Judge asks why Cuesta Title was not indicted

July 1, 2015
Kelly Gearhart

Kelly Gearhart


During the first day of former North County developer Kelly Gearhart’s sentencing hearing, Gearhart’s attorney attempted to paint his client as a previously honest man whose missteps were a result of the downturn in the market while the judge questioned why Cuesta Title had not been indicted in the criminal actions.

In 2014, Gearhart, now 54, plead guilty to two counts of wire fraud and one count of money laundering in an agreement that reduced the maximum sentence allowable by law from 300 years to 50 years in federal prison. The prosecution is asking for a 135 months sentence and Gearhart is seeking 57 months’ imprisonment.

Both sides are in agreement on most of the issues that impact sentencing guidelines, such as the amount of money Gearhart defrauded from investors in the Vista del Hombre proposed development. However, the prosecution is claiming Gearhart had more than 250 victims who invested in the Paso Robles development while Gearhart’s attorney claims there were only 18 investors directly victimized by Gearhart.

Even though Gearhart allegedly 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.

United States Attorney Stephen I. Goorvitch told the court he was ready to provide several examples of Gearhart’s attempts to lull investors into believing there investments were secure. Those examples included a May 2008 letter penned by Gearhart and statements Gearhart made the same month on KVEC’s Dave Congalton radio show. On the show, Gearhart said he had not co-mingled funds and that investors monies were secured through property.

Gearhart’s attorney Firdaus Dordi argued that Gearhart had not sent investors a letter in May 2008. Dordi said his client sent the letter in Jan. 2008 as supported by a Tribune article Gearhart attached to his letter. Dordi said that the investors had not lost their security in the property because it had been a partial reconveyance, where the deeds of trust had been transferred out of the investors name through the assistance of a title company.

Wright then looked over at the prosecution and asked why Cuesta Title was not involved in the criminal proceedings.

“Has Cuesta Title been indicted as well?” Wright asked. “I can’t understand why Cuesta is not in this courtroom now.”

Multiple lawsuits have claimed employees of Cuesta Title – now Stewart 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 the lawsuits. In some cases the title companies have paid investors a portion of their losses and in other cases investors lost their claims in court.

Gearhart’s attorney Dordi went on to say that hard money lender James Miller had victimized Gearhart by not providing the developer approximately $8 million in loans the defendant then paid monthly interest payments on.

“He (Miller) is also swindling Mr. Gearhart,” Dordi said. “Gearhart was paying interest on $8 million he never received.”

Judge Wright questioned why Gearhart would pay interest on money that was skimmed off the top by Miller.

Dordi responded by claiming Gearhart was not that bright.

Several times during the hearing, Gearhart’s eyes welled up with tears.

After several hours of arguments, Wright continued the hearing until Thursday at 9 a.m. in order to provide time for Gearhart to testify and for the attorneys to continue arguing their cases.

“To all the victims who traveled some distance, I apologize,” Wright said.



  1. Marion Louise Warner says:

    Well ,from the pics Ole Kel ain’t lookin to too good — definitely not missing meals – wandering around with a back pack on — getting looks shot at him because he lives on the streets — being treated like a stranger by people who knew him in better days-and now can’t even wave- I doubt the news about his son’s death was recieved from a guy getting gas.He’s still trying to pull the same crap in Ohio–there’s no remorse going on here folks and Jay and ALL the rest played right along -by Kel’s rules. There’s plenty of others who knew what he was up to–or maybe they also just had dim lights from running the shredders non-stop.

    (12) 12 Total Votes - 12 up - 0 down
    • tstjbh says:

      It is the sign of the times we live. The real criminals still have their high placed jobs and claim lack of knowledge excuses their crime. Same thing happen in the sub prime loan scandal and then the Big Banks claimed they were too big to fail and needed government bailout??

      (2) 2 Total Votes - 2 up - 0 down
  2. Jorge Estrada says:

    If crime pays, the next question will be which state pays the best. Oh yes, don’t tell the truth or you may get ostracized from NBC or Macy’s or whatever. Now lets see, 57 months into how many $million? At $15 dollars per hour that would take a kajillion months. .

    (3) 17 Total Votes - 10 up - 7 down
  3. ToHellinaHandBasket says:

    This whole Kelly Gearhart thing has become such a soap opera. The Feds should have turned it over to Stacey Keach and CNBC from the beginning.

    The facts, Gearharts wrongdoings, and prison sentence would have been over in an hours time.


    (9) 13 Total Votes - 11 up - 2 down
  4. Chicken Boo says:

    Good to finally see Miller’s name being tossed about. How about some of the others like Dave Graves? Maybe Kelly will squeal like the little piggy that he is. No honor among thieves! As the heat gets hotter, Miller will cave and drag the rest down with him. Cuesta Title needs to be dragged back to court. And hey how is it that Chuck Liddell is able to get HIS money back? One judge finds Gearhart guilty, the other sets him free? What IS that?

    (17) 17 Total Votes - 17 up - 0 down
    • Still Standing says:

      Ya, he’ll throw Miller under the bus and most likely David Graves as well.Gotta wonder where those two are in all of this? I’ve heard Graves is going about his merry way building houses like he did nothing wrong. It wouldn’t surprise me to hear that Courtney opened a financial lending company with Jay as a silent partner! What a bunch of scum bags!

      (8) 8 Total Votes - 8 up - 0 down
      • Chicken Boo says:

        That’s a scary but possible thought! What IS going on with Graves and Miller? Dangerous business dealing with people who are “Morally impaired”. They don’t care who they destroy and they never look back. We cheer Gearharts sentence of 14 years, but that doesn’t pay any bills for those of us who lost so much at the hands of these thieves. Many of us won’t be around to see Gearharts ‘coming home’ bar-B-Q, nor will we ever see the slimey shadow of Dave Graves slinking back into the darkness and continuing his “good life”. Maybe Kelly will get some time off for ratting out his friends. What does it matter now? I’d be concerned if I was one of you!

        (5) 5 Total Votes - 5 up - 0 down
  5. Vagabond says:

    When a sitting Judge has to ask why a nefarious deed doesn’t have prosecutorial action against an obvious accomplice, that says a lot about the DA.

    (43) 47 Total Votes - 45 up - 2 down
  6. smiley says:

    Thats Cuesta Title

    (24) 24 Total Votes - 24 up - 0 down
    • obispan says:

      Why did you feel the need to wreck a great joke?

      (3) 3 Total Votes - 3 up - 0 down
  7. smiley says:

    Why isn’t Fiesta Title charged? What does an escrow company do these days? I thought they kept everything straight and legal in a deal, including their employees.

    (37) 37 Total Votes - 37 up - 0 down
  8. achillesheal says:

    Gearhart’s attorney painting him as some babe in the woods who wasn’t that bright is absolutely ludicrous. In order to conceive of and execute schemes such as this, one has to be bright, twisted, but intelligent.

    Don’t buy it judge.

    (45) 47 Total Votes - 46 up - 1 down
    • obispan says:

      This has been the story all along for Gearhart and many others; we were just cowboy-ing along when the market crashed and we fell into the same hole as everybody else.

      (16) 16 Total Votes - 16 up - 0 down
  9. scoopone says:

    Please Judge Wright, put this scum behind bars for the maximum allowed. He’s ruined hundreds if not thousands of lives.

    (64) 68 Total Votes - 66 up - 2 down

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