Business

Biz Buzz: Hurst plaintiffs sue bank, title companies

Cuesta Title Co., its parent company, Stewart Title, and Heritage Oaks Bank are being accused of defrauding almost 500 Hurst Financial investors in a $100 million Ponzi scheme orchestrated by real estate mortgage company Hurst Financial and developer Kelly Gearhart, according to a lawsuit heard in Superior Court on Thursday.

The plaintiffs are seeking to recover about $80 million in losses caused by the companies’ alleged wrong-doing.

The title insurance companies and the bank have denied the charges and are seeking to have the case thrown out of court, saying the allegations lack specificity and evidence.

Cuesta Title, a real estate title insurer in San Luis Obispo County since 1965, closed its offices in San Luis Obispo, Atascadero, Paso Robles and Pismo Beach in late 2008 in the wake of fraud allegations and collusion with Kelly Gearhart and James Hurst Miller. Both filed for bankruptcy, along with Miller’s company Hurst Financial, last year.

Hurst Financial investors are alleging that Cuesta Title — and title officer Melanie Schneider in particular — created escrows with investor money that were supposed to finance construction of buildings but went instead to pay off earlier investors and keep the wrongful scheme alive, said Steve Sanchez, who is representing the investors on behalf of San Diego firm Kirby Noonan Lance & Hoge. The 700-page lawsuit was filed about a year ago.

Heritage Oaks Bank has also been named in the suit for allegedly helping to perpetuate the fraud through loans it made to Gearhart that it secured with a Vista Del Hombre project on Gearhart’s Links golf course in Paso Robles.

Sanchez alleges the bank was aware that the developer had fraudulently cleared Hurst Financial investors’ claims from the deed. Molly Baier, the attorney defending the bank, said Thursday that the bank was unaware of Gearhart’s and Hurst Financial’s alleged wrong-doing at the time of the transaction. Although bank officials saw a preliminary title report showing Hurst Financial investors on the Vista Del Hombre deed, they believed Gearhart when he told them the report was a mistake.

Another hearing on the matter is set for 10 a.m. July 22.

— Melanie Cleveland

Gallery opens in Court Street center

A jewelry store and art gallery has opened in the Court Street center formerly occupied by Taste, a wine tasting store, at the corner of Osos and Monterey streets. The gallery, opened by Ian Saude, features Saude’s jewelry, cashmere and home décor items.

Saude’s designs have been worn by celebrities including Demi Moore, Jessica Biel, Teri Hatcher and Faith Hill. In addition to Saude’s signature items, the store will offer the works of a select group of international jewelry designers and visual artists and feature furniture and home décor, including the work of British designer Alex Lamont. Saude began his design career on a trip to the Himalayas to study Buddhist philosophy, where he subsequently lived for more than a decade.

— AnnMarie Cornejo

  Comments