Stewart Title settles with Gearhart investors

March 7, 2011

Kelly Gearhart

By KAREN VELIE

Stewart Title settled with investors of former North County developer Kelly Gearhart for approximately 27 percent of their investments in seven lots off Highway 41 near U.S. Highway 101 in Atascadero.

Stewart Title paid investors in the five residential lots and two condos on Tecorida Avenue $460,000, the current value of the property.

Information that Cuesta Title was working with Gearhart to allegedly defraud investors was explained in several 2008 CalCoastNews exclusives.

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.

Gearhart fled to Wadsworth, Ohio, in Nov. 2008 following threats of physical violence by an angry investor. A few months later, he filed a bankruptcy petition in the Northern District of Ohio U.S. Bankruptcy Court claiming more than $45 million in personal debt.

HFI lent Gearhart and his holdings more than $70 million, the bulk of which went to Gearhart through his corporations and was not included in his bankruptcy filing.

In June 2009, more than 300 investors filed a lawsuit through the San Diego based attorney firm of Kirby, Noonan, Lance and Hoge which says Stewart Title aided and abetted and/or conspired with HFI in defrauding people through illegal investment schemes.

On Jan. 25, a U.S. bankruptcy court judge ordered that the Tecorida Avenue properties could be sold with the proceeds being held by the bankruptcy trustee until all seven properties have transferred ownership.

After commissions and property sales costs are paid, the court has ordered the trustees to pay the law firm of Kirby, Noonan, Lance and Hoge $70,000 plus one half of the net proceeds exceeding the $460,000 already paid by Stewart Title.

Any extra monies will remain part of the bankruptcy estate.

More than 1,200 investors, primarily seniors, invested in excess of $100 million with HFI that is currently unaccounted for. During the past three years, Gearhart and HFI president Jay Miller have been the subjects of a federal investigation into racketeering, money laundering and mail fraud.


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9 Comments

  1. willie says:

    As typical, when a flagrant developer Madoff wannabe gets caught up, investors usually lose all after years of litigation.
    However do to his failed attempt to bankrupt, some investor will recover a fraction of loses.
    Nothing ever seems to change, the more high class a person seems to appears, the more crooked they seem to be, someone has to pay for all of their extragant life style.
    I have no sympathy for pretty boy Gearhart and hope karma takes its toll on him.
    Thank you Karen for your diligent investigation and follow through.

    (13) 15 Total Votes - 14 up - 1 down
  2. Cindy says:

    I was just looking for some information that someone had posted on a thread to the article “Gearhart’s Control of Atascadero” when I noticed the last post that had been left there. It was posted 2 1/2 weeks after everyone had moved on to other articles. I think this post is worth bringing forward as this is rather interesting and he is asking for help, he left his email address if anyone cares to respond with advise.

    Here is the part of the story goodman5 is referring to “White moved his fiancee into the other home and kept it in his name until he sold it in 2003 for $297,926, even though, according to the agreement, it should have had a maximum sales price of $166,240.”

    ” goodman5 says:
    12/27/2010 at 7:27 pm

    OMG, That’s my house they are talking about! I bought it from Bruce in 2003 and sold it after a huge ordeal to try to get out of the dead restriction and we had to do all kinds of stuff to sell it because of the fire wall being removed! I had to get the mayor and city council to help me be able to sell it for what I paid for it 297,000! Does anyone know how to go about getting some of the money back he over charged us?? I can’t believe how much thy know about the house. We bought at a time where real estate was skyrocketing and then almost got stuck with a house they said we were going to loose money on! Help!! boyoutlet@gmail.com

    (3) 3 Total Votes - 3 up - 0 down
    • Cindy says:

      I think it’s interesting that the Mayor and CC of Atascadero did not require Bruce White to return the “ill gotten” $297,000 to “goodman5” in exchange for a deed re-conveyance. Then require that White sell the house to a qualifying low/moderate income family for the appropriate price while confirming the proper recording of the property as deed restricted! I assume that since goodman5 qualified to purchase the property at the current FMV then he did not qualify to purchase the deed restricted low income property to begin with, otherwise I should think that Bruce White would have owed goodman5 $131,686 plus title to the property.

      But no, it would appear that they allowed Bruce White to pocket the extra $131,686 and did exactly what (probably cleared the restriction from the title)? Is that even legal?

      (5) 11 Total Votes - 8 up - 3 down
  3. Harlow says:

    27 pecent is a CROCK of SH..!!!!!!

    (11) 13 Total Votes - 12 up - 1 down
  4. Cindy says:

    Humm, interesting caricature on the wall next to Gearharts head. Is that supposed to be a red devil or demon of some kind?

    (3) 5 Total Votes - 4 up - 1 down
  5. SanSimeonSam says:

    Why are these guys not in jail. Are our corrupt politician so afraid of disclosure that they allow these pondscum to run free.

    (28) 30 Total Votes - 29 up - 1 down
    • centralcoastcoyote says:

      do you not like what happened here? Were you even involved with this particular piece of land?

      (-12) 16 Total Votes - 2 up - 14 down
  6. Nancimeek says:

    Didn’t Melanie Schneider serve as a notary on a document that was signed TWICE and also didn’t Colleen Alexander the secretary for Robert Grigger Jones do the same thing? Witness the same document signed TWICE?

    That’s what happened to us the 1st Amendment for our father’s trust was signed in Hawaii (according to Jones) and signed three days later in his office in California (the one with theadmittedly forged signatures that Jones’ stated on the stand he didn’t recall) He recalled it in 2006when he executived an affidaavit stating Dad was in his office three days later?

    Just curious if you recall that twice signing and witnessing of a document by melanie and the other one witnessed by Colleen Alexander? Anyone?

    (0) 22 Total Votes - 11 up - 11 down
  7. Cindy says:

    Does anyone know how many other properties were misrepresented by Melanie Schneider? I would imagine Stewart Title will be responsible for those as well. As for Schneider, is there any word on whether she is going to be held accountable or will she get out of this by claiming incompetence?

    (38) 46 Total Votes - 42 up - 4 down

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