cancer, donate to a charity, not waste your money on ruining peoples life (and for those who say their lives are ruined because their whole nest egg was invested…maybe next time before you invest your WHOLE retirement in a high risk investment, think it through…dont be greedy!)"

There you go, markthompson, I've reprinted some of your past drivel to save you the trouble. Now that the facts about the FRAUD are coming out, perhaps you should rethink your definition of "GREED". And your current whining about jail time (YES!!!) makes this past post both pathetic and prophetic:"Just remeber they did not take your money, we gave it to them to invest and I back Kelly and Jay 100% that we will get our money back…as far as I am concerned we haven't lost anything. We are just not getting interest. The biggest whiners will be the biggest losers in the end…"

By: hotdog on 10/25/08

Fedup, right on. I don't know where these 'nay sayers' come from, they must have nothing to do but blame victims of crime. Their intellectual capacity is certainly wanting, not to mention their moral compass. If anyone reads these articles and late follow ups in the Trib, NT and other sources it becomes obvious what is going on. Could be these sad cases are plants from the crooks, trying to deflect responsibility. Its all pretty bleak. And despite the crooks admitting their crimes to the DRE their mouthpiece has proclaimed them innocent! Read the Biz Buzz in section B of the Sat Trib on all that.

By: Fedup on 10/25/08

To markthompson

You are an idiot. How do you know if anyone put all their eggs in one basket. That sounds like what someone with your mentality would do. I guess you don't put your money in the bank because it might get robbed. You are the kind of guy that thinks that a woman should get raped because she is a woman.

By: markthompson on 10/25/08

tblonde bottom line if you hadn't put all of your eggs in one basket you wouldn't be here and if you would have put away your monthly checks you wouldn't be here either. Whats the jail time gonna really do for you… nothing you will still have to go back to work to attempt to make it somehow. I hope to here from you soon!

By: Newsome on 10/25/08

I don't think AmyDummy is a dummy, I think he simply doesn't know what he is talking about.

He may not understand that the underlying security for these "risky" loans has been deeded away. He may not understand the notion of progress payments made against progress that had not been made.

Or he may just be stirring the pot because he has a mean streak or nothing better to do.

By: Roo on 10/25/08

It's nice to see the cutting-edge Trib joined in on this story 4 days later…

By: tblonde on 10/24/08

This has nothing to do with the economy. Hurst Financial had hard money and was to monitor the construction projects on many projects, and give Gearhart x amount of dollars as the projects progressed. He didn't, he gave it all to Gearhart at one time. This is just the tip of the iceberg, there was so much illegal misdealings between Hurst (Miller) and Gearhart frauduantly it's too complicated to go into on a blog. They deeded property back to themselves, they reconveyed property frauduantly, etc, etc, etc,. These people are going to go to jail for many years, the evidence has been collected in volumes. It's just a matter of time. Don't say innocent until proven guilty, trust me they haven't got a chance in hell to get out of the misery they have caused many people.

By: AymaDummy on 10/24/08

Okay, NOBODY is blaming anybody. We are not going to blame ourselves for investing our money and we are not going to blame the people who are 80 or 90 years old. But get a clue that it was a risk, and nobody complained when we were making money. Look at the economy people, it's not just private loans that are going down, big banks are as well and most likely for the same reason.

By: George on 10/24/08

a few name calling comments deleted,Re: guidelines.

By: InTheKnow on 10/23/08

High risk is one thing, fraud and theft are another. Yes, with high risk you lose when the market goes down. That is expected. However, high risk does not mean it is ok for your lender to be a thief. Also, it is the lenders responsibility to inform investors of the amount of assets they can invest. I guess some of these 80 and 90 year old investors should be blamed. Shame on you.

By: Fedup on 10/23/08

To markthompson

I rest my case.

By: markthompson on 10/23/08

I look forward to reading all the complaining from everybody. Get a job and do something about it, you all signed a paper that stated that it was a high risk investment and on top of that to put all of your money in it was crazy

By: Fedup on 10/23/08

Why do some of you idiots equate criminal activity with risky investment. Fraud has nothing to do with investment risk. FRAUD IS A CRIME. If you get mugged is it a risky investment to have your money in your wallet?

It amazes me how some people have a back handed way of blaming the victim.

By: Booty_Juice on 10/22/08

Of COURSE these are daddy/daughter and mommy/son crimes involving inbred families who all know each other and their various crummy little business'. Being north county it could be no other way. Wake up and smell the meth lab.

By: JorgeEstrada on 10/22/08

It is very disturbing to hear a lawyer, officer of the courts, address the investors not the crime. We have all heard how the victims become the issue and to add insult, who left the door open for more victims? The clue is in the popular techno song of the 80's by the group Trio, DA DA DA.

By: tblonde on 10/22/08

Sorry about leaving Kelly out of my blog. He is as big a scum bag as Jay and Courtney. I'm sure Kelly has no problem sleeping at night. What a pathetic piece of garbage he is as well.

By: tblonde on 10/22/08

Jay Miller's wife owns Firefly in Paso Robles. Nice shop, hope she can sleep at night knowing she has a nice business while there so many senior citizens losing their home and everything they worked for all their lives. She must be so proud of her husband Jay and daughter Courtney. Maybe she can hire the 81 year old man that has to go back to work washing dishes because of her husband and daughter. There are so many cases of elderly citizens not knowing what they are going to do now that Hurst Financial has taken their security from them. Sleep well Courtney, Jay and the rest of you scum bags!

By: MyThoughts on 10/22/08

tick tock, tick tock, tick tock … the wheels of justice keep ticking away, thanks in great part to Karen and Dan

By: hotdog on 10/22/08

The investors are waiting with glee for the day when Jay and Courtney are sharing meals with Guth and Yaguda in prison.

Quite a dad/daughter and mom/son routine we have here; and I think Gearhead's relatives will take the dive with him too. Nice collection of families we have around these parts!

The family that steals together stays together.

By: fogcatcher on 10/21/08

things are going to move fast now,and any evidence that investors have uncovered should be ready to be handed to the investigators such as a "refund of overfunding" check that was made out to HFC by the title company!!!! ($30,000.00+) Wonder where that went!