Atascadero fraudster Kelly Gearhart released from prison a year early
Convicted fraudster and former Atascadero Citizen of the Year Kelly Gearhart was released from federal prison Wednesday, according to the Federal Bureau of Prisons website.
Gearhart, 60, was released a year ahead of schedule — he was originally supposed to be released in March 2023. He was serving a nine-year sentence after pleading guilty to wire fraud and money laundering in U.S. District Court in 2014.
Gearhart was released briefly in April 2020 amid the coronavirus pandemic. At the time, he was transferred from the Federal Correctional Institute in Morgantown, West Virginia, to a residential re-entry management office in Cincinnati, Ohio and remained there until he was released, the Federal Bureau of Prisons confirmed with the Tribune.
His last city of residence was Wadsworth, Ohio, according to previous Tribune reporting.
Gearhart’s crimes
Gearhart, a former real estate developer in San Luis Obispo County, pleaded guilty to two counts of wire fraud and one count of money laundering in a Los Angeles federal court in 2014 after scamming investors out of up to $20 million.
According to previous Tribune reporting, Gearhart led a ponzi scheme that defrauded hundreds of investors. His largest real estate endeavor, the Vista del Hombre project, was an office park to be built on a Paso Robles golf course.
Gearhart solicited loans for the project from investors, telling them the loans were secured with specific lots from the project and would be paid back with interest.
But Gearhart admitted in court that he sold the lots associated with the development project even though they were supposedly used to secure the loans, according to the U.S. Attorney’s Office.
Gearhart then admitted to using the same lots to secure $3 million in bank loans, and when he defaulted on those loans and declared bankruptcy, his investors lost the collateral that secured their loans, and their money.
Gearhart’s plea agreement allowed prosecutors to seek financial restitution for investors victimized by the project, but it’s unclear if any restitution was paid.
In 2014, Thom Mrozek, public affairs officer for the U.S. Attorney’s Office at the time, told the Tribune that Gearhart did not have $20 million to pay back investors but that they would continue looking for assets that could be appropriated while Gearhart was in prison.
Kelly Christensen, a Los Osos victim, told the Tribune in 2014 that the financial loss “destroyed my life.”
He lost $73,000 after investing nearly all his savings with Atascadero hard-money lender Jay Hurst Miller, who worked as a middle-man between Gearhart and investors. Miller was sentenced to seven years in federal prison in 2015 for his role in the ponzi scheme.
This story was originally published March 3, 2022 at 12:26 PM.
