Former President of Central Coast Investment Firm Sentenced to Seven Years in Prison for Defrauding Real Estate Investors
LOS ANGELES—A Paso Robles man has been sentenced to 84 months in federal prison for misappropriating millions of dollars that victims invested in Central Coast real estate projects and for helping a real estate developer defraud a bank.
James Hurst Miller Jr., 67, the former president of the Atascadero-based Hurst Financial Corporation, was sentenced yesterday by United States District Judge Otis D. Wright II.
Miller’s case is related to that of Kelly Gearhart, a former Central Coast real estate developer, who was sentenced in July to 14 years in federal prison (see: http://go.usa.gov/3SQqR).
Miller operated Hurst Financial, which essentially acted a “middle man” between investors and real estate developers, including Gearhart. Miller solicited investments in Paso Robles real estate development projects known as Beacon Road and Vista Del Hombre (which involved Gearhart), as well as the Salinas River real estate development project in Templeton. After obtaining funds from investors, Miller used approximately $3.7 million of the money for other purposes, contrary to his promises about how the money would be used. Miller used money from investors to develop different real estate projects, make interest payments to investors, and pay-off loans related to different real estate projects.
Miller also admitted that he aided and abetted false statements made by Gearhart to Heritage Oaks Bank. Prosecutors argued that Miller helped Gearhart clear title to Vista Del Hombre lots that were securing victims’ investments, and Gearhart then used those lots to obtain bank loans from Heritage Oaks Bank and San Luis Trust Bank (which was later acquired by Pacific West Bank).
In asking for a prison term that was half that of Gearhart’s sentence, prosecutors noted Miller’s acceptance of responsibility and cooperation. Prosecutors also argued in court documents that, although Miller misspent money from victims, he did not steal the money for his personal use or to fund any lavish lifestyle. Unlike Gearhart, who defrauded victims for his own personal gain, Miller “was an established businessman who committed certain crimes when faced with economic difficulties,” according to a sentencing memo filed in court. Nevertheless, prosecutors sought a seven-year sentence based on the significant impact Miller’s crimes had on the community, as well as Miller personally profiting from commissions and fees on victims’ investments.
“Miller turned to fraud when faced with a choice between helping Gearhart and safeguarding victims’ investments,” said United States Attorney Eileen M. Decker. “This significant sentence emphasizes that he made the wrong choice.”
Miller pleaded guilty in 2011 to mail fraud, wire fraud, money laundering, and aiding and abetting a false statement to a bank.
In addition to the seven-year sentence issued to Miller, Judge Wright scheduled a restitution hearing for December 21.
Gearhart also appeared in court yesterday, at which time Judge Wright scheduled another restitution hearing for November 9.
The cases against Miller and Gearhart were the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.