Gearhart pleads not guilty to fraud

August 14, 2012

Kelly Gearhart and James Miller

By KAREN VELIE and DANIEL BLACKBURN

Onetime Atascadero “Person of the Year” Kelly Gearhart pleaded not guilty to 16 charges of mail fraud, wire fraud and money laundering at his arraignment Monday at a federal court in Los Angeles.

The former North County developer faces up to 300 years in federal prison if convicted on all charges.

Gearhart and the former president of Hurst Financial, James Miller, have been accused of helping to defraud more than 1,200 investors of more than $100 million in an alleged Ponzi Scheme. Miller and Gearhart bilked investors who put money into Central Coast real estate projects and then siphoned off the monies for other purposes, including maintaining lavish lifestyles, federal authorities alleged.

Their victims include senior citizens, many whom invested their life’s savings with Gearhart and Miller, and local charities such as the Atascadero Meals On Wheals program which reduced meals sizes after losing its investment.

Gearhart’s and Miller’s charges came as part of a larger organized crime investigation, according to a federal seizure warrant for the proceeds from the sale of Miller’s home in 2009.

On Aug. 19, 2011,  Miller agreed to plead guilty to charges of fraud and money laundering as part of a plea agreement the court then filed under seal. However, the court did not order Miller to be taken into custody while permitting him to post a $50,000 bail. His sentencing is scheduled for Oct. 29 in the U.S. District Court in Los Angeles.

After Gearhart pled not guilty, Federal Magistrate Judge Jacqueline Chooljian for the United States District Court for the Central District of California placed Gearhart’s bond at $100,000. Two people, a friend and a relative of Gearhart’s, pledged $50,000 surety bonds each to cover the $100,000 bail requirement. Gearhart was not taken into custody.

Assistant United States Attorney Stephen I. Goorvitch of the major fraud section said his office was not releasing the names of Gearhart’s bond holders, though he did say they didn’t appear to be involved in Gearhart’s alleged criminal activity.

“Gearhart did not pay his own bond,” Goorvitch said. “Two people pledged $50,000 each. We do not believe they were involved in the crime.”

Shortly after Monday’s hearing, prosecutors and Gearhart’s public defenders filed a request to continue Gearhart’s trial from Oct. 29 to Jan. 29.

Gearhart’s attorneys said they need more time to review the voluminous amounts of evidence including tapes of a radio show in which Gearhart called into the Dave Congalton talk show on KVEC to claim CalCoastNews’ articles on his alleged fraud schemes were untrue.

The request also says the parties are working on a plea agreement.

“Defense counsel, defendant and the government are discussing whether this case may be resolved without the need for a trial, pursuant to a plea agreement,” the request says.


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Crusader

I am rather surprised that Gearhart wasn’t accidentally run down in the Roybal Building’s parking structure…


bobfromsanluis

Gee, you sound just like Jesus would sound in this situation, I’m sure …..


cheseburger

I am sure he and god would send all these alleged stupid crooks, who did get caught, straight to rot in burning hell fire!


R.Hodin

I hope the Atascadero CItizen of the Year commendation is placed into the court record. I’d love to hear that recited in court by the public defender! Bwahahahahahah


cheseburger

“Gearhart did not pay his own bond,” Goorvitch said. “Two people pledged $50,000 each. We do not believe they were involved in the crime.”


Right, they would be the only ones not involved with this, and why the hell would two people post a bond for such a piece of crap, who will not show up in court?


Because this is all part of the plan the money they posted was most likely the investors monies!


They shall all rot in hell!


R.Hodin

And the taxpayers can pick up the tab for his defense. Gearhart had some ace advice given to him going into this chapter of the novella.


cheseburger

Ah the man at the top could it be the same one Nanci Meek has found fraud with?

Should of seen him plead the fifth when the judge asked him if he had advised Jay Miller not to answer his interrogatories! Turned beet red, and I was there, even the bailiff was jumping up and down when the alleged crooks got sanctioned.

Do I have to keep saying alleged, can’t I just call a book by it’s title.


Booty JuJu

If he’s represented by a public pretender guarandamnteed he’ll plead.


Jorge Estrada

Starting to smell like the victims will be acused of enabeling the acused perpetrator thus a potential accessory to the crime. Crazier things have happened like getting a twenty percent return on your investment. Compare today’s rates to the Gearhart days and see how time appears launder a crime. In another year the investors will be the only criminals, trying to get something for nothing while Gearhart just failed at being a professional. I wonder how many certifications he violated or was his track record the only answer they wanted to be part of? Geeeee???, Gearhart may be the victim?


BeenThereDoneThat

Gearhart failed at being a professional?


NO, Gearhart failed at being honest and forthright with those who trusted what he said and the way things worked. When the lies (i.e.like to many people invested on one properity) start coming how is that the investors fault? Take the properity to the side of Circle K off Morro Rd. That dirt lot was sold to investors as 27 properities. In the public records it was three. So again WHO LIED???


Chicken Boo

So is Miller actually locked up now? I guess I missed that. I wonder if Gearhart is considered the bottom of the barrel and they are now going after only the ones above him. I sure do know a certian other ‘developer’ I’d love to see thrown under the bus….just as dirty as Gearhart. Do you think they will pick up any of the other pond-scum?


BeenThereDoneThat

Miller pled guilty months ago in a plea agreement. He is scheduled to be sentenced sometime in Oct. I believe.


Chicken Boo

Thanks, BTDT!


BeenThereDoneThat

I said to my wife after I read last month that Gearhart was indicted, that I bet the Feds will offer him a plea deal. NOT for lesser time for him but for Tamara. Why that? Because I bet there are others higher up yet that they want and they don’t want to let Kelly off easy so they figure they will leave Tamara out of it, as she is a small fish.


Same thing I bet they did with Jay. He is still doing time. What could he have pled to give up Kelly? To keep his daughter Courtney out of it. Anyone notice Courtney has been mentioned in three years?


I figure Jay was used for Kelly and Kelly is going to be used for……..?????????


Yes this is all speculation, just sharing an idea. Time will tell after it is all over and maybe some reports are released if this is a possibility.


Dexter

“I figure Jay was used for Kelly and Kelly is going to be used for……..?????????”


My guess is McKinney, Warren Frace and some member of the City Council like OMalley, Clay and Fonzi.


They are as they say … the prime suspects. Time will tell if Gearhart will tell.


Bob Kelly might have a chance of ending up on that list too.


BeenThereDoneThat

And let’s not forget Grigger Jones. Yea I figure all those and more, I just left it as a fill in the blank as there will probably be quite a few.


Mr. Holly

I don’t think that Fonzi or Kelly were on the council when all of this happened. Should be interesting to see where this goes.


danika

Fonzi was on the Planning Commission during the Gearhart reign and openly supported MANY if not most of Gearhart’s projects, including the Mackey project.


Cindy

I wonder why the Feds are using the call from Gearhart into Congalton as evidence? I remember that show and Gearhart saying “Lies, Lies all lies, I’m gonna get my lawyer and sue you”, in response to Velie! I recall laughing at him and all his denials while I listened.


I wonder if Gearhart’s public statements are evidence against him because he went on the radio and denied how much his projects were really worth and therefor he was perpetuating his scheme despite the truth that Velie was reporting to the public? If he would lie to everyone on the radio, he would certainly lie to the investors individually.


cheseburger

Remember when I asked him if he were in fact commingling funds, and he would not answer, well by failing to answer the question he answered all of them, yes I am a thief I stole all your money but I’m not leaving town, lying piece of crap!


Gearhart your soul was extracted from the bowls of the devil himself, oh how’s that bad cough that old Charlie Moore told me about and how the hell did he know? Anybody got answer’s, I doing free lung surgery with an Ice cream scoop, only for you Kelly, Eric Baldwin gave me the idea, (malice)!