Expert to probe value of Gearhart firm

The trustee in former Atascadero developer Kelly Gearhart’s $100 million-plus bankruptcy has hired an expert to value a company that Gearhart and others formed to develop a Salinan Indian casino and reservation.

Attorneys working on behalf of the trustee allege that Gearhart improperly invested more than $700,000 in the PeJiHoTa project. They suspect that investors’ money from other projects was tied up in that effort.

They also accuse Gearhart of trying to hide his involvement with the Salinans from his creditors, according to a complaint filed in U. S. Bankruptcy Court in Ohio, where he now lives. He held a 25 percent interest before he resigned from the company in 2008.

In June last year, bankruptcy attorneys filed a lawsuit against the PeJiHoTa partners, all from Atascadero — insurance broker Daniel Phillips, attorney Robert M. “Grigger” Jones and Salinan tribal member Chris Molina — saying Gearhart illegally transferred his interest to them without receiving proper value for the transfer.

If the appraiser finds that the company has some value, the bankruptcy trustee would try to recoup the money and then reapportion it to all of Gearhart’s creditors, according to the lawsuit.

Phillips told The Tribune that there is “no intrinsic value” in the company.

“I think the bankruptcy trustee has to do this just to prove (to the creditors) that it’s worth nothing,” Phillips said. “Everything Kelly paid was for expenses. The company now only has debt. These people (the Salinans) mean a lot to me. Unfortunately, we picked a guy that was the town bandit. He’s hurt a lot of people. It’s sad. We’re just regular guys in the community.”

Efforts by The Tribune to reach Gearhart on PeJiHoTa and other bankruptcy issues have been unsuccessful. Jones also could not be reached for comment.

The Salinans planned on buying 2,500 acres on the Central Coast, where they would build a 250,000-square-foot gaming casino, homes for about 400 people, a school, a hospital and an energy plant, according to the PeJiHoTa business plan.

Molina, who spoke as a member of the Salinan tribe (he is chairman of its public relations) and as a member of the PeHiJoTa LLC, said the tribe would continue to work on becoming federally recognized. It needs this recognition to pursue plans to own and develop its ancestral lands — regardless of Gearhart’s involvement.

“If we had the money and were able to move forward, it could be anywhere between a two-year and a 20-year process,” Molina said. “We have already been working on this for years.”

The company’s name is taken from the Salinan word “pejihota,” which means sage, a sacred plant for the Salinans.

Whatever Gearhart spent on PeJiHoTa went for legal, consulting, researching and lobbying fees, as well as for a Salinan tribe office on Morro Road in Atascadero and its staff salaries, Salinan tribal leaders said.

Gearhart was to be repaid with 4 percent interest after the tribe gained federal recognition and gaming or other enterprises provided the Salinans an income stream, according to their business contract with Gearhart.

“Why he didn’t divulge he didn’t have the LLC to the bankruptcy court, I have no idea,” Molina said. “We had no clue he was going to Ohio and (declaring) bankruptcy. We’re victims in this thing also.”

The expert appraisal firm, Veriti Consulting of Scottsdale, Ariz., will value the LLC according to its worth if it continued operating, a Feb. 11 order issued by the bankruptcy judge said.

Molina believes the appraisal will find PeJiHoTa is worth “zero.”

“The only way to recoup the money Gearhart advanced is for the tribe to get federally recognized,” Molina said. “This is totally speculative. All the money that paid the bills for this process was deemed advance funds. It’s really pie in the sky.”