SLO County battling trustees over Gearhart properties
June 29, 2012
Following an announcement in early June by the San Luis Obispo County tax collector’s office that several of former North County developer Kelly Gearhart’s tax-defaulted properties were to be sold at auction on July 1, an Ohio court trustee filed a motion to stop the proposed sales.
As of June 6, Gearhart, his wife Tamara Gearhart, and several of their subsidiaries owed SLO County $537,987 in property taxes, fees and penalties.
In the wake of an FBI investigation into fraud and organized crime, the Gearharts moved to Wadsworth, Ohio in 2008. The couple was accused of helping to defraud more than 1,200 investors of more than $100 million in an alleged Ponzi scheme.
In February 2009, the Gearharts filed personal bankruptcy in Ohio claiming $6.5 million in estimated assets and $45.1 million in estimated debts.
Earlier this month, an attorney for bankruptcy trustee Harold Corzin sent a letter to San Luis Obispo County Tax Collector Frank Freitas asking him to stop the proposed auction of Gearhart’s properties because they are in the advanced stages of litigation with a tentative settlement already in place.
“To the extent that you are proposing to sell parcels titled in the name of Kelly V. Gearhart and not yet abandoned by the bankruptcy trustee, this conduct is in violation of the automatic stay of the bankruptcy court,” said Corzin’s attorney Kenneth L. Gibson in the letter.
Corzin explained that the bankruptcy court proceeds would be used to pay property taxes as well as Gearhart’s creditors. If sold by the tax collector, Gearhart’s other creditors would be left without compensation, according to Corzin’s motion to stop the sales.