Kelly Gearhart blames lenders, claims he is a victim
June 28, 2015
By KAREN VELIE
Former North County developer Kelly Gearhart contends that employees of Heritage Oaks Bank and Hurst Financial were primarily responsible for defrauding more than 1,200 investors out of more than $100 million. The prosecution argues that Gearhart lulled the victims through misinformation and as such is responsible for their losses.
In 2014, Gearhart, now 55, pled guilty to bilking investors who put money into Central Coast real estate projects in an agreement that reduced the maximum sentence allowable by law from 300 years to 50 years in federal prison. Instead of developing the properties, Gearhart spent the money on his and his wife Tamara Gearhart’s extravagant lifestyle.
Even though Gearhart defrauded more than 1,000 victims, the government based its case on only several frauds including Gearhart’s largest, his Vista Del Hombre project in Paso Robles, And as such, Gearhart believes the court should consider only 18 victims when handing down his sentence.
During an evidentiary hearing on Monday at 1:30 p.m., the government plans to ask for a 135 months sentence and Gearhart will introduce evidence in support of the 57 months’ imprisonment sentence he seeks. Nevertheless, the court can elect to charge Gearhart with the maximum, 50 years in federal prison.
The prosecution contends that Gearhart falsely re-conveyed loans in order to secure a loan from Heritage Oaks Bank. By doing so, Gearhart allegedly stole the investors security interest by using the lots as collateral for the bank loan without the bank’s knowledge of the prior loans.
In a document Gearhart’s attorney Firdaus Dordi filed late last month, the defense argues that Heritage Oaks Bank employee Greg Porter asked Cuesta Title for the faulty title insurance on the parcel.
“Gearhart intends to demonstrate at the evidentiary hearing that Heritage Oaks Bank was aware of the trust deed on the parcel which was recorded in 2007,” the document says.
Gearhart also claims that Hurst Financial principals James Miller and Courtney Brard made the false promises to the investors, and not Gearhart. In addition, Gearhart contends he is also a victim of Miller and Brard’s fraud because they only paid him a fraction of the total funds raised for Vista del Hombre.
On June 1, Judge Wright permitted victims to describe their losses. Statements the judge is required by law to consider when handing down Gearhart’s sentence.
Before the statements, United States Attorney Stephen I. Goorvitch asked the court if people the court may later determine are not victims could speak, the judge said all of the people Gearhart defrauded are victims.
“If someone has lost money or property to Kelly Gearhart, I want to hear from them,” Judge Wright said. “You are victims.”
Investors who lost money or property to Gearhart, and did not speak at the June 1 hearing, can speak at Gearhart’s sentencing hearing scheduled on June 29 at 1:30 p.m. in courtroom 11 at the United States Courthouse at 312 N. Spring Street in Los Angeles.
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