HFI executive bargaining for less prison time

April 22, 2011

By KAREN VELIE

Hurst Financial, Inc. (HFI) president Jay Miller is working on a plea agreement with federal prosecutors in exchange for his testimony against former north county developer Kelly Gearhart, according to inside sources.

Miller, 63, is asking to be incarcerated in a minimum security facility. He also wants the agreement to leave out wording that could tip off his future prison mates that he ratted-out his former business partners.

In addition, he wants four counts reduced to one and an agreement that he is given less time for turning himself in, pleading guilty, informing on others and being a non-violent criminal.

The FBI and the San Luis Obispo District Attorney’s offices first mounted an investigation into fraudulent lending and financial practices by Miller, his daughter Courtney Brard, and Gearhart in 2008. No charges have yet been filed.

Miller asserts that his testimony to the Grand Jury and possible cooperation in upcoming trials against Gearhart and other defendants should afford him a nine year or lower sentence with time off for his cooperation.

He argues that he is worried about his safety in a higher security facility and is requesting a lighter sentence at a prison camp in Lompoc than originally offered if he is going to cooperate.

Miller claims he was blindly led by Gearhart, but also admits he was aware of the damage he was inflicting on investors.

Even so, he makes a point of noting that, from 1981 through 2005, he worked honestly.

At Lompoc Federal Prison, inmates stay in three separate facilities – medium security, low security and a minimum security camp.  At the Federal Prison Camp, where Miller would like to spend his pending incarceration, there is no fence and an average inmate to guard ratio of 26 to one.

He is reportedly gathering accoutrements such as T-shirts, tennis shoes and towels and asking when he needs to self surrender. However, the clothes Miller is wearing when arrested will be mailed back to his family and he is not permitted to bring his own shoes, towels and T-shirts.

He can keep his wedding ring, glasses and some money with him in prison.

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 $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, through progressive payments. Instead, he paid Gearhart in lump sums “without any monitoring of the construction.”

The FBI seized proceeds from the sale of Miller’s home in 2009 because of allegations of racketeering, money laundering and wire fraud, according to the seizure warrant.

Typically, the FBI attempts to arrests everyone involved in an organized crime group on the same day.

Miller’s attorney Jeffrey Benise did not respond to requests for comment. Thom Mrozek, the public affairs officer for the United States Attorney’s office, said that he cannot comment on a case that hasn’t been filed.