Gearhart appraiser loses license over land fraud

January 5, 2012

Kelly Gearhart and James Miller


EDITORS NOTE: See Conflicting appraisals, a comparison of appraisals made by Terry Pippin and Market Dynamics’ Dennis Greene, an appraiser hired by Heritage Oaks Bank, at the bottom of this story.

An Atascadero-based appraiser whose inflated appraisals helped North County Developer Kelly Gearhart defraud investors out of more than $100 million has lost his license. The California Attorney General’s office ordered Terry Pippin to surrender his license in December.

Pippin made false statements in appraisals that helped Gearhart, James Hurst Miller and others get financing that was used to carry out the fraud, Attorney General Kamala D. Harris said in her December order of license surrender. The story of the fraud, which affected some 1,200 investors, was first reported by CalCoastNews in 2008. Harris issued her order after the California Office of Real Estate Appraisers submitted an accusation that detailed Pippin’s conduct in a number of transactions.

At the time, Pippin said he stood by the numbers he put into his appraisals saying they were both accurate and legal.

“I do know what I am doing. I have been doing this for 18 years,” Pippin said in his 2008 interview.

In August, the U.S. Attorney’s Office in Los Angeles charged Miller, the former head of Hurst Financial, with defrauding investors. Miller fraudulently sought money from investors for the Beacon Road and Vista del Hombre real estate developments in Paso Robles as well as the Salinas River development project in Templeton, the U.S. Attorney’s Office alleged.

Miller was charged with mail fraud, wire fraud, money laundering, making a false statement to a bank and aiding and abetting Gearhart in making other false statements in seeking funding. The $100 million fraud was uncovered by CalCoastNews in 2008.

The CalCoastNews investigation found that Miller and Gearhart allegedly swindled the investors in a lending scheme involving hard money with the assistance of title officers, lawyers, public officials and appraiser Terry Pippin.

Pippin appraised the Vista del Hombre project in 2007 for $17.75 million, California state investigators said. The project lies six miles east of downtown Paso Robles and is on the site of The Links Golf Course, a flat, dust-blown, treeless expanse of land just a stone’s throw from the airport. The project envisioned the construction of 32 commercial and residential buildings on the property.

Pippin’s appraisal failed to report that the development was part of the golf course or that persons trying to get access to the development site would have to pass between two already existing golf holes.

Gearhart used Pippin’s appraisal to get a loan in 2006 from Hurst Financial for $15 million. Gearhart used that first loan to buy Vista del Hombre and for initial infrastructure construction. Miller got the money from investors who were lured by promises of high interest returns and reassured by Miller’s claim that the property’s loan to value ratio was only 44 percent. Those claims were included in loan agreement documents.

That hard money loan (a loan based on the land value rather than the developer’s credit rating) could fund no more than 44 percent of the project’s total value. That initial loan was slated to mature in late 2006, but Miller has not repaid investors and stopped making interest payments.

By 2007, Miller had lent Gearhart another $11.85 million for the Vista del Hombre development. That pact was signed on June 22, 2007, after Miller attracted more than 100 investors with the same loan-to-value promise.

Pippin appraised the property again in 2008.

“My opinion is it is worth around $100 million finished,” Pippin told CalCoastNews in 2008.

That figure is more than four times higher than what other licensed appraisers estimated its projected value to be.

Heritage Oaks Bank conducted its own appraisal of Vista del Hombre in 2008. Gearhart had sought a loan from the bank on the property. Using the services of Cuesta Title, Miller and Gearhart claimed that the property had a clean title with no existing loans, according to bank documents.

Vista del Hombre was worth about $4.3 million as it was in January 2008, the bank appraisal said. 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 rise to $21.8 million.

Also under scrutiny is Pippin’s appraisal of a proposed residential development in Atascadero dubbed the Triangle Property. State investigators said that Pippin falsely reported that the property was part of a 15-unit tentative map when no such map had been submitted to the planning department, falsely reported who the owner of the property was and failed to report former property transfers.

One of the more egregious appraisals Pippin created was used to get investors to fund a proposed 58-unit residential development in Templeton known as the Salinas River Property. In that case, Pippin failed to report that the property could not be utilized for the proposed development because portions of the proposed development were to be located in the Salinas River bed or in a flood zone.

In his appraisal of the Eagle Ranch development in Atascadero, Pippin reported the existence of a home that was not there and said that the property was zoned for residential development.

“Respondent produced an appraisal that lacked sufficient credible information and analysis to be used for any legitimate purpose,” the Office of Real Estate Appraisers accusation says.

In his report, Bruce Crandall, an investigator with the Office of Real Estate Appraisers (ORES), also noted that Pippin “failed to cooperate with the investigation.”

Crandall asked the state to suspend Pippin’s license, to enact fines and to “take further action as deemed necessary and proper.”

In response to Crandall’s request, the state ordered Pippin to surrender his license by Dec. 12 for a minimum of two years and to pay $15,000 for enforcement costs.  Pippin agreed not to contest the allegations.

Yesenia Rocha, Office of Real Estate Appraisers legal secretary, said further information on possible legal action to be taken against Pippin is confidential.



Conflicting Vista del Hombre appraisals  
Appraiser Pre-development
Finished development
Terry Pippin $17.8 million $100 million
Heritage Oaks Bank $4.3 million $21.8 million

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2 years and 15 thousand dollars????

Is this a JOKE????

Read the article again Harlow only this time read between the lines ……..

Crandall asked the state to suspend Pippin’s license, to enact fines and to “take further action as deemed necessary and proper.”

Yesenia Rocha, Office of Real Estate Appraisers legal secretary, said further information on possible legal action to be taken against Pippin is confidential.

We should not have to “read between the lines”. It should be so stated.

ALL action taken against these crooks ought be a matter of PUBLIC RECORD………….or at the very LEAST be made available to those of us that have been robbed!

We should not have to read between ANY lines…….

And while all of this “foot-dragging” is going on … people are dying and losing their homes and value of said properties is continually declining and taxes owed.

My concern about Pippin was relayed to this agency YEARS ago…….sorry…but it is called …..WELL…..DUH!!!!!!!!!!!

On top of this insanity………..Pippin was only licensed for residential properties up to $250,000 NOT commercial…………..AND? HOW did this FLY????


Up to three properties of $250,000 and non-commercial, that’s $75,000 max, this is an insult to law enforcement, why even have cops, if you let the bad guys go?

I read the article again, and was struck that in the lede we’re told he has “lost his license,” which any reasonable person would think means it’s gone, kaput forever, whereas in fact he had his license “suspended” for two years, which is a professional disciplinary slap on the wrist that in no way means he’s out of the appraisal business. Those two different statements are not the same thing. If suspension is true, lost his license is hyperbole. Sloppy reporting. Wonder what else that’s not so obvious is also misleading (or wrong) here.

He should be in an orange suit!

As a former federal grand juror, I can tell you the federal process is slow but thorough. First the FBI investigates the matter and gathers as much evidence & witnesses as possible. Then they submit the case to the District US Attorney who then further investigates the matter by further interviewing suspects and witnesses in front of federal grand jury where perjury can send them to federal prison. The information learned in front a federal grand jury is then further investigated and new witnesses interviewed. It is during this process that new crimes and additional suspects are discovered. Eventually the same federal grand jury will be asked to indict the suspects or group of suspects. The US Attorney usually has one year of a impaneled grand jury time before he indicts or has to wait for another grand jury to be impaneled to take over the hearing the case. When the indictment is issued the case then goes to trial in front of a federal judge and a separate federal jury who will determine if the suspect is guilty or innocent.

As a federal grand juror we had cases that had been in the investigation process for 5 years, other cases were the investigation started years after the crime took place. I did learn that the government wheels are slow to turn but that they are like a elephant who never forgets once your are in their system. I was amazed at the information and records that are kept by the government that are often used many years later to indict a offender.

I was on a investigative federal grand jury for 15 months. At the beginning I considered trying to get off jury duty, but I decided to give it a try. I was assigned to a 1 year term that was extended for 3 months due to a major investigation and eventual trial & conviction that has since been made into a cable channel documentary. Federal rules prohibit me from sharing information about the cases assigned to us. In the end I enjoyed my time a federal grand juror, it was a very good learning experience. The part I enjoyed the most is that as a federal grand juror you can interview the suspects and witnesses without their attorneys present and under oath and decide for yourself if this person should be indicted or not. In my experience, many of the US Attorneys found our questing very helpful and at times took the investigation in another direction because of the information learned in front of the federal grand jury. Perjury in front of a federal grand jury is punishable by 2 years in a federal prison. A federal judge can stick a witness in federal detention for refusing to answer a federal grand jurors question until they decide to cooperate. A suspect can take the 5th, but a witness cannot.

So far for our family it has been worth the wait.

It took over 4 years for Feds to nail GFovernor Blagojevich and they also snagged 13 others including some for real estate fraud. Here is a link to the time line …..,0,2680294.story?page=1

Pippin inflates prices on numerous projects (so you can’t say it was a one time mistake) and they yank his lic. for two years and a 15k fine??? I sure hope there will be more charges coming.

Kelly and Jay couldn’t have continued (getting money from investors) had Pippin not assisted in inflating price values. I find him as guilty as the others.

BTDT, I’m continuously being told that when this gang gets arrested , it will happen to all of them at the same time. I don’t know why the Feds do it that way but I’m told that is how they have always done it and that is how they will do it when Gearhart, Miller, Pippin, the title girlfriend and the rest of them are finally made to answer for this egregious fraud.

I agree BTDT. Pippin committed fraud. Certainly seems that the penalty should be more substantial.

It seems that many of these groups of real estate agencies and insurance agencies, doctors, attorneys etc all cover each others butts. Just a slap on the wrist or less for crimes that you and I would pay a hefty price for.

Why is it that all the people involved around KG are being prosecuted but not the chief perp?

Right on, the regulatory agencies dropped the ball big time. The list of sloth is almost endless, and the penalties are childish for such massive fraud. Our system is broken in so many ways…

I personally had that Templeton property under contract and hired consultants and went to the county on more then one occasion to see if it could be developed, and no it couldn’t.

So when I heard Kelly was getting around 57 lots out of it, I knew something was not right in Oz !

I turned the deal over to the guys that bought it and sold it to Kelly 2 years later, everybody knew that could not be developed, Rottman owned the next piece over and they knew theirs could not be developed, Kelly pulled a fast one.

I think people need to get there facts straight. First I don’t think Pippin is the cause of inflation you can’t just put a price on something it has to be realistic and blend in with other prices in the area and if its more you need to justify it. I use to be an appraiser. Also the lender (WHO LENDS THE MONEY) if you all have ever built anything you should know that they are only suppose to give you so much money to get going then GO OUT AND CHECK THE JOB before they GIVE YOU ANYMORE MONEY so how could the appraiser be the cause of Kelly getting all the money. Come on people use you heads.

Hello???? How does one appraise a property for a value with buildings NOT built yet???

And not LICENSED to do so???? They are ALL in this together…..

Get my facts straight???? I am commenting on what I read. It states and shows his prices were well above those of Heritage. So if a price is larger than is another, it’s inflated isn’t it??

Second who is the lender??????? Hmmm Jay Miller!!!! Common use your head!!!!! If Pippin helps the Lender make the property look like it has more value than it does, then it is easier to convince investors to invest in something that is overvalued isn’t it, thinking that they can’t lose????????????????????

That only happens with honest people, this was not done from the beginning with honestly, and Pippin should have known the Templeton property was Ag and in the flood plane, if he did his homework. If you actually walked the property you would know as a large portion is in the river bed covered with sand, just like the sand and gravel business 100 feet away from the subject property.

Wasn’t the Triangle property where Gearhart proposed a statue of himself in the area proposed for a small recreation area for the people who lived in the project.

A statue? R U kidding me?

Not shocking in the least. Gearhart’s Atascadero home on Marchant Ave had G-E-A-R-H-A-R-T spelled out in his shrubs!

Kelly G’s famous line: ” Don’t you know who I AM???? (emphasis on the i )

Yep, Mr. Gearhart…pretty much everyone breathing in the county now knows WHO YOU ARE!

It sure did. It took up the entire lower hill side of his front yard except for the driveway. When people started looking for him, it was very easy to find him…. I wonder if he chopped down the bushes himself or if the knew owner ended up removing his name?

You can hear the clock ticking – tick – tock tick tock tick tock . Oh Kelly………….

Yeah, Kelly, I’m not sick or tired or dead, just plain sick of waiting for you to go to that Ohio prison, I’m writing the president next, you should hang for what you have done to senior citizens. Or better yet re-open Guantanamo bay just for you, f-ing creep, your baby will grow up, learn the truth and hate you, until you are DEAD! She will learn you only had her for sympathy, how will she learn because my baby who is seven now, (that you took everything from), will tell her.

And so will everybody else, even grandma, you ripped off your own mother, you should die a slow and painful death like Jesus did for YOUR sins.

WOW ! He appears to be heavily involved in screwing people out of their life saving ( millions ) but he only gets a two year suspension of his license and a 15 K fine . Looks like crime pays in Atascadero , at least for Gearhart and Wally Mart .

Shouldn’t the DA be doing something about Pippin or is this out of the DA’s jurisdiction ?

The DA is probably having cocktails with pippin now, along with the other crooks he refused to pursue.

Thanks Hotdog as I read this I visualized that painting of the dogs playing poker while they smoked cigars and drank liquor . I got a good laugh out of it , thanks . Except dogs are a better class than these guys . HaHaHa.

It pays to have paid off the City Council, Mayor, etc. of the town you are bilking for MILLIONS of $$$. They in turn make you Citizen of the Year!

I’m not sure but I think the local Chamber had a say in that too.

Good story.

How is Dennis Greene, involved?

Sometimes I wonder about comments here. Why would anyone disagree with IC’s question?

Perhaps they don’t approve of the superfluous, comma?

Damn them retired English teachers!

But somehow I think it’s just a way to get more clicks. Cheapens the sight in my opinion, but it’s a biz. gotta do what they gotta do.

Get some integrity! don’t use the like buttons without a posted reason.

To Kelly and a couple of Atown officials: Here comes the paddy wagon, here comes the paddy wagon driven by the feds……..

Serious, are they ever going to get here? It has been years. If someone is going down for any of this, it needs to happen soon. What the heck is the FBI still doing?

It took over 4 years for Feds to nail GFovernor Blagojevich and they also snagged 13 others including some for real estate fraud. Here is a link to the time line …..,0,2680294.story?page=1

I knew of a case where the DA knew a attorney was stealing clients funds and took a year and a half before they actually contacted him, a couple months later they finally acted, knowing all a long more victims were being fleeced.

More than a couple…wait and see…