Joe Johnston/The Tribune (of San Luis Obispo) via AP
In this April 26, 2005, photo, previous Atascadero Resident of the Year Kelly Gearhart postures in front of the Printery structure in Atascadero, Calif.
Thursday, July 2, 2015|9:30 p.m.
LOS ANGELES– A previous California realty designer as soon as honored as his city’s resident of the year was sentenced Thursday to the maximum 14 years in jail for bilking investors who put countless dollars into unsuccessful development projects.
Federal L.a Judge Otis Wright handed down a harsher sentence than the government had requested for Kelly Gearhart, 53, who pleaded guilty in 2014 to wire fraud and cash laundering. Gearhart, who now lives in northeastern Ohio, asked forgiveness through splits Thursday to the mainly elderly people he cheated.
“I’m so sorry for all the distress I triggered,” Gearhart stated with a quavering voice. “I’ve lost everything I had. I have actually found material things have no value compared with the trust and friendship of those who cared about me. I valued that the most and now it’s gone.”
Gearhart’s attorneys had requested five years in jail, while federal district attorneys asked for 11.
As federal marshals handcuffed Gearhart, two financiers smiled while a 3rd wept.
Judge Otis Wright spoke sternly to Gearhart, stating he provided terrific weight to numerous elderly investors “who had actually counted on this cash to see them through their so-called golden years.”
“I would think of many of them have a number of sleepless nights worrying about exactly what their future holds in shop. And for exactly what?” Wright asked.
He stated Gearhart has done nothing to reveal he was inspired by anything other than “large greed.”
Gearthart and his attorney argued that he had not been using investor money on himself, however had started comprehensive deal with the property tasks they had funded, when the real estate market collapsed in 2007, scrambled to utilize his own money to aim to get them completed.
“It’s sort of like being a great swimmer and thinking you can outswim the biggest wave and recognizing halfway through it that you cannot,” Firdaus Dordi informed the judge before sentencing. “Mr. Gearhart drowned.”
Dordi said Gearhart was inspired by pride, arrogance and determination not to see his business fail.
In his plea contract with prosecutors, Gearhart admitted selling the exact same lots in a property project to multiple investors, informing them that they would be repaid with interest. Gearhart also confessed making use of the exact same lots to get bank financing.
In all, Gearhart cheated more than 250 investors from a minimum of $15 million, federal district attorney Stephen Goorvitch said.
“His conduct was quite brazen,” Goorvitch stated. “Mr. Gearhart is simply saying whatever to the victims to obtain their cash, making all these guarantees even though he’s losing cash on his tasks … He sells the lots over and over once more even though the lots are being made use of to protect the victims’ efforts. He lies to the bank and makes use of the cash as an individual piggy bank.”
Both lawyers disagreed about the significance of Gearhart’s contributions to his environment, Atascadero, on California’s main coast. After working as a prison guard for eight years, Gearhart developed a remodel and real estate business from the ground up in 1992, completing hundreds of effective houses and industrial homes for many years, Dordi stated.
In 2006, Atascadero’s chamber of commerce named Gearhart resident of the year, mentioning $500,000 in charitable donations.
Goorvitch said donations mean a lot less if any of the cash came from financiers.
“He was a relied on expert in the neighborhood, he was citizen of the year,” Goorvitch said. “To me those people need to be held to a higher requirement.”
An Oct. 20 hearing will figure out just how much restitution Gearhart will certainly be bought to pay investors, though prosecutors keep in mind that Gearhart may not have any money left.
Kelly Stark, 66, said Gearhart’s sterling credibility swayed him to invest $175,000 in several tasks; he lost it all.
After sentencing, Stark stated he felt relief and closure.
“He just destroyed people,” Stark stated.
Monetta Grabowski, 69, spoke through splits earlier this week about how she lost $27,000 she invested wishing for a bigger supplement to exactly what she gets from retirement.
“We were not rich people,” Grabowski said. “The majority of us can never ever earn the money back.”