Once a hard money lender with more than $100 million in loans and 1,000 clients, the North County’s Jay Hurst Miller has now filed for Chapter 7 bankruptcy protection.
Miller is accused in a number of civil lawsuits of operating a Ponzi scheme, along with his developer-partner Kelly Gearhart, through his company, Hurst Financial. But Miller’s bankruptcy filing on Monday was as an individual, not on behalf of his company.
Attorneys involved in Miller’s case say they expect the bankruptcy filings of Hurst Financial as well as that of the company’s vice president and Miller’s daughter, Courtney Brard to follow shortly.
Miller could not be reached for comment Tuesday. Calls to his attorney, Jeffrey Benice, were not returned.
Miller’s bankruptcy follows a host of other problems starting last year when state regulators charged him with fraud while acting as president of Hurst Financial. The allegations involved complicated financial transactions and deed manipulations that allegedly occurred while Miller was supposed to be supervising the also allegedly fraudulent activities of Gearhart.
Miller also faces an estimated 12 lawsuits filed since 2008 charging him with fraud and operating a Ponzi scheme. Although he has not been formally charged, Miller is being investigated by the U.S. Department of Justice on suspicion of racketeering, money laundering and interstate mail fraud, according to a seizure warrant on Miller’s home issued by the FBI. Because of that warrant, he is also under a court order restraining him from taking money from the recent sale of his home, according to court documents in a pending lawsuit filed against him by investors David Rios and Murray Powell in May 2008.
Three Hurst Financial investors had placed Miller into involuntary bankruptcy at the end of June, but the process was stalled when Benice told Superior Court Judge Roger Picquet that Miller and Brard were planning to voluntarily file on their own behalf. If they had not filed by Thursday, Picquet had ordered they appear in court to explain their intentions.
Bankruptcy filings typically take precedence over other civil filings. So the lawsuits that Miller currently faces will likely be stayed until the Bankruptcy Court determines the extent of Miller’s assets and liabilities and distributes them accordingly.
Assets and liabilities
In his voluntary petition, Miller claims he owes almost $11 million and has assets worth only about $68,000, according to documents filed Monday in U.S. Bankruptcy Court in Santa Barbara.
His only listed income for the last year was $11,400 in unemployment benefits.
Most of his claimed debt involves some $9 million he owes to unspecified Hurst Financial investors for construction loans on a still-vacant Beacon Road property that he co-owned with Gearhart. Gearhart filed for bankruptcy in his home state of Ohio last February, listing about $45 million in debt, the majority of which was owed to Miller’s Hurst Financial investors.
Miller’s filings also show an additional $1 million in Hurst Financial loans, which he claims he borrowed from investors as a construction loan on three properties that he did not own.
The other major creditor listed in Miller’s bankruptcy filing is Paso Robles-based Heritage Oaks Bank, which is owed $223,700 on an unsecured line of credit, according to Miller’s accounting.
In his filing, Miller does not name any of the civil lawsuits pending against him, the involuntary bankruptcy that was placed on him, nor any of his company’s investors he may owe money to, while acting as head of Hurst Financial.
One such suit lists more than 400 Hurst Financial investors and more than $60 million in losses that they claim were caused by Miller while he was operating an alleged multimillion-dollar Ponzi scheme that preyed on the elderly. The scheme created escrows and other documents that robbed investors of funds that Miller had promised were going toward Gearhart’s construction of residential and commercial buildings, the suit charges.
None of the projects were built.
Tags: bankruptcy, hard money lender, hard money news, Lending Partner
