Posted on Tue, Aug. 24, 2010

Creditors asking for more than $100 million in claims against former Atascadero developer Kelly Gearhart may get a piece of a Salinan Indian casino and profits the gambling concern could generate.

The catch: when and if such a casino materializes.

Ken Gibson — one of two attorneys acting on behalf of the U. S. trustee in the bankruptcy of Gearhart and his wife, Tamara — alleges that the developer may have fraudulently diverted between $1 million and $1.5 million from investors in Atascadero-based Hurst Financial Inc. toward a Salinan effort to develop a Central Coast casino and reservation, according to court records.

Gearhart — facing several lawsuits accusing him of fraud in connection with Hurst Financial, as well as a criminal investigation into those dealings — filed for bankruptcy protection in Ohio, where he now lives, in February 2009.

The Salinans’ plans called for pursuing federal recognition, after which a partnership would buy 2,500 acres somewhere in San Luis Obispo County or Monterey County, and build a 250,000-square-foot casino, homes for about 400 people, a school, a hospital and a “green” energy plant, according to its business plan.

Tribal representatives believe Gearhart paid between $900,000 and $1.5 million for legal, consulting, researching and lobbying fees, as well as for a Salinan tribe office on Morro Road in Atascadero and its staff salaries.

Gearhart was to be repaid by the tribe with interest, but not until the gaming or other enterprises could provide the Salinans an income stream, according to their business outline with Gearhart.

As a result of U.S. Trustee Harold Corzin’s investigation, the partnership — dubbed PeJiHoTa — agreed that the bankruptcy estate could take over Gearhart’s rights for reimbursement of advances totaling nearly $650,000 plus interest.

As part of a compromise, PeJiHoTa also agreed to pay $20,000 to the trustee to cover the costs of the investigation; and to giving Gearhart’s bankruptcy creditors a one-fourth share in the corporation that plans on developing the reservation and casino.

Chris Molina, Salinan tribe representative and member of the PeJiHoTa partnership, has estimated federal recognition could take as long as five to 10 years. Until that is in place, no building of a reservation or casino can occur.

— Melanie Cleveland

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The newly renovated El Camino North Car Wash at 740 21st St. in Paso Robles held a grand reopening event on Saturday with a free barbecue.

Owned by Gary Pederson, who has owned the El Camino Car Wash in Atascadero for 17 years, the business reopened under the new name on July 1.

— Melanie Cleveland