As a civil trial involving his alleged real estate fraud wraps up Wednesday, former Atascadero builder Kelly Gearhart’s properties are set to be auctioned off later this month.
On its website, David R. Maltz & Co. — a New York-based auction company — announced that Gearhart’s properties will be auctioned off Oct. 16 at Courtyard by Marriott in Paso Robles. The company, which specializes in “debt-related sales,” is representing the U.S. Bankruptcy Court in Ohio, where Gearhart filed for bankruptcy protection after moving there in 2008.
Gearhart is set to go to trial on fraud charges Nov. 12 at the U.S. District Court in Los Angeles. He has pleaded not guilty. He is alleged to have defrauded investors of millions of dollars in a Ponzi scheme involving real estate deals, including a proposed Vista Del Hombre business park.
Gearhart’s historic Atascadero home, along with several real estate assets, were previously auctioned in 2008.
While Gearhart, Atascadero’s 2005 Citizen of the Year, once enjoyed a good reputation as a North County builder and civic leader, things went sour when he allegedly promised to develop projects that were never built. Instead, he allegedly used investor money — gathered by lender Jay Miller of Hurst Financial — to pay other investors in a scheme that became exposed when the economy plummeted.
Miller, who pleaded guilty to four counts of fraud and money laundering charges in 2011, is set to be sentenced March 17 in federal court.
Gearhart, who maintained a “lavish lifestyle,” according to the U.S. Attorney’s Office, filed for bankruptcy in 2009, claiming he owed creditors $45 million. Meanwhile, numerous civil suits were filed by investors who claim they were bilked by Gearhart and Miller.
In a trial expected to go to the jury Wednesday, plaintiffs are suing the escrow companies that worked for the Miller and Gearhart projects.