December 22, 2008

full_172082(EDITORS‘ NOTE: For months, a concerned investor sifted through Hurst Financial Inc.’s trash, tirelessly collecting eight bags of “Post-it” notes, hand-written letters, and typed documents from the imploding lending company. The investor then shared that trash with us. Part I of the Dumpster Chronicles revealed how Hurst Financial Inc. principals knowingly defrauded investors. Part II explained how district attorney’s officials only grudgingly investigated the lender.)



Investors and creditors who have lost millions of dollars to local hard money lenders may find financial reprieve through a plethora of entities with dirty hands.

Sources contend those entities were either culpable in assisting the allegedly fraudulent lenders, or failed in performing a fiduciary duty to report suspected fraud. And as a result, many traumatized Central Coast investors might eventually recover more of their investment than originally believed.

Information plucked from the Dumpster paints a picture of twisted relationships forged between hard money lenders, developers, appraisers, accountants, and bankers working together to facilitate the alleged Ponzi scheme.

Hurst Financial Inc. (HFI) is one of at least four San Luis Obispo County hard money lenders participating in lending schemes and inappropriate management practices that may have already cost thousands of investors, primarily seniors, more than $500 million in non-returned investments.

Hard money loans are based on the value of the underlying asset, rather than borrowers’ credit rating. The concept works if the lender finances no more than 60 to 70 percent of the project and makes payments to contractors as the work progresses. HFI principals James Miller and his daughter Courtney Brard failed to follow through on these promises, and utilized incoming investor money to cover expenses and existing loan interest payments.

HFI funded, in their entirety, numerous developments never constructed. One of those is the Vista del Hombe project. 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.

In January, prominent developer Kelly Gearhart secured a million-dollar loan from Heritage Oaks Bank on his Vista del Hombre property — already over-encumbered by more than $27 million in loans through HFI. The bank’s own appraisal showed the loan had been based on erroneous claims about Vista del Hombre’s value.

That appraisal was not received by bank officials until nearly two months after the loan proceeds had been paid to Gearhart. Relying on a Cuesta Title report, the appraisal claims the property is free and clear of all liens and encumbrances not listed in the report.

Numerous attorneys retained by investors are looking toward Cuesta Title for financial restitution for alleged negligence, and in some cases fraud. Numerous Cuesta Title reports are rife with errors and at the minimum show sloppy work, sources said.

Banks officials have a fiduciary duty to report fraud. There have been instances where banks have been found to be financially liable for frauds they did not perpetrate, because of their failure to disclose.

In an odd twist, Melanie Schneider, an ex-employee of Cuesta Title who was a key person in the majority of HFI transactions, reportedly moved to Colorado with Kelly Gearhart’s brother, Doug Gearhart, shortly after the fall of HFI, sources said.

Additionally, Heritage Oaks Bank Assistant Vice President Greg Porter, whose name is listed on the appraisal as the bank’s contact for the proposed development, reportedly had his house in Atascadero remodeled — including a room addition by Gearhart — prior to the loan’s approval. (Gearhart Construction built commercial and residential properties. The development company did not have a remodeling division.)

One scribbled note discovered in the HFI Dumpster reads: “We even gave Porter with Heritage Oaks Bank….” The last two words of the note, which discusses the specific fraudulent reconveyance that eventually would cost HFI its real estate license, are unreadable because of stains.

Porter, asked if the Gearhart remodeling job influenced Heritage Oaks Bank’s loan approval prior to an appraisal, declined comment, as did bank Vice President Williams Raver.

Nevertheless, documents from the Dumpster confirm that HFI relied on the bank for additional funding.

Another page retrieved reads, “Kelly Gearhart sufficient collateral – Heritage Oaks Bank – (Links) golf course $10 million.”

The bank’s own appraisal says the property is worth approximately $4.3 million as is. The property would increase in value if “an extraordinary assumption” is made that Gearhart would ever complete the 32 commercial and residential buildings as proposed. In that instance, according to the bank’s appraisal, the estimated value would swell to $21.8 million.

Hurst’s appraiser, Terry L. Pippin, claims the property’s worth — if finished — is more than four times the bank’s appraisal.

“My opinion is it is worth around $100 million finished,” Pippin reported. “I do know what I am doing. I have been doing this for 18 years.”

Many investors claim they were wooed by talk of accurate property appraisals, only to find out later that many projects had been given alleged inflated values. Pippin is licensed only as a “certified residential” appraiser, licensed to appraise residential property from one to four units, each with a maximum market value of $250,000; or commercial properties valued at no more than $250,000.

According to one item tossed in the Dumpster, HFI officials knew the truth: “Pippin is not licensed to do commercial!”

Pippin told a reporter that because these appraisals were not secured with federally insured loans, anyone, licensed or not, can appraise properties regardless of the value.

“Under my license, I am able to do any private appraisals,” Pippin added. “For federally related transactions, I can do commercial up to $250,000. It is private money so there are no regulations on that.”

Paul Ketchum, an official with the Office of Real Estate Appraisers Enforcement Division, disagreed with Pippin’s assertions that he does not have to follow usual guidelines when making hard money lending appraisals.

“For licensees of our office, regardless of federally regulated transactions or not, these persons must conform to Uniform Standards of Professional Appraisal Practices,” Ketchum added. Ketchum then request a copy of Pippin’s appraisal, along with the opposing Heritage Oaks Bank appraisal.

According to HFI detail reports, Miller paid Pippin $300 to $500 per appraisal that tout Pippin as a state certified real estate appraiser. A commercial appraisal typically costs between $3,000 and $7,000.

A gaggle of local banks provided hard money lenders unsecured commercial loans, often for millions of dollars. According to the Dumpster documents, Santa Lucia Bank and San Luis Trust Bank made unsecured loans to either Gearhart or Miller.

Following reports on this Web site that HFI and Gearhart were in serious financial distress, San Luis Trust Bank placed liens on 13 properties in Wadsworth, Ohio, owned jointly by Gearhart, his wife Tamara Gearhart, Fred Russell, and Habib Tavassoli.

Russell and Tavassoli are co-owners of a string of bars in San Luis Obispo, including McCarthy’s Irish Pub. Neither Russell nor Tavassoli responded to requests for comment.

Gearhart moved from Wadsworth as a child. In 2005, Gearhart told a reporter he planned to move back to his roots, which he did a little over a month ago.

Another possible avenue for investors hungry to recoup losses could be money that appears to have been funneled to Miller’s wife, Laurel Miller, and relatives earlier this year.

One concerned investor sent Miller an e-mail asking why Miller had transferred his home into his wife’s trust account in March. “Sounds awfully suspicious… especially since it was the same week Gearhart stopped paying (interest payments),” the investor wrote.

A stack of Dumpster documents portray HFI principals attempting to protect assets through family ties.

“One year hold house from date of grant deed – Laurel not sued for performance. Defalcation – Broker uses money for his own use. Laurel make payment on house! Her checking account. Collateral estoppel?” reads one page from the Dumpster.

It appears Miller and Brard were also looking at using the Homestead Act to protect assets from investors.

“Ask about irrevocable trust with kids, Homestead Act. If two take half, can I buy a home and have it secure,” was found scribbled on a piece of yellow-lined paper stained with coffee.

Editors’ postscript: After CalCoastNews made copies of pertinent documents from the Dumpster, all the bags were turned over to the proper authorities.




  1. ccn_debate says:

    Member Opinions:
    By: George on 1/2/09
    Cindy, I am not the only mod here,you have read the guide lines right? other helpful info on my bio, avoid all caps,"feed not the troll"try to keep your comment about the topic not other members of the site.
    By: Cindy on 12/31/08
    I agree that we should stay on topic. I felt that I had to respond to the sarcastic remark about Ted Kennedy. As for all that followed my remark I would be happy to answer your questions but George won't let me.
    By: outsider on 12/30/08
    I think everyone agrees that it is good to stay on subject the best we can but when someone makes an idiotic statement it has to be addressed…thats not getting off subject in my book…its funny how some people dont want to bring politics into a conversation when they dont like what is being said…if you dont like what is being said just ignore the comments…

    By: hotdog on 12/30/08
    When I make a typo here it gets underlined in squiggly red. I wonder what some of you think about when posting poorly written comments, no regard for the reader? Lazy?

    Anyway, I think we should stay on the subject of the article and leave politics out of it. That is precisely what should be discussed.
    By: Black_Copter_Pilot on 12/30/08

    I must have missed the memo on "what really needs to be dicussed."

    Please forgive me to responding to the crazy lady's declaration regarding Ted Kennedy
    By: MyThoughts on 12/30/08
    To Outsider, Cindy and BCP:

    Stay on topic. Ted Kennedy has nothing to do with this story … or are you trying to direct the conversation away from what really needs to be discussed.

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  2. ccn_debate says:

    By: outsider on 12/30/08
    Lol…Cindy's story is hilarious while sad. Its amazing what people will claim while trying to use unnamed sources. What a JOKE!! Use some common sense Cindy. If Ted Kennedy was innocent, why would he tell the police that he was driving the car. Why was he wearing a neck brace for a month after the murder. Why did he admit to everything including the fact that he did nothing to save his girlfriend. Firefighters estimated that she lived for at least another 6hrs in the car before the air was gone while Teddy huddled with his advisors trying to think of a way to get out of his predicament. Makes me kind of wonder about all your opinions Cindy…

    By: mccdave on 12/29/08
    I've heard enough. Tomorrow I'm going before the Paso City Council to convince them to build my monorail.
    By: 4Warn on 12/29/08
    Here is something else that is scary.

    Dee Lacey (Paso Citizen of the Year, Cattlewoman of the Year, etc etc etc) sits on the Heritage Oaks Board of Directors. I don't know if she is on the loan committee or not.

    According to the BK docs Lacey was heavily invested in EFI as was a business called Centennial Livestock which is owned by her husband John Lacey.

    It appears that Heritage Oaks is making big dollar loans to EFI while someone on the board of directors has a huge interest/investment in the company.

    Am I missing something here or does this also seem fishy?

    I hope the DA and Feds are turning over every stinking rock and will stomp the heck out of the corruption. If not … we need a new DA !!!
    By: Black_Copter_Pilot on 12/29/08

    I guess the fact that Teddy made statements to the police that he ws driving and that most of the sane world believes that he was at the wheel means little to the tin hat wearers of this site.

    I hearby proclaim you Cindy as way, way out there.


    By: Cindy on 12/29/08
    To 4Warn: Yes Greg Porter was voting on those projects. I have been wondering about the same thing. Why didn't he recuse himself?

    To Paso Guy: No I'm not kidding. I am serious. The story that I have is from a reliable source that I trust 100% and explains every move that Teddy made. The story isn't what anyone thinks apart from yes he was having too much fun with Mary Jo while his wife was home too pregnant to attend the party that night. No one knew she went off the bridge. Teddy was the first one to find out the next morning when he sobered up enough to go looking for her. The truth would have been stranger than fiction but in hind site not as damaging.

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  3. ccn_debate says:

    By: 4Warn on 12/29/08
    There is a fact that is missing here and that is very troubeling.

    Greg Porter was an Atascadero Planning Commissioner who was appointed by O'Malley and his cronies in 2004 or 2005.

    It would be interesting to know if Porter was voting on any Gearhart projects while arranging Heritage Oaks loans on Gearhart projects and while having his house remodeled by Gearhart.

    This aspect smells way too fishy and needs to be looked into
    By: AuntMillie on 12/29/08
    What a shame. So Karen and Josh have to share their underwear with all their roommates. That's a hoot. No sympathy here. Save it for all the seniors who are trying to sell their homes in this market, who are afraid of foreclosure, who fear bankruptcy,and are looking for jobs. I just hope the accommodations aren't quite as nice in state prison.
    By: Paso_Guy on 12/29/08
    Cindy…that nonsense about Kennedy and Mary Jo..Your joking, Right?
    By: Cindy on 12/29/08
    I can't believe the article that appeared in the Tribune yesterday. It's looks like a "front page" PR campaign disguised as news to gain empathy for Guth and Yaguda.
    By: JorgeEstrada on 12/29/08
    They should have known and they need to stay in jail until the cops can wash their hands. No soy stupido
    By: Cindy on 12/29/08
    To Outsider – Not to get off topic but you said "Did you know that more people have been murdered in the beloved Ted Kennedy's car than deaths in Nuclear Power plants in the US."
    You need to find a new line of sarcasm. Ted wasn't even in the car when Mary Jo drove it off the bridge. He had got out of the car and watched some GOP boy's follow her thinking that Teddy was still in the car with her. They were trying to catch him having an affair! He didn't know she went "speeding" off the bridge while trying to take them on a fun wild goose chase. Thats a fact. (I'm an insider on that one).
    By: hotdog on 12/28/08
    Roo is dead right.
    At least locally this situation is non partisan and we should keep politics out of it and focus on how to deal with our mess. We could direct our attention to the DA, DRE, DOC, our state reps and anyone else around here who could have and can alleviate the burden on the investors. To date they have done very little.
    By: Roo on 12/28/08

    (Sh)Outsider, I challenged you on your assertion that Hurst/Gearhart victims were "greedy", and you're onto Barney Frank. If you wish to parrot what you hear elsewhere, do it somewhere else or stay on topic.

    The internet (unfortunately) is the current day water cooler. Sorry, dude, gotta get back to work..

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  4. ccn_debate says:

    By: outsider on 12/28/08
    Roo…GREED does strange things to people. and they are the maddest when things dont bounce their way. They whine and cry and point fingers at everyone else but themselves. Barney Frank is well known on the hill as "The Banking Queen". He and Chris Dodd,another dem hero,squashed a republican bill in 2006 to regulate Fannie and Freddie.
    to hotdog…the Democrats have been in control of congress for the last 2 yrs and what have they accomplished. Are you better off than you were 2 yrs ago?
    The other funny fact is that all of the alleged perpetrators involved in this scam are proud democrats. Did you know that more people have been murdered in the beloved Ted Kennedy's car than deaths in Nuclear Power plants in the US.
    By: hotdog on 12/27/08
    Paso Guy, check out http://www.usnews.com/blogs/sam-dealey/2008/9/12/… for more info on all this. Just looking at wigged out neo con sites does not lead to the truth.
    By: hotdog on 12/27/08
    Paso Guy,
    OK, I looked at your web reference. I have not done oodles of research about Frank but on that site is a picture of Ray-gun with his infamous quote, "the most terrifying words in the English language are: I'm from the government and I am here to help".
    And here is a blurb from a person linked to that site: " I consider myself to be a Reagan/Rush Conservative who is a female version of Sean Hannity". I don't need to see anything else-these are fruitcakes and probably will do anything to denigrate Frank. But I will look further, I know there is plenty of blame to spread around.
    I guess if you just get your info from that fat slug rush and sites like this then of course I understand your confusion and wrong thinking.
    However, since you think Frank blew it by not providing oversight then we at least agree oversight was and is needed. I don't know what his role is but it is obvious from history (see ray-gun's quote) the conservative mantra is less or no oversight, let the market run itself. I am glad we agree that is a failed agenda.
    By: Paso_Guy on 12/27/08
    Hey hotdog…..Barney Frank is Gay? BFD. He is the guy who is chairman of the Finance committee that oversees fredie and fannie. He also declared, shortly before their fall, that they were sound investments. Did he not know that the loans were saturated with subprime garbage? If he didin't he was not doing his job. He is one of the reasons for mess that the mortage market has become….as I said, we were in big enough trouble without the hard money crimes. Barney Frank should resign.

    By: hotdog on 12/27/08
    Like I said, we have many spewing nonsense. Those 'blinded' by large losses are not blinded at all, they're mad. I guess we will have to put up with those who figure fraud is OK, we have all kinds in our society.
    What does Barney Frank have to do with all this? Is it because he is gay, and liberal, that you toss stones his way without any explanation? Bunch of bull…. ALL sane experts are blaming this whole mess we find the country in was a direct result of greed, hubris and lack of oversight, mostly the latter. Putting crooks in jail now and watching potential future ones is the only way to run a society.
    So far the righties have had a solid 8 years to tear government to shreds, emasculating almost all agencies charged with protecting the public (health, safety, environment). We are in a huge mess; crumbling infrastructure, ruined economy, endless and worthless wars, our reputation shot around the world-how is that working out for you? We need more Barney Franks.

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  5. ccn_debate says:

    By: Roo on 12/27/08
    I posed the question because I knew you couldn't answer it. Looks like I was right.
    The thing I am objecting to is your use of the word "greed".

    "Yup, the market is in the toilet. Well, shucks, that ol' commercial unit we invested in over there in Paso must be worth 50 cents on the dollar. Huh? It's just a vacant piece of property with $12 million loaned out on it? The principals are probably going to jail? Shoot! I guess that'll teach us for being so greedy…"

    By: outsider on 12/27/08
    To Roo
    The reason nobody is answering your question is because it is dumb..There is no set number…its moving all the time depending on prevailing rates and the risk of the investment over a certain period of time..this all common sense. The loans in qustion were all high risk projects being built or developed on speculation..
    What the lenders did to cover up the problems with these loans was not right and they have to face the consequences..

    By: Roo on 12/27/08
    C'mon Outsider,
    Why don't you answer the question I posed earlier?
    "Just what is the cutoff for an investment that is not "greedy"? 5%? 8%? 10%?"
    Your bank interest example is a poor analogy. You know most people have their retirement money in other investments than bank passbook accounts. Get real.
    By: outsider on 12/27/08
    Ha…when has jail time ever been a deterrent for a criminal act? As far as "unsuspecting investers", anyone investing in these highly risky loans should be very leery…when u can only get 4% and the bank and 12% from xyz loan company….LLook out..The greed factor is there and the investors have to take some of the blame. Donald Trump is about to go under. Alot of really good business people have been taken down with this downturn in the real estate market. The whining is getting old. If you want to be mad at someone, you should be mad at Barney Frank. The guy should be fired and off the hill. The guy is a trainwreck..He's at the heart of whats wrong in Washington and our own legislature.
    By: Fedup on 12/27/08
    Prison time is one hell of a deterrent for these and future crooks. It is our civic duty to make sure that these people are prosecuted to the full extent of the law. It might make these Madoff wannabes think twice before they pull their scam on other unsuspecting investors.
    By: Macgruber on 12/27/08
    Hotdog…. I'll agree their was mismanagement, but I strongly feel there was no intent to bilk us out of our money, and purposely be fraudulent. I have $10,000 (i know, very small amount compared to most) invested and would love to have it back but driving these people into the ground or to jail is not going to get me a penny. I guess people with more money invested might be more blinded by the frustration to really take in all the facts and points of view so I can see where they are coming from.

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  6. ccn_debate says:

    By: hotdog on 12/27/08
    Paso Guy, your comments about Vanguard seem to make sense-UNTIL you read the loan papers-all of them. All these loans are supposed to be fully funded before commencing with the deal-that ensures the builder of money to complete the projects he promised to do. I know of at least two brokers who failed to do this, Vanguard and another. I have no knowledge they are crooked like HFI, EF, RPL and 21st Century, but they made mistakes they should not have made. It blows my mind how lax and foolish even the honest ones were. I suppose they will say they had no idea the economy and housing gig would get so bad-bull! It is their business to know, and carefully monitor this stuff. It is elementary to adjust the strategy to the situation-they didn't.
    Through fraud or mismanagement the investors were ripped off. I know of many very savvy investors (including realtors, lawyers, accountants etc) who were bilked by these scams or poorly run operations. All investors and others who give a damn about justice should hammer our state reps for massive reform and heavy oversight of these business operations in the future. Lack of oversight has brought this on us. The greed, hubris and natural tendency of humans to cheat requires oversight to keep us honest.
    And these papers were not a few post it notes 'stained with coffee' (did that writer insinuate this is all a plant by CCN?). I happen to have a few original 'trash papers' and can verify authenticity of much of the info. Someone who knows nothing of this criticizing those who report objective findings is way off base. It is just amazing how some readers spend their time throwing rocks at those who try to shed some light on this ghastly situation. But then we all know the criminals often post here as provocateurs and nay sayers, spewing nonsense.
    By: Fedup on 12/26/08
    The FBI doesn't think it's a joke.
    By: Macgruber on 12/26/08
    Is this article a joke? Just curious, if I write a bunch of nonsense on some post it notes, spill a little coffee on it and send it into you guys will you write a story about it? I'm interested in some concrete, accurate evidence, not some chicken scratch notes from who knows where or who really wrote them.
    By: Paso_Guy on 12/25/08
    I'm with mcdave on this…you take away whatever Karen and Josh did and we, the investors, are still screwed……..the subprime fallout has taken it's toll.

    Just ask any investor with Vangaurd Lending…..no bad management, but few loans that are not in default, and, no new money to finish the unfinished.

    Maybe we can get an indictment against Barney for all those Fannie and Freddie failures
    By: MyThoughts on 12/25/08
    Lets give it one day of peace.

    Merry Christmas to you all!

    And special thanks to Karen and Dan for their efforts in helping those of us who have been taken advantage of.

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  7. ccn_debate says:

    By: mccdave on 12/25/08
    And in time for Christmas, another tale of formerly reputable lenders caught with their pants down:
    By: mccdave on 12/25/08
    From Cindy: "Real estate has always been a wise investment and a 12% return wasn't unrealistic."

    That's precisely the delusion that created this mess. Historical real returns on property in the U.S. are much lower, averaging around 2-3% — see Robert Shiller's historical house price data and his general debunking of folk myths surrounding property. Even if you count California as an exception, there are booms and busts here, and greater volatility increases the odds of investing at the wrong time.

    Fraud is fraud, but the folks who invested in these hard money schemes were also deluding themselves amidst abundant evidence of a bubble. They weren't alone, and even some supposedly smart money men got caught out putting too many eggs in Bernard Madoff's ponzi scheme, mortgage-backed securities, etc. But it didn't take dumpster diving to see that these hard money lenders were probably very risky investments in the latter stages of the bubble.
    By: hotdog on 12/25/08
    Cindy, I think you are too generous. I don't know what you mean by recent funds but overall we have counted over 110 million in dead loans and still collecting data.
    You put the story straight-all they had to do was follow the simple rules and all would be fine. They didn't, they are either dumb as a bag of rocks or crooks, or both. Either way they must pay. They were trusted to manage a reasonable investment and instead ripped off friends, former employees and all others who thought they were legit.
    By: Cindy on 12/25/08
    To say that these investors were high rollers is just b.s. Real estate has always been a wise investment and a 12% return wasn't unrealistic. In fact it was more than reasonable. It wasn't the market down turn that caused this, it only exposed it. If these loan companies would have stuck to their word this never would have happened. I do think they are a flight risk especially when there is 5 million in recent funds that 's unaccounted for.
    By: hotdog on 12/25/08
    The higher the bail the better. These crooks have been operating illegally for some time, it was the market downturn that exposed it.
    By: MyThoughts on 12/24/08
    Suggesting that these birds are not a flight risk is dellusional thinking at its best.
    By: Black_Copter_Pilot on 12/24/08
    My take is that None of the hard money lenders used the Ponzi as a business plan model, but morph into a Ponzi-like business as things went bad.

    I talked to the DA's office last week and asked them why the bail on the EFI pair was set at $5 million each.I was suprised at the answer..was set at that amount because the AMOUNT OF BUSINESS TRANSACTED WHILE THEIR PERMIT WAS NOT PAID was around $13 million. It was not set at $5 million because that was amount that is unaccounted for. Go figure…I have nothing good to say about those two but it seems to me that if they were a flight risk, they would have been long gone and not at their residence when arrested.
    By: Roo on 12/24/08

    A Ponzi scheme is a Ponzi scheme, and fraud is fraud, regardless of economic cycles.

    Just what is the cutoff for an investment that is not "greedy"? 5%? 8%? 10%? I'd love to hear your opinion on that…or from anyone else who wants to blame the "greedy investors" for this mess…

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  8. ccn_debate says:

    By: outsider on 12/24/08
    Thanks for the excellent reprting…I see it all a bit differently and am sure will get blasted for my opinion.
    EVERYBODY knows that hard money lending is a risky busines and not for a virgin. The promise of high interest rates;a a quick return..suck the greedy in.
    lets be honest..the contractors, the hard money lenders and the banks involved didnt want ny of this to happen..It wasnt planned.What has happened to our local economy here has happened all over the US. When the economy cycled into the beginning of the recession 1 1/2 yrs ago everyone was caught by surprise at how quickly the building boom had stopped. Investors,bankers lenders, and construction all caught. Shit happens…but as is always the case, its the coverup of the crisis that gets people in trouble and crimes were probably committed, and people are going to serve some time….outsider
    By: Shouldhaveknown on 12/23/08
    I am unsure of the inner workings of HFI, but as a former employee of one of the other failed four I wanted to bring up the appraisal issue. There is no Dept. of Corporations requirement to have an official appraisal and it was often done on a case by case basis. IF the loan officer was honest and not corrupted by greed, an actual value was given based on comparable sales. If not it gave a lot of power to greedy loan officers. For any other financing, appraisals are checked and double checked. Keep in mind that the maximum loan to values were not normally capped at 60 to 70% and appreciation could be added to the value as well. And if the company underwriters called the loan officers on the values? Well of course they were in danger of losing their jobs and knew they would most likely not be hired anywhere else for their whistle blowing. We all praise the whistle blowers, but they have families to feed just like everyone else. Most employees at these companies were not making the big bucks and could not afford to take the chance, although I am sure in retrospect they wish they had. I cannot and will not defend any of the company owners who allowed this to happen. I share in most of your opinions that they deserve to be in jail.
    By: Cindy on 12/23/08
    Merry Christmas to the 'bilked" investors. Not only have Karen and Dan tied everything together for you but they have shown you a venue (part of the cadre) that you can pursue to recoup some of your losses.

    Karen and Dan – Thank You for your hard work. I hope its appreciated, I know that I appreciate you.
    By: JorgeEstrada on 12/23/08
    I thought NAFTA was about free, trade not fund, take. I think this is to big for local control.
    By: shingh on 12/23/08
    Superior Reporting as usual, HOB currently has a $ 7,000,000.00 + default notice against SLO-HAAS, LLC which it's tow principals you reported on long ago Ron Hertel and Robert Fowler, just last Week Fowler and his partner Rossi where at the SMR meeting, they are behind many defaults and loan frauds and i expect more is to come keep digging in the trash because that is the same way the FBI has gotten great evidence in past major Criminal cases. Disregard those who try to manipulate your stories good reporting.
    By: hotdog on 12/23/08
    Don't miss the credits at the beginning of the article. A hard working and diligent person made all this possible for CCN to illuminate the abuses by all these 'suits'. Sometime in the future our 'deep throat' might be revealed, and heralded as one of the pioneers in exposing these crimes. The whistle blowers in our society deserve much credit for shedding light on the challenges facing all of us. Often they are fired, castigated as 'disgruntled employees' or otherwise dishonored-that is a real shame.
    By: Newsome on 12/22/08
    Damn you guys are good. I will paypal this months donation shortly.

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