Gearhart indicted, facing 300 years in federal prison

July 5, 2012

Kelly Gearhart and James Hurst Miller

Update: Under the original story.

Onetime Atascadero “Person of the Year” and prominent North County land developer Kelly Gearhart has been indicted by a federal grand jury and faces 16 charges of mail fraud, wire fraud, and money laundering. Investigators are calling it a “multi-million-dollar case.”

Assistant United States Attorney Stephen I. Goorvitch of the Major Frauds Section said in a statement that the charges revolve around accusations of Gearhart’s “bilking of investors who put money into Central Coast real estate projects – money that was siphoned off for other purposes, including maintaining a lavish lifestyle.” If convicted, Gearhart could face as much as 300 years in federal prison.

Gearhart’s questionable financial dealings were brought to light in a lengthy, ongoing series of articles by CalCoastNews starting in 2008. The developer threatened to sue the news website following the publishing of articles outlining his questionable investment activities in one particular project, the Vista del Hombre golf and business park located on the outskirts of Paso Robles. That lawsuit never materialized, although the website received letters from Gearhart’s attorneys, as well as Gearhart’s personal denial and threats voiced on Dave Congalton’s Home Town radio show on KVEC920.

Gearhart, 50, currently resides in Wadsworth, Ohio. He has not been arrested, federal agents said.

Investments in specific real estate development projects were fraudulently solicited by Gearhart, promising development but never delivering. He failed to disclose “a number of things,” said Goorvitch, “specifically that he was using victims’ funds to pay for his and his wife’s lavish living expenses, that he was using their money to develop different real estate projects than those intended by the victims, and that he was using victims’ money to make interest payments to other investors.”

He also sold various properties to numerous victims, the indictment alleges, without owning clear title to the properties.

Gearhart’s primary hard money lender, James Hurst Miller, already is under indictment on related charges.

UPDATE: Gearhart is slated to be arraigned in federal court in Los Angeles on August 13.

The government is alleging that Gearhart used victims’ funds intended for specific real estate projects to develop different projects. He also allegedly used those same funds to make interest to other investors in the real estate projects.

As part of his scheme to defraud, Gearhart also “concealed his material misrepresentations and omissions from victims, and lulled… victims into maintaining their loans” with Gearhart, according to the indictment.

Mail fraud allegations stem from a variety of checks mailed during 2007-08 from Hurst Financial Corp. (HFC), Miller’s company, to a group of individuals identified in the indictment only by their initials.

He also wired money with intent to defraud, federal authorities allege. On Oct. 5, 2007, he electronically wired $1.5 million from one local bank account to another in three separate communications. He followed that with a transfer of $1 million on Aug. 21, 2007. all of those funds went into City National Bank in San Luis Obispo.

One of the two money laundering charges derives from a payment of $25,600 to Pe-Ji-Ho-La, LLC.

Marion Warner, Gearhart’s common-law stepmother of 35 years, told CalCoastNews that Gearhart had boasted of his master plan for financial freedom. He planned to build his empire on borrowed money stashing funds, properties and jewels until the perfect time to file bankruptcy.

A group called PMA, now Pe-Ji-Ho-Ta, entered into an agreement with the the Salinan Indian Nation. Gearhart and his partners projected the agreement would result in earnings of approximately $600 million in profits over the next 50 years, according to Pe-Ji-Ho-Ta records.

Amidst assurances that then President George W. Bush was poised to sign off on the first step towards the development of an Indian owned casino in Paso Robles, the Salinan Indian Tribal Council entered into an agreement with PMA.

Gearhart was one of the members of PMA, along with attorney Grigger Jones, Chris Molina and Dan Phillips, to signed a contract with the tribe located in San Luis Obispo and Monterey counties in order to speed the tribe’s application for federal recognition – all with the goal of eventually building a large Indian gambling casino on the northeast side of Paso Robles.

Molina, one of four men who told the tribe they could secure federal recognition, boasted his group had a politician poised to fast-track their plans. Without a member of Congress or a U.S. president pushing for approval, the procedures required to procure federal recognition for an Indian tribe usually takes about 20 years, according to tribal council meeting minutes.

Although no federal official was publicly linked to the project, Molina, who is also a tribal member, used former President Bush’s name in promoting the project before Bush left office.

In March 2003, Molina introduced attorneys Tom Tellefsen and Jerry Levine to the tribal council as two men who could shorten the timeline for federal recognition from 20 or more years to a few months because of their ties to the Bush administration.

Tellefsen and Meg Whitman were former Massachusetts Gov. Mitt Romney’s national finance co-chairs during his 2008 presidential run. Levine is a business and litigation attorney with the Los Angeles based Holland & Knight law firm.

“Mr. Tom Tellefsen is exactly who he says he is, and is in the position to compress the timeline for completion of the task,” tribal confidential documents say. “The law firm that has been chosen for us is not only one of the largest in the world, but it is politically aligned with the current administration. Phil Hogan was Jerry Levine’s partner until the appointment to the National Indian Gaming Commission by President Bush; Tom Tellefson is a close friend of George W. Bush.”

Molina assured the tribal council that Levine was there to represent the tribe and not PMA, even though PMA would cover all attorney fees, according to the minutes of a March, 2003 tribal council meeting. It was an assurance the tribal leaders said he failed to follow through on.

In October 2003, PMA changed its name to Pe-Ji-Ho-Ta Consultants LLC and had Joe Diehl of the San Luis Obispo law firm of Diehl and Rodewald file a lawsuit against the Salinan Tribe, claiming fraud, breach of contract, and intentional misrepresentation for canceling their agreement to give Gearhart, Molina, Jones and Phillips a cut of future casino revenue in exchange for helping the tribe receiving federally recognized. The suit asked the tribe to return $20,000 in expenses as well as $2.5 million for lost revenue to Pe-Ji-Ho-Ta.

The tribe later agreed to reenter into an agreement with Pe-Ji-Ho-Ta Consultants LLC.

Pe-Ji-Ho-Ta and the Salinan Tribe’s plans call for building a 250,000-square-foot gaming casino, homes for about 400 people, a school, a hospital and a “green” energy plant on 2,500 areas they plan to purchase in either North San Luis Obispo County or South Monterey Counts, according to their business plan.

Because of Gearhart’s bankruptcy and other problems with authorities, the U.S. Bankruptcy Court now owns Gearhart’s 25-percent share in Pe-Ji-Ho-Ta’s portion of future casino profits.

This article will be updated as more information becomes available.

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I repost this question to Mr. Fonzi in response to his last post in defense of Alberta Fonzi, his wife. He says she was in no way supportive or an ally of Kelly Gearhart. He has yet to respond so perhaps he did not see my question. Here it is again:

Mr. Fonzi, did Roberta Fonzi support the “Mackey” project while she was on the Planning Commission?

Somebody needs to get Gearhart’s story on the American Greed tv program. Guess I will talk to them about it today. Saw part of a show last night that talked about a guy that bilked his friends and family out of 2 or 3 million. Good show but 130 million from seniors would be a better one.

Gearhart can be the major star he thinks he is. Better lose some weight though so he can run from BahBah in prison. Sorry I don’t know how to spell the big guys name. Wheres Gimlet when you need him? Or her.

God Bless the Gearhart’s and all the people he stole from. (That is if he is guilty). And everyone seem to think so. I trust Karen with this one.

Was our beloved J App involved with K elly G ? Seems he had his hands in everything else.

“Indian owned casino in Paso Robles”. I wouldn’t be at all surprised, would you?

Spirit Filled

Kelly Gearhart as a young “fair haired” Prison Guard ***Correctional Officer***was a most favorite son from the Warden, Captain, Lieutenant’s, and Sergeant’s, all the way down to the “in-the-car” Officers.

Way back then they were in his pocket, and he was in their good graces getting whatever jobs and or days off he needed that allowed him to do his contracting and in-house favors.

He made good money both as a Corrections Officer and as a young contractor doing favors for those in positions of POWER. The influence he yielded has always been far reaching.

Pump him enough and he’ll be demanding seven figures for the story rights while he’s serving time.

“Pump him enough” some kind of prison cartoon?

Ew. Did you have to leave me with THAT visual?

If they are like some of the reporters and news programs I have contacted, they want to wait until ALL the indictments and convictions are completed. This is all just the tip of the iceberg with more indictments to come.

Someone is now looking into the whole thing. Somebody is going to put the story on TV. Any money I get for the tip to them will be given to Victim’s Witness. They helped a little girl that was raped that we took care of for years. We tried to adopt her but the mother had Social Services on her side. They fought us even though the guy that raped her was crazy and later put in prison. She was only two and a half at the time.

God Bless Victim’s Witness it is a wonderful program and the people who run it are up for sainthood.

I’m sure Social Services has helped a lot of people and will help many more.

They do have the courts on their side and beat the hell out of us. We spent thousands of dollars trying to adopt her but we lost and so did she. We had her for a long time so had the chance to take her to play therapy three times a week.

When she turned 18 she came home. By the grace of God she stayed with us for 4 years before she left. We had the honor of helping her get through college. And we enjoyed every minute with her and still do.

If you need a grandma you need to get one like my wife. She is an angel that is embarrassed if someone says thank you to her. She is perfection that I will never reach.

God Bless my wife of 48 years tomorrow. How did she do it? I know, I’m all corn.

I didn’t hear that particular show but if true, I am completely blown away.

Dave has been such a critic of the tribune and their weakness to print the truth about corruption activities, especially when it hurts their bottom dollar.

Maybe it was hurting Daves employer’s bottom dollar too.

The lack of a vigilent press is one of the things that is hurting this country and allowing the greedy bastards among our populace to drag us all to the bottom.

Kudos to CCN, Karen, and Dan for standing up for SLO County and America. You are patriots and its perfect timing considering we just celebrated 4th of July.

As for Dave’s behavior, I simply don’t get it. SomeTingWong

Sounds like Dave has a case of sour grapes. Grow up, Dave. You don’t own the airwaves. You’re not the only local radio station or personality who is allowed access to interviews or reporting by Karen and Dan. They are free to appear on other local radio shows. I, for one will be turned in to that station for my local news from now on. I will not condone Dave’s mean spiritedness.

Seems Dave and 980 has held a grudge against Karen and Dan and their reporting for some time. Its really a shame what 980 has become IMO. Ive noticed a significant increase in the worthless repetitive commercials since Karen and Dan’s reporting dissapeared. Home town radio is a two way street Dave, some of us cold care less about Billy Bobs lost dentures and want some real reporting….the Kind Karen and Dan provided.

Don’t give up, Dan. The truth doesn’t always come out in our time, but usually the people who aren’t honest and pretend to be something they’re not, sooner or later show they’re colors, this whole story is full of those kind of people. Because of you guys having the guts to bring the truth out, finally the abusers and users are going to answer for their actions. As a “Teacher” once said , “you’ll know them by their works”. That’s why you need to hang in there.

I’m ashamed to admit that I listened to portions of Dave’s show yesterday. He spent a lot of time on Kelly Gearhart. But no one was calling in so Dave repeatedly asked hard-hitting questions like “What would you give Kelly Gearhart?” and “What do you think of the Kelly Gearhart mess?” He sounded a little desperate as the crickets chirped during the silence.. And no, he didn’t mention CCN once.

But why is anyone surprised that Dave’s dissing CCN again? Remember a few months ago Dave wrote his lengthy rant here, calling CCN readers a “lynch mob of uninformed, kneejerk anonymice” for criticizing his pal SLO Deputy DA Karen Gray.. He ended his diatribe in a not-so-professional or classy manner: “OK peeps. Bring it on! I’m ready.”

OK Dave. I stupidly gave you a second chance. Even though your show’s turned into a 3 hour infomercial for a used car lot and a local grocery store, I would tune in now and again for your guests–not for you, BTW–but for your interesting guests. But now that you’re starting w/the immature attitude again about who goes on what shows and talks about whatever….I’m gonna have to banish your station again between 4-7. Grow up, Dave.

Without the grocery store and the used car lot you would have no Dave Congalton, or any local radio, including Tea Party KPRL, or liberal KYNS, both of which entertain me at times. Use it or lose it.

I am disappointed to see the normally straight-on reporting of Dan Blackburn be so twisted and inaccurate here. I will give my side of the story Wednesday at 5:05 on KVEC 920 AM.

Your side should be told here, not on KVEC, Dave.

Well, Dave I am disappointed (but not surprised) to see you pop in–not with any explanations of why you’re kissing up to the Trib and dissing CCN–but with a tacky plea for ones to listen to your show. Dwindling listeners, Dave? I won’t tune in on Monday; why should I bother?

Also you chatted on the air with your new boss Andrew Cannon on Friday, even giving out his e-mail in case listeners wanted to contact him. It’s not worth my time, Dave, but maybe others will drop Mr. Cannon a note explaining how your rude tone and arrogant attitude turn away listeners. Hometown Radio’s been on for 20 years but a corporate employer may not want to keep you around for another 20 years…or 2…if you keep up the whining and game-playing.

KVEC Program Director Andrew Cannon:

Dave says:” I will give my side of the story”

So you are saying that the history of Gearhart is somehow different?

Dave if you make a revisionist history of Gearhart I think Karen should make a eBook of all your emails about this from 08 and on, the Congalton letters……

Then there is Dave and Adam Hill………….


Are you kidding me, Dave? You actually resort to threats to maintain market share? I trust Dan. And I trust Karen. I used to think you were looking out for the community but I now believe you are looking out for yourself.

Admittedly, the only times I ever listen to Dave Congalton was when you (Dan) or Karen Velie were speaking. Outside of that, I haven’t bothered. Sounds like I missed nothing. Mr. Congalton, your interviews of CCN stories have greatly increased your listening audience. You might want to remember who butters your bread, get over yourself, and think about how easily you can be replaced.

If that’s the case, I have seriously lost respect for Dave. Sharing news is simply that, sharing news, not a popularity contest. If you didn’t want her on other news stations, maybe Dave should have treated her better.

I like CNN and I like the Dave Congalton Show. I also know Dave used to be associated with CNN in some way as I remember seeing his name listed in the CNN Team box as an editor or something. It is obvious there has been a falling out between these two fine organizations. Perhaps a sit down between these parties with an intermediary to discuss whatever the issues are, as ADULT BUSINESS PEOPLE, can clear the air. This is turning into an embarrassing show of colossal stupidity. There is almost always a reasonable compromise that can be reached. If there is an honest difference of opinion about how these two organizations interact with each other and they find they can no longer interact in a professional manner than each needs to go its separate way WITHOUT placing blame or trying to bring the other down. Business organizations are allowed to have differences of opinions, but to turn this difference of opinion about business practices into taking potshots at each other, either directly OR INDIRECTLY is not acceptable, period!

Well said, pismo and whatisup. I like both media venues, they’re both highly valued sources of information for us SLO county citizens. This isn’t the first time that Congalton has appeared to act out when he was angry with Karen over something. They both need to work out whatever this problem is and it sounds like Congalton wants an exclusive on CCN reporting. Maybe Karen could agree to do his show before she does anyone elses. That would sound fair and lets face it, he can’t have the air waves all to himself and CCN news is important. They used to put out such a fantastic effort together on behalf of us citizens, I hope Dave starts to think about the rest of us again because he/we can get the news first on his show and after that, the rest is crumbs, let the other stations have them. What say you CCN, will you give Dave the first spot before you go on other shows?

Why should KVEC/Congalton get the exclusives and the crumbs go to the progressive station? Makes no sense. News is news regardless of what station reports first. I think it should be up to CNN as to where and when they choose to appear first, and given the way Dave has reacted to Karen appearing on that station, I vote for the progressive station – which appears to have more respect for Karen. Congalton and KVEC should not get preferential treatment especially when Congalton has behaved so childishly.

Dave Congalton is an eqotistical a-hole. Either you do it his way or you hit the highway. You should know that by now, Daniel.

Yeah, he did cut my radio interview with Kelly Gearhart short, come to think back!

He can soak his head in a bucket too!

Gearhart is not stupid (especially with attorneys backing him-paid for by the victims), a former correctional officer, in absence of a raid and handhcuffs, knows about the game, i.e. the charges may have only one or two that might stick, and the game pressure is to make him spill his gutts, which he already knows about! Nevertheless I hope they nail this SOB and his wife (no sympathy for them whatsoever!).

Courtney Brard too, she set me up royal and I am not releasing her from my lawsuit, fraud should not be cleared by bankruptcy.

Chese, You hit the nail on the head. Without Courtney Brard’s lies and deceit on behalf of her father none of these crooks like Gearhart, Graves, Shores, Cuesta Title, et al would have been able to pull this off. This, not to mention the vultures like Pete Josserand and Ron Berry that came after to pick the bones of what little the people had left. I am sure she is going to get away clean as part of Jay Miller’s plea deal.

Law enforcement in this country has become nothing but a dirty joke and the joke is on us.

There was a document associated with the Hurst Financial Jay Miller company that was notarized and witnessed by Courtney Braird then two days later the SAME document was witnessed and notarized by Colleen Alexander, secretary for Attorney Robert Grigger Jones. Anyone have a copy of that document?

OMG I have proof that Attorney Robert Grigger Jones already forged a document while taking over our father’s trust, AFTER dad died, an affidavit confirming by his own admission he lied, and someone dislikes our post regarding the TWICE notarizing of a document (second time by Colleen Alexander, Jones’ secretary) and we get a thumbs down? too funny. Makes you wonder who is giving the thumbs down right? Go to our site and look at the signatures comparisons and review all the other shenanigans Jones (gearhart’s partner and Pe Ji Ho Ta partner and attorney) and see for yourself Mr. thumbs Down!

Don’t worry Nanci, it’s the troll Slanders, he picks on those who have experienced great losses, to hell with the red, get your words out there, remember I have your back!

Where there ANY members of the city council during the reign of KG that weren’t in his pocket?

Yes, George Luna and Becky Pacas. In fact Pacas had sewed Gerahart for dirty business dealings and won her case prior to having been elected to the CC. Unfortunately, there were 3 members who constantly made up a quorum “YES” vote for Gearhart, so no matter what Pacas or Luna tried to do to stop him, they were out voted. Also, Gearhart would manage to get lots of “seeming everyday local citizens” out too CC meetings where his projects were under consideration to speak on behalf of those projects and insist how valuable they would be to everyone in A-Town. At that time, Luna didn’t understand how he was managing to do that (get so many seeming citizens on his side). Later it became clear that they were the people who had invested through Jay Miller and they (the investors) would get all their family and friends out to help push projects through at the PC and the CC meetings.

P.S. By the time the citizens of A-Town managed to elect a council where the quorum vote went to three members that were not going to tolerate Gearhart, most of his projects had already been voted through and had done there damage and the new tricks seemed to be going on in the city managers office. That’s when Mike Brennler attempted to step in and we all saw what happened to Mike when he tried. It was sickening.

I was at many of those meetings I think it safe to say that most of his fan club were his investors

and are now holding the bag!

Mike Sherer was one of his biggest supporters. If I was the FBI I would be looking in to him!

His name is never mentioned and I have to wounder why!

Allow me to shed light on Mike Sherer and others’ involvement/support of a specific Kelly Gearhart developement project:

From the minutes of the Atas. City Council Meeting held Tues., August 10, 1999 in regards to the Mackey project:

“Michael Sherer, 84050 Alta Vista, stated he attended a similar hearing concerning the 19-home subdivision on Traffic Way.� He explained there were many objections to that subdivision but now that it is built, it is obvious that the concerns of the opponents of that project were unfounded.”

“Jim Shores, 6700 El Camino Real, stated he owns property adjacent to the lots and is for the project. (Mackey project)� He offered to extend the use of his water well to the applicant if he was interested.”

“Donn Clickard, 8525 Atascadero Ave., stated that he is in favor of this project.� He explained to the Council that low to moderate-income housing is a need in our community.”

“Bob Shannon, 5700 Portola, stated that he supports this project.� He stated that he agrees with both Donn Clickard and Michael Sherer.� As a competing contractor, he acknowledged that Mr. Gearhart has a vision and that may be what this city needs.”

“Jay Miller, 7340 Morro Road, stated that in the past he had qualified for a first-time home in Lompoc.� He stated that he is in favor of the housing project.”

“George Molina, 5555 Robles St., stated his support for this project.� He also stated that many of the concerns expressed tonight regarding water, safety issue, etc., are not legitimate”

This project was eventually haulted and Kelly Gearhart did NOT get his way despite all the above persons attempts to sway the coucil. It is intersting to note Roberta Fonzi was in FAVOR of this project without ever having looked at the actual site. KG wanted to build 29 houses on a 4 acre lot; the lots in the neighborhood are zoned for 1 house on each acre. Had this project completed, there would have been 29 driveways backing out directly onto Traffic Way within a quarter mile (Chico St to Potrero).

Yeah Danika…but don’t forget Kelly Gearhart had ” a vision and that may be what this city needs…” LOL And remember how Brennler pushed “transparency in government” over and over and at least 3 of the council members kept trying to shut him up. I wonder why!

It will be quite interesting to see if/when anyone else is indicted…

PP5, the info above is just a smattering of people who spoke in favor of Kelly Gearhart. The support ran very, very deep. Let’s hope someone takes the time to shake the tree and out every one of them.

There’s that name again, Molina. Sounds like the whole family was involved with Mr. Gearhart! George is Chris’s Father, right?

Cindy: I am amused by the misplaced notion that Luna and Pacas – particularly Luna – were principled members of the Atascadero City Council.

The truth is, George Luna and Becky Pacas were no better or worse than the other three council members.

Well, I do agree that they all threw you under the bus while protecting themselves and Wade.

How did Luna and Pacas protect themselves?

It’s a long complicated story that goes back a few years. I know that Karen covered it but I’m not sure if she was with the NT at the time or if she covered it under “uncoveredSLO”. The story was called, something like “Lies and Audiotape”. It had to do with the city council illegally meeting behind closed doors and discussing taking over the Ghans {sic} service station by eminent domain. The station was across from the Carlton Hotel (valuable location). Kelly Gearhart was also involved with this ordeal as he wanted to build a parking garage there as I recall. Wade McKInney enlisted city staff employee Marty Tracey to “sort of” intimidate the Ghans into doing things the city way. Marty made the mistake of leaving a message on the Ghans answer machine telling them that he was giving them a “heads up” and also stating that he was very sorry about it. The Ghans in turn contacted Karen and an attorney. All hell broke loose after that and the bottom line is that the CC and Wade McKinney said Marty was a rogue employee and a liar. From there it just kept getting worse and in the end, Marty and the city Attorney were terminated. The CA was terminated for telling the CC that they could fire Marty without due process etc (and other bad advice) and Marty was terminated for doing what Wade told him to do. The CC claimed all innocence and no knowledge which was BS.

That is the short version ;)

You left out the funniest part. The city claimed that they fired Marty for running from Karen and hiding his face! That’s the truth, just ask Marty. That is why they said they fired him.

Back then, Karen was new on the scene and people knew that she could be ruthless when it came to reporting wrong doing. They weren’t used to being outted by the press and Marty was between a rock and a hard stone. When Karen came calling at city hall to speak to Marty, she had photographers with her. They captured Marty running and hiding his face. He ran behind a door with a glass window in it and held it closed while Karen tried to push it open saying, I just want to ask you some questions. You could see Marty on the other side yelling to stay away from him. It was hilarious. Not that Marty was the bad guy, he was the good guy but it was still very comical.

No, it’s not the truth.

The problem with your version is there was only one photographer who arrived before Karen. He took a bunch of photos, and began to push the camera in my face becoming very aggressive. I moved back asking him to stop making a gesture with my extended arm. At that moment Karen came in and was waiving her arm over her head. If you look at the photo you will see that I am looking at her and speaking.

The camera had a huge lens on it, and the camera at that point was below the guy’s waist. The photo is obviously taken at an angle. The whole thing became a circus, and I turned to exit the room through the door being held open by Marcia.

It was the photographer that tried to access the staff area, not Karen. I did not yell at anyone at any time. If I had, that would have been another count against me in the bogus “Report of Investigation.

If I was, as you say, I was running away covering my face, where’s the photos? Obviously you were not there, and I have all the documents and recordings if you want to publicaly revisit this matter.

Karen knows the truth of what happened, and should respond to this as well.

I had called Karen and made an appointment to meet with her at City Hall to hear the tape she claimed to have. After I made the appointment, I called Marcia and asked if she was available to sit in on my meeting with Karen.

I got a call from the reception desk saying that there was a photographer from the New Times there to take my picture. This was news to me, so I left my office and entered the reception area of City Hall. As soon as I walked in the photographer ask the girl at the counter if I was “him.” At hearing “yes,” he began taking photos. After he shot a whole series of photos I asked him to stop taking my picture. He said “no,” and started up again. I asked him again, and he just kept clicking. Then he got close to me and put the camera in my face saying “you want me to stop, you want me to stop?” At that point I stepped back and into the counter and noticed Marcia opening the door to the staff area. The photographer had lowered the camera to below his waist and began making shoving motions with the camera and saying “you want me to stop, you want me to stop?” At that point I gestured with my left arm for him to stop as I saw Karen coming into the Reception area waiving her arm over her head. I said to her that I had not agree to this, and realizing that the encounter had become a circus, I calmly walked to the door held open by Marcia, which was only a few steps, and out of the room followed closely by the photographer who by that time had become very aggressive.

The photographer grabbed the door from out of my had and was trying to enter the staff area claiming that it was public property and he had a right to enter. I said that it wasn’t and pulled the door shut. While City Hall is public property, the photographer did not have the right to enter the staff area and that is what I was responding to.

I stood there with Marcia for about a minute, and said to her that I was going back to my office. Marcia asked me if someone should accompany me, and I said no. I then re-entered the Reception area. By that time Karen and the photographer were in the parking lot. I looked at them, and they at me. I went to my office which was outside of and adjacent to City Hall at that time. I expected Karen and the photographer to come into my office, but they didn’t.

At no time was there laughter in the room or unprofessional conduct on my part as PaulJones suggests. The City’s thug investigator tried to make the case that I was yelling, but Marcia and the other witnesses testified otherwise.

Karen, I have Marcia’s testimony and it does not square with PaulJones version of the story.

Karen, again you were there. What say you?

Did I “run hiding my face?” Was it you on the other side of the door saying that you just want to ask some questions? Was I “yelling – stay away from me” as claimed by PaulJones?

And PaulJones, who are you? I don’t remember anyone named Paul Jones working for the City of Atascadero, and there is no Paul Jones testimony as part of the “Report of Investigation.” I know that your version of the story would have been of great interest to the thug investigator and Wade had you actually been there and were it true.

Only a coward takes a cheap shot without identifying yourself. Come on, step forward and prove what you say is the truth.

I wasn’t there. It’s the story as best I remember as it was told at the time by someone who claimed to have been close by that day. It struck me funny at the time and still does, if it isn’t quite what happened then I take your word for it.

MartyTracey, I believe you. Your words hold a ring of truth that I find credible. I hear versions and perceptions of truth on a daily basis, being an insurance agent. Believe me, I hear some whoppers. It becomes easy to tell who is turning events to shine the light more favorable on themselves.

Where I am sure there is some of this in your accounting of event, I feel you are mostly truthful.

I do recall that the NT photographer was very aggressive at times and would snap photo’s non stop from all directions (while upsetting the subject of his focus) and then he would provide the least appealing photo to accompany the article.

I recall when Marcia was refusing to honor public records requests for certain documents that she as the city clerk had a fiduciary responsibility to provide under the public records act. The NT photographer got Marcia so unnerved that she needed to take time off work after the encounter.

According to a PC who said they spoke with Marcia after the episode, she was “visibly shaking” and Marcia stated that he (NT photographer) had just come in and started aggressively snapping photos prior to Karen arriving.

I don’t doubt that things happened exactly as Marty say’s they happened that day. Also, Karen would not have attempted to access the staff area but the photographer probably wouldn’t have known better until Karen arrived and stopped him.


While true that the City Attorney was shown the door, I don’t think that happened until sometime in 2006.

As for me, this all happened in 2005 and I did not leave the City of Atascadero until May 2009.


You don’t have to take my word for it. Karen was there. And then there is the Report of Investigation, deposition testimony, and supporting documents.

Karen hasn’t spoken yet. And the Report of Investigation, which was a fault finding investigation rather than a fact finding investigation, the purpose of which was to find justification to punish me, corroborates my version of what happened with the photographer.

Believe me, Wade and his management team, and past and current City Councils would prefer your version.

By the way, you didn’t say who you really are?

Again, my question was:

How did George Luna and Becky Pacas protect themselves. I fail to see the answer in the exhaustive responses above…


As you point out these have been “exhaustive responses,” and any further explanation will be even more exhaustive.

I’d be more than happy to sit down with you and do my best to answer your questions.

Karen has my contact information, and is encouraged to facilitate such a meeting if you are interested.

Yes it was a long battle starting with Karen’s story in the NT called “Threats, Lies & Audiotape” which would have been prior to or very early in 2007. The city council initially attempted to terminate you behind closed doors which was illegal and when they learned that they had violated your rights to due process, you retained your position but became the subject of retaliation and demotion. They made your life miserable but in the end, you prevailed.

This ordeal obviously took an emotional toll on you as it would any upstanding citizen and honest working man. You’re a good man in my opinion and unfortunately, there were many misunderstandings starting with the fact that the message was 8 months old. That is something that was unknown at the beginning of this fiasco. Had that been known from the start, I think this ordeal might have taken a different direction. I hope you’re doing well.

Thank you Cindy.

One correction. Karen’s story about the Gaughans was in an October 2005 edition of the New Times.

MT, please explain your comment about Luna and Pacas.

Yes, it is a long and complicated story. However, I was not “enlisted . . . . to “sort of” intimidate the Ghans (sic) into doing things the city way.” And if you think property owners should be informed about government action being taken relative to private property, nor was it a “mistake” to leave the Gaughans that phone message. The Gaughans never said that I threatened them, but did say to the Atascadero News that I was being scapegoated. It was Karen and the New Times that characterized the message and the conduct of the City as a threat. I had one reporter tell me that it was the public conduct of city officials that gave legs to the story.

In deposition testimony the Gaughans said that I was a nice guy that was always professional in my dealings with them. A calm reading, or better yet hearing of the message will demonstrate that all I had done, with Wade’s knowledge, was to inform the Gaughans about what the next steps would be relative to their property and offer to discuss it with them. During the same time that I was working with the Gaughans, I was also working with another property owner in the same way. I don’t remember the owner’s name, but the property was a boarded up former restaurant south of and adjacent to the Carlton Hotel. The owner was interested in participating in a “friendly” eminent domain process. Kelley Gearhart bought the property before that process was concluded.

The Gaughans had discussed with me on at least two occasions the eminent domain process to include September or October 2004 and January 2005. Eminent domain occurs in two phases. The first phase is known as “process,” and the second phase is known as “proceeding.” Under the law, an agency is required to make a good faith effort to come to terms for the purchase of real property. If the parties are not able to come to terms, then the City Council, during a public meeting, makes a resolution of necessity which moves the process to court proceedings.

Following the phone message, the Gaughans negotiated offers of $1.2 and then $1.5 million dollars, but would not allow access for an appraisal and environmental investigation. In April 2005 the City went to court to get court ordered access to conduct the required environmental investigation and appraisal, which was granted.

Under the law, a public agency must conduct an environmental assessment and an appraisal. This is known as “due diligence.“ The Agency, by law, is only able to pay the appraised value and maybe some money for relocation costs, and the value of any “good will“ if a business. In an eminent domain proceeding, the court can order that a higher price be paid; but, without an order of the court the public agency is limited to the appraised value plus some ancillary costs as stated.

The Agency’s offer on each occasion was for what the Gaughans demanded, but not to exceed the appraised value. When the appraisal came in at $950,000, eight months after the phone message, they found Karen and the rest is what it is.

Following Karen’s article I offered to sit down with the Council and tell them what I knew. That never happened. Instead Scolise, Luna and Pacas made statements to the press. In a letter the Editor, Pacas said something to the effect that “everyone” knows the truth from the press reports, thus no need to talk to me.

All of the above is documented, but not the totality of the story. There are lots of documents and deposition testimony; and, I have copies of all of it.

MartyTracey, thank you for your explanation on Pacas and Luna and the links provided. This was most helpful. I have always thought of Luna and Pacas as being against Kelly Gearhart. I didn’t see anything in the documents provided that changed this opinon. If you have something else that would change this, please provide.

All of this occurred during the Bush administration, ergo, Obama’s fault. Just get the n*****r out of the WHITE House and all will be well.

I gave you the first thumbs down, not for ANY fondness for Obama, but for your blatanty racist comment, which has NO relevance to this story.

O.K. , my apologies, point poorly made. My point was, if you oppose regulation of investments and everything crashes what did you expect? This happens all the time. It’s so huge and out of control now that it caused a recession, oddly enough called the “Obama recession”. Whether in the North County or nationally, this is no accident. Yet greed remains good.

I am surprised that you did not see sarcasm thought…

I did see the sarcasm but couldn’t get passed the racism in your post. I am glad you apologized. I agree that greed is rampant and the driving force behind just about everything these days. It is out of control. Understanding this, it is imperative that we all take a firm stand and do our part to change what we can. Greed isn’t good.

The “racism” is in the post for a reason. The fact that Obama is black is the fuel that fires the anti-Obama movement. If either Clinton were president Romney would stand a chance. It is how Wall Street and the PAC’s are going to reinstate Bush style plutocracy. Greed is how Gearhart was able to attract investors, 12% when you’d get maybe a third of that on a legit investment. Is it government’s role or that of the market to regulate such activity? Romney is for plutocracy, but that’s not selling so well since Oct ’08. If it’s not the government’s business to stop the derivatives “market” or Lipor manipulation why should they pay any attention to Gearhart? If someone offers 3x the going rate, investor beware.

“Greed is how Gearhart was able to attract investors, 12% when you’d get maybe a third of that on a legit investment. Is it government’s role or that of the market to regulate such activity?”

Sounds like another blame the investor line! Remember these investments (not all) had bogus guaranteed property title by Cuesta/Smith Title. Yes, regulation is a good thing in the world of Land/Investment sharks. Could have prevented the fraud and ruination of so many folks life savings.

So don’t trust Cuesta Title, and make your investment decisions accordingly The Wall Street derivatives were just as worthless. I think Gearhart is entitled to the same Bush-style federal bailout and no increase in regulation!

Free Lunch!

Served by Kelly Gearhart

Cheese provided by Miller & Brard

Mustard spread by Cuesta/Smith Title

You provide the Bread

The word you wrote describes all colors and by writing it, well makes you one. Sorry it is what it is, but you will never have my respect where’s that red button?

Please don’t use the n word in my presence. But the part about getting Obama out of the White House is a good idea. Maybe we could all go golfing together. He can get on any golf course in the country. Even Augusta.

My reponse to Mr. Fonzi……………….

It is an interesting post Mr. Fonzi but please lets add some other facts.

Do you remember encountering me in the parking lot of Albertsons (August 2, 2007 10:10 am) while you were gathering signatures for the recall? You had been at the table with Ray Buban and Cheryl Burbach and then encountered me at my vehicle. My wife and I were there to pick up a birthday cake for my grandsons birthday party.

Do you remember telling me that the recall could go away if I made a public apology to Kelly Gearhart for having requested the DA to investigate him? Why would you do that Al?

Do you also remember sending an email to the media claiming that I had attacked your wife even though the only time I had ever met her was in the middle of the Carrow’s Restaurant for a cup of coffee after she had asked to meet me after I won election to the city council? Why would you do that Al?

I confronted your wife about this email during a public council meeting and demanded an apology. She said she didn’t feel it appropriate to discuss such matters. That event is all recorded on video.

I have the email and have no problem sharing it with the public. What abou you Al? Do you have a problem with me sharing it with the public?

So yes let’s talk about character assassination Mr. Fonzi and let’s let the public compare the evidence.

Share it, please. Let this be the first of many bold steps of many people to transparency.

Mr. Brennler: You were correct about Gearheart and I was wrong, but given what was known at the time, I felt your personal attacks on him were unwarranted. However, your recollection about what happened at Albertson’s is incorrect. We spoke at the front of Albertson’s at a table used to collect signatures for your recall; I did not “confront you at your car.” I did say you could end the recall if you backed off, but it ended anyway as it was poorly organized. I didn’t start the recall, nor even participate in it for at least two months, but I did have a hand in ending it by helping to persuade the originators that it wasn’t in anyone’s interest to continue. As to why I participated at all, it was your conduct and attitude towards the public that convinced me you needed to go. For example, your explulsion of Mr. Billings, a former teacher and citizen of the year from a city council meeting because you didn’t like the expression on his face was an example of abuse of authority and power. For those not familiar with the incident, it occurred during one of the more spirited council meetings discussing Wal Mart. There were many union supporters in the audience making a lot of noise, but the facial expression of a 72 year old man upset Mr. Brennler so much he ordered a police officer to expel Mr. Billings during a break. As for demanding an apology from my wife, you confronted her on two occasions at Planning Commission meetings to demand an apology from her for my remarks about you. She told you to speak to me, which you never did. When your behavior continued and appeared threatening to her, she spoke to the Police Chief about her concerns. He said he spoke to you and the matter ended as far as we knew. You’re correct about it all being on video and I encourage people to look it up. Bottom line, why would you go to a Planning Commission meeting and demand a spouse apologize for her husband’s remarks? Why didn’t you speak to me? That incident was nearly four years ago by my recollection. Finally, I encourage people to check the facts about Mr. Brennler’s insinuations that Roberta was somehow an ally of Gearheart. This man has just been indicted for defrauding hundreds of people out of millions of dollars. He attempted to do the same with Roberta’s real estate client. Roberta was not a friend, ally or anything other than an vigorous advocate for the people of Atascadero while on the Planning Commission and likewise for her clients, whom she defended against Gearheart’s attempted predations. As for e-mails, feel free to share anything you like, challenge to a debate or any other forum or venue you please. We will be happy to oblige. Al Fonzi.

Mr. Fonzi, in trying to cover your wife’s tracks, you come across as a disgraced husband whose good ol’ boy network is being dismantled, Mr. Brennler, I doubt even your most enthusiastic supporters during your successful run for city council run could have known how badly Atascadero’s government needed you… if only just to come in and flush it. The only reason those dum-dums came after you with their chlldish recall was because they were dirty and insecure.

How about this forum to share everything you are talking about?

Mr. Brennler shares the email.

Mr. Fonzi shares the link to the real estate contract and links to the videos he asks us all to check.

Mr. Fonzi, did Roberta Fonzi support the “Mackey” project while she was on the Planning Commission?

Roberta Fonzi = Al FONZI PUPPET. Left to her own devices, she is Ok in my opinion. I have seen her work at getting to the facts of a project and I have often seen her make excellent decisions on behalf of those that she serves. The problem is her husband and we can not separate the two. Maybe she should go back to being a housewife and realtor and get out of the politics. If he were my husband, I would be embarrassed after reading his rather transparent post.

If readers are interested in facts, the last person they will use as a source is Mr. Brennler. First of all, he has a personal grudge, as Roberta (Fonzi) and I, both worked to have Brennler recalled when he served on the city council. I worked a lot harder to have him recalled than Roberta did but his aberrant and threatening behavior towards Roberta after he left the Council was serious enough that Roberta asked the Police Chief to interview Mr. Brennler. Second, Roberta was a nemesis to Gearheart, not an ally. She continually challenged him while on the Planning Commission and frequently related to me how Gearheart continuously attempted to “get over” and cut corners on his projects. The allusion that Roberta “sweated Gearheart” for appliances is a lie and I doubt Ms. Vielly implied anything of the sort, as Roberta personally related the facts to her several months ago. Roberta is a realtor; one of her clients bought a home from Gearheart that was supposed to be fitted with gas appliances. When they took posession of the home, it had electric applicances. Roberta confronted Gearheart and demanded he live up to his contractual obligations, which he did, after she proved to him that the plans he submitted to the City and his contract both called for gas applicances. It’s all in the public record and real estate contracts are also permanent records. Anyone can check them out for themselves, except those who deal in rumor and character assasination, in which Mr. Brennler has excelled in the past.This city was torn apart by Mr. Brennler’s short term of office on the council. If people want to believe him, be my guest, but you get the government you deserve. Al Fonzi.

Can you put a link to the real estate contracts you say are of permanent record?

Mr. Fonzi: It is appropriate and quite noble for you to stick up for your wife; however it would be much appreciated if the public could hear from her firsthand. I’ve heard her speak. She’s smart and articulate so she should just come forward and address us herself. It’s obvious you and she are reading this chatboard so please ask her to spend a moment to address her detractors personally. (While you’re at it, if you could ask her colleagues Clay, O’Malley, and McKinney to speak up, that would be great.)

As for your assertion that Mr. Brennler supposedly tore apart A-town…um…sorry to inform you but your city’s been going downhill for a long time. If anything, you’re mad because Brennler shook up the good ol’ boy network in Atascadero and that really pi$$ed off a few old-timers.

And Mr. Fonzi, it’s interesting you blame Mr. Brennler (BTW, I don’t know him) for tearing apart A-town but he’s not the one being indicted; Gearhart is. So if your wife did nothing wrong; don’t sweat it. But now that Gearhart’s been indicted, I expect he’ll start squawking like a chicken who’s about to be plucked… I have a strong feeling that Gearhart’s gonna talk and some A-town city staffers will not like what he has to say.

Mr. Brennler did not tear apart the city of Atascadero. Back room deals, elbow rubbing, card games, and out and out votes-for-favor are why the city went into chaos. It seems to be the norm for city governments in this county.

Did anyone else hear Dave Congalton’s comment last night about The Trib breaking the Gearhart story? My husband came home INCENSED!

I’ll keep watching for yesterday’s podcast to post because – if this is true – I vow never to listen to the Congalton Show again. What a jerk.

For the history buffs take a trip to May 6, 2008 “Atascadero developer Kelly Gearhart will respond to allegations raised by on Wednesday between 5 and 6 p.m.” In Dave’s own words

Isn’t it funny that on May 6th of that year Kelly was saying how everyone had it wrong. Then five months later he was packed up and hiding in Ohio ever since. Hmm are these the acts of an innocent man???