HFI’s Jay Miller forced into bankruptcy
June 29, 2009
By KAREN VELIE
Several investors in Hurst Financial Inc’s (HFI) hard money lending schemes thrust HFI President Jay Miller into involuntary Chapter 7 bankruptcy citing Miller’s failure to repay loans he personally guaranteed.
Before their meltdown a little more than a year ago, HFI’s key players’ lifestyles were reminiscent of Fitzgerald’s Jay Gatsby: lavish parties, exotic cars, and high rolling excursions in their monogrammed private aircrafts. Investors claim Miller and his associates used construction monies to live the high life, while paying interest from one account to fund another in an alleged Ponzi scheme.
Earlier today, three creditors – Pete Evans, Gary Luttrell, and Kelly Christensen – filed a petition with the Santa Barbara Bankruptcy Court seeking to collect $117,000 from the former lender. Miller partnered with developer Kelly Gearhart as a co-borrower on properties the petitioners invested in.
“We did this so we can get recovery,” Christensen said. “So Miller can’t liquidate his properties or transfer his assets to others. He has been taking properties out of his name.”
The court’s ruling means that, as of Tuesday, all Miller’s financial transactions will fall under review by the U.S. Bankruptcy Court. The action also stays any court orders or filings taken under the past 90 days.
Miller will have 20 days to respond, by either filing a motion disputing creditor claims, or by demonstrating to the court that all debts are current.
More than 1,200 investors, primarily seniors, invested in excess of $100 million with HFI that is currently unaccounted for. Late last month,the FBI seized proceeds from the sale of Miller’s home citing allegations of racketeering, money laundering, and wire fraud. No charges have yet been filed.
Christensen, a partially retired cement mason, who used to send a portion of his interest payments to family members in the Philippines, is now scrambling to pick up odd jobs in order to keep a roof over his head.
“I’m no longer able to send money to our family in the Philippines, they are literally starving,” Christensen said.
A 64-year-old retiree, Evans donated regularly to numerous charities. He invested $200,000 with HFI thinking he could step up his philanthropy.
“I wanted to casually spend my life giving money away,” Evans said. “Our purpose is to help one another. But first you have to keep yourself financially healthy in order to give to others.”
A least four San Luis Obispo County investment firms – Estate Financial Inc., Hurst Financial, Real Property Lenders, and 21st Century – have allegedly participated in schemes that have cost local investors more than $500 million, creating an environment that may shadow private, non-profit, and business finances in this county for decades.
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