Former Atascadero developer Kelly Gearhart pleaded not guilty in U.S. District Court in Los Angeles earlier this week to 16 counts of federal crimes including fraud and money laundering.

Gearhart faces allegations that he swindled people in real estate deals and then used the victims’ funds to pay for his and his wife’s lavish living expenses and other luxury items.

Gearhart was arraigned Monday in federal court in Los Angeles. According to the U.S. Attorney’s Office, a friend and a relative each signed an affidavit of sureties of $50,000 to cover Gearhart’s bond of $100,000.

Sureties are what a person signs over in property or assets if a defendant misses a court appearance.

The federal court docket shows that Camille H. Thompkins and Tiffany George covered the bond.

Gearhart can’t travel outside of the state of Ohio, where he has been residing, or the Central District of California without court approval, according to the federal attorney.

Gearhart was named the 2005 Citizen of the Year by the Atascadero Chamber of Commerce. The chamber also named Gearhart its Business Person of the Year in 1999.

An eight-page indictment outlines the scheme Gearhart is alleged to have used to defraud investors of money and property “by means of material false and fraudulent pretenses, representations and promises and the concealment of material facts relating to certain real estate projects.”

Gearhart allegedly solicited loans from victims of the scheme by falsely saying he owned specific land that would secure their investments.

He told investors the loans would be paid back with interest, according to the indictment, and that specific lots would be sold back to investors, which he promised to rent. He sold the same lots to multiple buyers, the indictment indicates.

The allegations include $2.5 million in wire fraud transmissions as well as mail and bank transaction activity that was allegedly fraudulent.