Former Atascadero resident and real estate developer Kelly Gearhart was indicted for 16 counts of federal fraud on July 5, according to the FBI.
The indictment alleges: Between November 2004 and December 2008, Gearhart was willfully involved in a plot to defraud investors in his Vista Del Hombre real estate project. The project was represented as being valued at $26 million. Gearhart took money from investors with the promise that it would be used to develop specific real estate projects and investors would be paid back with interest. Gearhart also arranged to sell specific properties to individual investors in an agreement to rent back those properties and later transfer the titles.
The case against Gearhart claims that, contrary to what he had led investors to believe, he didn’t own the land he needed for the project and that the investors’ money, instead of being used to fund the project, was used to repay other investors, to develop other projects, and to support Gearhart in what the FBI described as a “lavish lifestyle.”
Gearhart is accused of selling the same individual lots to multiple investors and never transferring the titles as was promised.
Other charges include fraudulent use of the U.S. mail system; wire fraud in the form of $1.5 million worth of bank transactions; and interstate commerce with unlawful funds, which totaled $49,000. If found guilty of all 16 counts, Gearhart will face a maximum sentence of 300 years in federal prison.
Neither Gearhart nor his representatives could be reached for comment.
He’s scheduled to be arraigned Aug. 13.