California Real Estate Fraud Report

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Heritage Oaks Bank Settles with Investors on Paso Robles Development

Plaintiffs who claimed in a civil lawsuit that Heritage Oaks Bank, Stewart Title and Cuesta Title knew that they were involved in a fraudulent scheme operated by Hurst Financial Corp., its owner James Hurst Miller, and developer Kelly Gearhart have reached a settlement with Heritage Oaks Bank.

The case against the bank and the two title companies was set to be heard in San Luis Obispo Superior Court next week. James Neudecker, attorney for Heritage Oaks Bank, did not disclose the settlement terms. The 500 investors/plaintiffs claimed that the bank was an active participant in the fraud – a Ponzi scheme – because it was “fully aware of, and assisted in, the fraudulent re-conveyances of the deeds of trust by Hurst.” They further claimed that “Gearhart helped Miller solicit about $73 million from private investors for 25 separate real estate developments, all of which eventually failed,” according to the court documents.

Heritage Oaks had loaned Kelly Gearhart approximately $1.5 million to develop the Vista Del Hombre project in Paso Robles.

Both Gearhart and Miller were charged criminally. Kelly Gearhart has been indicted on 16 counts of fraud and money laundering. James Hurst Miller has already pleaded guilty to four counts of fraud and money laundering.

Read the original article in the San Luis Obispo Tribune

© Copyright 2007-2018 Monique Bryher

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