Tom Murrell accused of benefiting from Gearhart fraud

July 9, 2013
Kelly Gearhart

Kelly Gearhart


San Luis Obispo County Superior Court Judge Charles Crandall Monday denied a motion to dismiss a lawsuit against Cuesta Title, Stewart Title and Heritage Oaks Bank noting the defendants were aware of wrongdoings.

In 2009, more than 300 investors filed a lawsuit alleging Stewart Title, Cuesta Title and Heritage Oaks Bank aided and abetted and/or conspired with Hurst Financial Inc. and former North County developer Kelly Gearhart in defrauding hundreds of seniors through illegal investment schemes.

In their lawsuit, San Diego based attorneys Steven Sanchez and David Noonan cite examples of the title company creating false escrows, falsely closing active escrows, and illegally filing clean title reports before placing additional loans on already encumbered properties.

According to Monday’s ruling, Gearhart’s former partner Tom Murrell personally benefited from his position as the president of Cuesta Title. In one example, even though the title on a Morro Road property had multiple beneficiaries, the investors were lumped together on one title because the property had not yet been subdivided.

“As a consequence, Murrell and Gearhart’s company was paid approximately $1.5 million in plaintiff’s investor money to purchase property, thereby directly benefitting Murrell in a transaction closed by his own escrow company,” the ruling says.

The plaintiffs also accuse Heritage Oaks Bank officials of being aware of the Gearhart/Hurst scheme when they approved a $1.5 million loan which permitted the bank to obtain a priority secured interest in the Vista Del Hombre project, effectively wiping out the investors’ encumbrances.

In its request for a motion to dismiss the suit against the bank, attorneys for Heritage Oaks Bank claim that Cuesta Title employees failed to inform the bank’s loan officer, Greg Porter, of the pre-existing liens.

However, in a deposition, former Cuesta Title employee Marcus Harmon testified he showed Porter the investor liens in a title report.

Yesterday, Judge Crandall denied both the title company’s and the bank’s motions to dismiss concluding, “A serious fraud has plainly been perpetrated on a wide group of investors, which is reflected in the indictments and/or convictions of several key players.”

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.

In the summer of 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.

In August 2012, Gearhart pleaded not guilty to 16 charges of mail fraud, wire fraud and money laundering at a federal court in Los Angeles. He faces up to 300 years in federal prison if convicted on all charges. His trial is set for Nov. 12.


Inline Feedbacks
View all comments

Ha! So what else s new? Probilt (Reggie Brard) started to do the something with San Luis trust bank. His daughter in law Courtney (Jay Millers daughter Hurst financial) was teaching him all the good tricks!

As related to the Kelly Gerhart fiasco and the FEMA fiasco, here are a couple of YouTube clips that explain it pretty well The relevance of the first link/clip starts at about the 8:04 mark and it continues through the 2nd link/clip.

This is pretty much what happened in SLO County, particularly the North County …. and with full cooperation with the politicians and muckity mucks.