Chuck Liddell lawsuit goes to jury

June 19, 2015
Chuck Liddell

Chuck Liddell

Following a five-week trial, a San Luis Obispo County jury is now deliberating as to whether Cuesta Title Company aided and abetted former North County developer Kelly Gearhart in defrauding mixed martial arts champion Chuck Liddell. [Tribune]

Liddell claims he lost $2 million after his signature was forged on an escrow document. Liddell testified that he purchased four lots at Gearhart’s Vista del Hombre development for $500,000 apiece, but Cuesta Title released his funds before escrow closed and did so without transferring title to the properties.

The document Liddell alleges was forged authorized the release of his money. An attorney for Cuesta Title — now Stewart Title — argued Liddell did sign the document and does not want to take responsibility for putting too much faith in Gearhart.

Gerhart and James Miller, the former president of Hurst Financial Inc., defrauded more than 1,200 investors of more than $100 million in an alleged Ponzi scheme. Gerhart bilked investors who put money into Central Coast real estate projects, like the Vista del Hombre development, and then siphoned off the monies for other purposes, including his extravagant lifestyle.

Liddell testified that he met Gearhart through two friends, brothers Usman and Umer Iqbal, who are also plaintiffs in the trial. One of the brothers told him that Gearhart would trade private flights to MMA fights in exchange for tickets, Liddell said.

Gearhart and Liddell did not socialize, but on one weekend, the developer called him with a business proposal, Liddell said. Liddell decided to invest $2 million for his retirement after consulting his mother and others who told him real estate was a good investment, he said.

Gerhart told Liddell to go to Cuesta Title and work with Melanie Schneider, the escrow officer who handled Gearthart’s deals, Liddell said. Liddell did not know that Schneider had $50,000 invested in the Vista del Hombre development.

Kelly Gearhart

Kelly Gearhart

Sources told CalCoastNews Schneider moved to Colorado with Gearhart’s brother, Doug Gearhart, shortly after the fall of Hurst Financial. Schneider also reportedly flew on Gearhart’s private jet and briefly lived in his guest house while she was friends with Gearhart’s wife.

Schneider testified that up to 80 percent of the escrows at her branch were related to Gearhart, but she did not know Gearhart was committing fraud. Liddell’s attorney said Schneider knew about the fraud and had a vested interest in making the deal go through.

Multiple lawsuits claim employees of Cuesta Title aided and abetted and/or conspired with Miller and Gearhart. Cuesta Title created false escrows, falsely closed active escrows and illegally filed clean title reports before placing additional loans on already encumbered properties, according to lawsuits.

Some investors have lost their claims in court, while others have received a portion of their losses from the title companies.

In May 2014, Gearhart pleaded guilty to two counts of wire fraud and one count of money laundering in Los Angeles federal court. Gerhart is due to be sentenced on June 29.

Prior to sentencing, the court will hold an evidentiary hearing in which the government plans to ask for a 135-month sentence. Gearhart will introduce evidence in support of the 57 months’ imprisonment he seeks.

The statutory maximum is 50 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.

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Blueprint for solvency, and security.

1. Never do business with a bank other than a checking account that contains just enough money to cover your monthly expenses.

2. Never take the advice of a so called investment consular.

3. If you have a retirement plan with your employer make sure you, and only you, decide how that money is invested.

4. Only invest in companies that produce a tangible product, don’t hedge, and possess sound liquidity. (Caterpillar, Chevron, and the like.)

5. Never trust quasi bureaucratic entities to provide your power, water, and other essentials. (yep, that means living off the grid)

6. Have at least half your cash reserves in precious metals. (gold is my metal of choice)

7. Always remember that government agencies are in the business of serving themselves, and not you.

8. Maintain the means to protect your person, property, and liberty.

9. Trust no living man, and tread lightly among the dead.

While some of that list is good advice and others are at least acceptable, some strike me as a bit paranoid and I am not the most trusting person around. People, businesses and government agencies are a mixed bag and some will burn you if given the chance. However, assuming that all will do so all the time has got to be an unpleasant way to go through life.

Try to observe particulars a bit more carefully and you will find that some are generally trustworthy. Don’t put all your eggs in one basket so that when you inevitably do get burned it won’t be as bad. (Sorry about the mixed metaphor.) It can be liberating to have the freedom to put some trust in others too even if you only trust yourself completely.

We had terrible experiences with Cuesta Title in our real estate business. They one error after another; shoddy work was common. We finally had to refuse to allow our clients to open escrows at Cuesta.

I sold 3 houses during the 2007-10 period and had nothing but trouble with them. On one house, I paid for inspections and they billed me on the day of escrow closing, agreed, and said I had a choice, close or default. They said they would send me a check but never did and because it was only $250 it was not worth going after and the inspection county closed and Cuesta Title they gave them the money. I only used them once and had all kinds of issues.

And to address the comment before mine, according to testimony, Chuck had visited the property, was shown all the project maps and the buildings…he was trying to invest in some property for his retirement…at that time property was a good investment and I think that no one reading this could have prevented what happened to him as it all happened at Cuesta. I know hindsight is 20-20 but I think he did everything right.

Before everyone is too hard on Chuck, I have been following the trial and it wasn’t like he just handed the money over to Gerhart. Based on what I’ve heard, this is my opinion on what happened.

Chuck opened an escrow with Melanie and Cuesta (by the way, her not disclosing a financial interest in the project to any customer I believe is a violation of the law) , she then opened escrow and the money was passed through to Gerhart. Upon recordation of the final map the property (according to the escrow instructions) was to be deeded to Chuck. What happened is Melanie (she said in court she forgot he had an open escrow) allowed Kelly to sell it again, and then also put a 1.6 million dollar loan against it (which is like selling it a third time). Liddell never got anything. Another thing to remember is title companies have all these files on computer…so you really can’t forget you have an open escrow. Also, if Chuck Liddell walks in your office and is buying a piece of land in a project that you have invested in, I would think you would remember that.

I know that some of the attorneys have told me that fraud was committed as Gerharts deals were spiraling and Melanie was trying to save her money as well as his. It wouldn’t have mattered what Liddell did. There were other plaintiffs in the trial that Cuesta and Melanie did the same thing too, paid for property and then Melanie forgot they had escrows too…and allowed the properties to be sold again even though the properties were bought and paid for through escrow. Those plaintiffs had lawyers throughout the whole transaction. My point is if someone is out to steal your money, theres nothing you could do if the person at the title company isn’t neutral and protecting your deposits . The reason Gerhart was successful was he had someone on the inside to allow him to sell it again and again. Imagine buying a home in escrow, then when its finished you show up at title and they say …well, even through you paid for it we forgot you bought it and the builder has sold it to someone else…and ohh. you won’t get your money back and its your fault. Thats what I think happened.

This wasn’t allowed in evidence but my understanding is that Gerhart as part of his plea bargain signed with the understanding that Melanie would get immunity.

This was a scam from day 1. There was Gerhart’s office, next door was Hurst Financial and next to that was Cuesta Title. In my opinion, and having observed the operation, this was a well orchestrated criminal act to rob these people of their money. Plain and simple.

uh, sorry. you dont even know a guy, he calls you, offers you a business proposal, and you part with $2M. wow, are there any victims here?

a fool and his money are soon parted.

Give him the 57 months with the caveat that upon release, he has to meet Chuck in the cage where hopefully he (Chuck) opens a can of “Whoopass.” Then, and only then, will justice be served.

Release him to the IceMan!

Go Chuck!

If he does not receive a lengthy sentence, I hope you will organize a recall of the DA and/ or the judge responsible for letting him off lightly. Investors may never get their money back, but a light sentence is salt in the wound.

I strongly believe we need to prosecute white collar crime. He destroyed many lives just as surely as any heroin dealer.I think there are a lot of investors (and non-investors like me) who would gladly work on such a recall. I sure will!

But the DA will consider a plea bargain as a conviction so his numbers will be high and that’s all he is looking for.

The DA has nothing to do with the criminal case against Gearhart & Miller. This case was investigated by the FBI and prosecuted in the federal courts.

I sure wish him luck – my children’s inheritance from their father was in the form of investments with Gearhart. Needless to say, that inheritance and my grandchlldren’s college funds are now gone.

First they were stolen from by Gearhart and now by the attorneys and financial group handling the Sr housing in Atascadero. Instead of getting $30,000 or so that was somehow awarded they get $7,000. Attorney’s fees, etc ate the rest all off.

There are people out there still making money off of this and off of these already cheated investors!

Wow I’m sorry to hear that! Whoop his ass Chucky!