Gearhart sentenced, cuffed, headed to prison

July 2, 2015

Updated at 6 p.m.

By KAREN VELIE and DANIEL BLACKBURN

Notorious North County developer Kelly Gearhart was sentenced to 14 years in federal prison Thursday morning by U.S. District Court Judge Otis Wright II in Los Angeles.

Gearhart, 54, was immediately stripped of his eyeglasses, wedding ring and other personal belongings, handcuffed, and led out of the courtroom by two federal marshals.

The sentence was three years more than prosecutors had suggested. While Gearhart had hoped for a more lenient prison term, Judge Wright sentenced Gearhart to 14 years each on two counts of wire fraud and one count of money laundering to be served concurrently.

A court official said Gearhart likely will serve at least 85 percent, and probably all, of the sentence.

Gearhart’s attorney Firdaus Dordi argued that Gearhart had been an honest developer whose pride drove him to bend the rules after the market went south. Dordi said that Gearhart had donated money to build the Atascadero High School track, money Dordi said did not come from investors in Gearhart’s projects.

However, United States Attorney Stephen I. Goorvitch  displayed an accounting that showed the $35,000 Gearhart donated for the track came from investors in his Salinas project. Goorvitch said that while a history of philanthropy can result in a lower sentence, in this case Gearhart was spending the victim’s money.

Gearhart’s attorney asked the court to allow his client to remain free until his Oct. 20 restitution hearing so that Gearhart could have time to explain his situation to his 5-year-old daughter.  Judge Wright denied the request while questioning if Gearhart had squirreled money away that he could use to flee.

Gearhart cried intermittently throughout an approximately five-minute statement that included apologies to his victims and claims others had told him his fraudulent acts were legal.

“I want to say how deeply sorry I am to everyone involved and their families,” Gearhart said. “I relied on someone else to say it was lawful. I did not know when to give up. I let my ego get in the way.”

Judge Wright said that even though the prosecution had not clearly established direct harm to hundreds of victims, the grievous harm Gearhart inflicted on his victims led to the higher sentencing.

“I want to note that many crimes are motivated by needs,  some by drug addictions, and some by plain and simple greed,” Judge Wright said.

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