Former Atascadero lender sentenced to 7 years
October 20, 2015
By KAREN VELIE
Former Hurst Financial principal James Miller was sentenced to seven years in federal prison on Monday for misappropriating millions of dollars that victims invested in Central Coast real estate projects and for helping developer Kelly Gearhart defraud a bank.
Miller, 67, pled guilty in 2011 to charges of mail fraud, wire fraud, money laundering, and making a false statement to a bank. Miller and former North County developer Kelly Gearhart allegedly swindled some 1,200 investors out of more than $100 million in a lending scheme involving hard money. In July, Gearhart was sentenced to 14 years in prison.
Before Miller’s sentencing, 22 former business associates, family members and friends sent letters to the court supporting Miller. Supporters included former Hurst Financial employee Erika Tidwell, several escrow officers who did business with Miller and Atascadero based attorney Robert “Grigger” Jones, Gearhart’s former partner in a proposed Indian Casino.
Miller operated Hurst Financial, a hard money lender which essentially acted a “middle man” between investors and real estate developers, including Gearhart.
Miller solicited investments in Paso Robles real estate development projects known as Beacon Road and Vista Del Hombre (which involved Gearhart), as well as the Salinas River real estate development project in Templeton. After obtaining funds from investors, Miller used money from investors to develop different real estate projects, make interest payments to investors, and pay-off loans related to different real estate projects.
Miller also admitted that he aided and abetted false statements made by Gearhart to Heritage Oaks Bank. Prosecutors argued that Miller helped Gearhart clear title to Vista Del Hombre lots that were securing victims’ investments, and Gearhart then used those lots to obtain bank loans from Heritage Oaks Bank and San Luis Trust Bank.
In asking for a prison term that was half that of Gearhart’s sentence, prosecutors noted Miller’s acceptance of responsibility and cooperation. Prosecutors also argued in court documents that, although Miller misspent money from victims, he did not steal the money for his personal use or to fund any lavish lifestyle. Unlike Gearhart, who defrauded victims for his own personal gain, Miller “was an established businessman who committed certain crimes when faced with economic difficulties,” according to a sentencing memo filed in court.
Nevertheless, prosecutors sought a seven-year sentence based on the significant impact Miller’s crimes had on the community, as well as Miller personally profiting from commissions and fees on victims’ investments.
“Miller turned to fraud when faced with a choice between helping Gearhart and safeguarding victims’ investments,” said United States Attorney Eileen M. Decker. “This significant sentence emphasizes that he made the wrong choice.”
The cases against Miller and Gearhart were the result of an investigation by the Federal Bureau of Investigation and IRS – Criminal Investigation.