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5 other plaintiffs in Chuck Liddell fraud trial lose their cases

Chuck Liddell, who said he was defrauded by developer Kelly Gearhart, testifies in his civil trial against Cuesta Title Company.
Chuck Liddell, who said he was defrauded by developer Kelly Gearhart, testifies in his civil trial against Cuesta Title Company. Courtesy of Courtroom View Network

The same jury that believed an escrow company helped North County developer Kelly Gearhart defraud ex-fighting champ Chuck Liddell did not believe that it had helped defraud five other plaintiffs in the same trial, according to verdicts announced this week.

Liddell is one of hundreds of investors to sue Cuesta Title Company and its related companies, Stewart Title of California and Stewart Title Guaranty, saying the escrow companies helped Gearhart commit fraud. Liddell's case went to trial with two other parties containing multiple plaintiffs.

Federal prosecutors say Gearhart ran a Ponzi scheme, paying himself and other investors with new investor money. But because he declared bankruptcy, investors have focused their lawsuits on Cuesta Title Company and related companies Stewart Title of California and Stewart Title Guaranty.

The plaintiffs claimed that escrow agent Melanie Schneider, who handled Gearhart’s escrows, had a conflict of interest because she was friends with Gearhart and his wife, flew with the Gearharts on their private jet, lived in their guest house and eventually became romantically involved with Gearhart’s brother. She also invested $50,000 in Vista del Hombre, a commercial development project in which Liddell invested $2 million.

The other seven plaintiffs claimed other conflicts of interest with Cuesta Title and Gearhart, too.

After a five-week trial, a jury voted 11-1 Tuesday that an employee of Cuesta Title Company knew that Gearhart was committing fraud against Liddell and assisted Gearhart in committing the fraud, according to the jury verdict forms, which did not name the Cuesta Title employee.

The jury awarded Liddell nearly $2 million.

After Liddell’s verdict, the jury also awarded $939,000 to U2 LLC — a limited liability company owned by Usman and Umer Iqbal, brothers who introduced Liddell to Gearhart. In doing so, the jury said a Cuesta Title employee helped Gearhart commit fraud against the Iqbals.

While the five remaining plaintiffs made similar allegations — that Schneider had helped Gearhart — the jury decided that Cuesta employees did not help Gearhart in their cases and that Cuesta Title was not negligent.

None of those plaintiffs were awarded money.

The entire trial was aired on Courtroom View Network, which streams court trials for attorneys and educators.

CVN had also aired a bellwether trial against Cuesta Title Company in 2013. A jury in that case ruled in favor of the defendants. The verdict in a second, related trial also favored the defendants.

Gearhart is set to be sentenced on federal fraud charges Monday in Los Angeles.

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