FBI accuses Miller of racketeering and money laundering
May 29, 2009
By KAREN VELIE
The FBI seized proceeds from Hurst Financial Inc. (HFI) President Jay Miller’s home May 27 because of allegations of racketeering, money laundering, and wire fraud, according to the seizure warrant.
“A racket is an illegal business, usually run as part of organized crime. Engaging in racket is called racketeering,” according to Wikipedia.
Earlier today, Superior Court of San Luis Obispo County Judge Roger T. Picquet ordered a temporary restraining order against the proceeds of Miller’s home following a request by HFI investors Murray Powell and David Rios. Last May, Rios and Powell filed an 11 count fraud and civil conspiracy lawsuit against Miller, HFI loan officer Courtney Brard, and North County developer Kelly Gearhart in which they claim the trio bilked them out of their investments.
Following a request from Picquet for an account of the net proceeds of Miller’s Templeton home, the Millers’ attorneys, Robert Grigger Jones and Glen Lewis, sprinted to the title company to inspect escrow records. In the miscellaneous column, directly below a charge of $645 for Al’s Septic, is a Federal Bureau of Investigation seizure warrant debit of $200,462.
The warrant alleges the property faces forfeiture under crimes and criminal procedure U.S. Code “concerning violations of Title 18… (which lists codes for racketeering, money laundering, and wire fraud),” according to the search warrant.
Miller’s 3,031 square foot home on 1015 Herdsman Way in Templeton includes a vineyard consisting of four acres of Merlot and Malbec varietals. It sold for $1.3 million leaving net proceeds of $690,000.
Even so, the court agreed to freeze only $244,757, half of the proceeds remaining after closing costs and federal seizures. The judge agreed that Miller’s wife, Laurel Miller, is entitled to the other half of the proceeds.
In June 2008, at a time Hurst Financial Inc. was in serious financial distress, James and Laurel Miller entered into a postnuptial agreement that granted Laurel half interest in their home. The couple married on Dec. 24, 1996.
The FBI and the San Luis Obispo District Attorney’s Offices mounted an investigation into fraudulent lending and financial practices by Miller, Brard, and Gearhart last year. At this time, charges have not yet been filed against the trio.
HFI made short-term “bridge” loans to contractors. Investors, during good times, would receive 12 percent on their money in monthly interest payments, with their entire principal returned upon maturation of the loan.
More than 1,200 investors, primarily seniors, invested more than a $100 million that is currently unaccounted for. According to the Department of Real Estate, Miller failed in his contractual agreement to protect investors by funding projects only as work was completed, with progressive payments. Instead, he paid Gearhart in lump sums “without any monitoring of the construction.”