Kelly Gearhart gets another reprieve
November 22, 2014
By KAREN VELIE
The sentencing hearing for former Atascadero developer Kelly Gearhart has been extended from Dec. 29 to Feb. 23. Gearhart faces a statutory maximum of 50 years in federal prison for defrauding investors out of more than $100 million.
In May, Gearhart pleaded guilty to two counts of wire fraud and one count of money laundering in a Los Angeles federal court. Gearhart, 53, admitted that he knowingly and intentionally made misrepresentations and omissions relating to development projects to get people and institutions, including nonprofits, to trust him with their money.
Assistant United States Attorney Stephen Goorvitch asked for the sentencing hearing delay to have more time to determine if any disputed issues can be resolved and to quantify the number of victims and restitution amounts. The judge approved the hearing continuation.
In May, Gearhart plead guilty to three charges in connection with the Vista Del Hombre project. He also agreed to pay restitution to his victims of that scheme of up to $20 million and to be truthful when dealing with the court, the probation department and pretrial services. In exchange, prosecutors dropped 13 of the 16 felony charges.
At that time, Goorvitch said he planned to seek a sentence of 11 years in federal prison. But, United States District Judge Otis D. Wright II is free to sentence Gearhart up to 50 years.
Gearhart and James Miller, the former president of Hurst Financial, defrauded more than 1,200 investors of more than $100 million in an alleged Ponzi scheme. Gearhart bilked investors who put money into Central Coast real estate projects and then siphoned off the monies for other purposes.
Gearhart’s relationships with community leaders in Atascadero and accomplices who included a lender, a title officer and a property appraiser, provided Gearhart with the appearance that he was an upstanding civic-minded citizen when, in fact, he was breaking state and federal laws.
Other than Gearhart and Miller, no one else has yet been charged for their participation in the fraud.
In 2011, Miller agreed to plead guilty to charges of fraud and money laundering in a plea agreement in which the court agreed to grant Miller’s daughter Courtney Brard immunity, according to court records. Miller is scheduled to be sentenced by Judge Wright on Feb. 2.
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.
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