Gearhart fraud scandal 'middleman' sentenced



The man who helped disgraced North County developer and convicted felon Kelly Gearhart steal millions of dollar from investors was sentenced by a federal judge on Oct. 19.

James Hurst Miller Jr., 67, was sentenced to seven years in federal prison on charges of mail fraud, wire fraud, money laundering, and aiding and abetting a false statement to a bank for his role in the Gearhart fraud scandal. Prosecutors characterized Miller
as a “middleman.” 

According to a press release from the U.S. Attorney’s Office, Miller was a go-between for Central Coast investors and real estate developers, and solicited investments for development projects in Paso Robles, including Beacon Road and Vista Del Hombre, one of Gearhart’s projects. Federal prosecutors said Miller misused approximately $3.7 million of the investors’ money, using it to develop other real estate projects, make interest payments to investors, and pay off loans related to different real estate projects.

Miller also admitted that he helped Gearhart by making false statements to Heritage Oaks Bank and helped Gearhart obtain a clear title to Vista Del Hombre lots. Gearhart then used those lots to obtain bank loans from Heritage Oaks Bank and San Luis Trust Bank, the press release stated. He pleaded guilty to the charges against him in 2011.

Prosecutors said that, unlike Gearhart, Miller never used victims’ money for personal use or to fund a “lavish lifestyle.”

“Miller turned to fraud when faced with a choice between helping Gearhart and safeguarding victims’ investments,” U.S. Attorney Eileen M. Decker said in a statement issued shortly after Miller’s sentencing. “This significant sentence emphasizes that he made the wrong choice.”

That sentence also took into account the “significant impact” of Miller’s crimes on the community, prosecutors said.

The sentence imposed on Miller is half that of Gearhart’s, who was sentenced to 14 years in federal prison in July after pleading guilty to two counts of wire fraud and one count of money laundering, according to previous New Times reporting. As part of his plea, Gearhart admitted to misrepresenting the Vista Del Hombre project to investors, and selling Vista Del Hombre lots that were already being used to secure loans from other victims and banks.

The U.S. Attorney’s Office is attempting to seek restitution for victims of Gearhart’s Ponzi-like real estate scam and “any other fraudulent conduct in which Gearhart may have been involved.” That figure could be as high as $20 million, according to previous statements from the U.S. Attorney’s Office. A restitution hearing for Gearhart is scheduled for Nov. 9. He is currently incarcerated in the Los Angeles Metropolitan Detention Center.

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