By KAREN VELIE
Former San Luis Obispo County developer and Atascadero resident Kelly Gearhart was released from federal prison today, a year early.
Gearhart was serving a nine-year sentence related to a hard money lending scheme in which he bilked investors out of millions of dollars. Gearhart was initially scheduled to be released on March 2, 2023.
After a short stint in home detention because of the COVID-19 pandemic, Gearhart served the end of his sentence in Cincinnati Residential Reentry Management. Gearhart will now reside in Wadsworth, Ohio, under monitoring by the U.S. Probation Office, according to the U.S. Department of Justice.
Gearhart’s questionable financial dealings were brought to light in a lengthy series of articles by CalCoastNews, starting in 2008. CalCoastNews exclusively reported that Gearhart and hard-money lender James Miller had swindled investors in a lending scheme with the assistance of title officers, lawyers, public officials and an appraiser.
While Gearhart defrauded his investors, then-Atascadero Mayor Tom O’Malley and a group of Atascadero residents pushed to have Gearhart named as the city’s “Citizen of the Year.”
More than 1,200 investors, primarily seniors, placed nearly $100 million with Miller to fund construction loans. Instead of protecting investors by funding projects only as work was completed, Miller paid Gearhart in lump sums without any monitoring of the construction, a violation of the investor contracts.
In July 2012, a federal grand jury indicted Gearhart on 16 charges of mail fraud, wire fraud, and money laundering. If convicted on all charges, Gearhart faced as much as 300 years in federal prison.
In 2014, Miller pleaded guilty to charges of mail fraud, wire fraud, money laundering, and making a false statement to a bank under an agreement that his daughter Courtney Brard would not be prosecuted. In 2015, Miller was sentenced to seven years in federal prison.
Gearhart pleaded guilty in 2014 to two counts of wire fraud and one count of money laundering under an agreement that his wife Tamara Gearhart would not be prosecuted. A year later, U.S. District Court Judge Otis Wright II sentenced the disgraced developer to 14 years in prison, a sentence which was later reduced to nine years.
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