Chuck Liddell awarded $1,982,727 in fraud case
On Tuesday an SLO jury of his peers awarded Chuck Liddell $1,982,727 against an escrow company that was too close to a fraudulent development company.
In June of 2007, former UFC light heavyweight champion Chuck Liddell invested $2,000,000 in a Kelly Gearhart housing development, via a San Luis Obispo escrow company. The development went bust, but the escrow company officer was close friends with the developer, lived with his brother for a time, took frequent trips on his jet, and had herself invested in the development, a clear conflict of interest.
In a story by The Courthouse News, Liddell described the circumstances behind the investment.
Liddell said he met Gearhart in 2005 through his friends Usman and Umer Iqbal, brothers an co-plaintiffs.
Usman told me about a big fight fan who would trade tickets for private flights to the fights, so it seemed like a great trade to me,” Liddell said.
Liddell said he flew to Las Vegas on Gearhart’s private jet about 10 times, to his fights and others.
Around 2007, Gearhart asked him if he would be interested in checking out some lots at his Vista del Hombre project, Liddell said. His career was winding down after a loss to Keith Jardine.
“It was my first time losing twice in a row,” he said.
Liddell’s next bout, a unanimous December 2007 decision over Wanderlei Silva, was the last bout Liddell would ever win.
He told the jury the imminent end of his career made him consider investing, which he never had done, and that his mother told him real estate was a good investment.
So when Gearhart showed him the land for Vista del Hombre, he said, he agreed to buy four lots for $500,000 apiece.
When Gearhart directed him to Cuesta Title, Liddell said, he had no idea that Schneider had a close relationship with Gearhart, or that she had invested money in the project.
On Tuesday an SLO jury of his peers awarded The Iceman $2 million against the escrow company.
Patrick S. Pemberton has the story, for the Fresno Bee.
Liddell had invested $2 million with Gearhart to purchase four lots at his Vista del Hombre development project. But he said Cuesta Title Company, which handled all of Gearhart’s escrows for the project, released his funds before the close of escrow and without transferring title to the properties. Meanwhile, Gearhart was using investor money to pay other investors and himself.
During the trial, his attorney, Warren Paboojian of Fresno, said Cuesta Title escrow officer Melanie Schneider had a conflict of interest because she was close friends with Gearhart and his wife — and had invested $50,000 of her own money in the Vista del Hombre project.
As an escrow officer, Paboojian told jurors in his closing argument, Schneider was supposed to be neutral. But, he said, she did not warn Liddell about possible improprieties committed by Gearhart because she had a financial stake in seeing the project go through.
You have to disclose actual fraud that’s being perpetrated, he told jurors.
On the stand, Schneider said she didn’t know Gearhart was committing fraud. Attorney Gerard Kelly, representing Cuesta Title, said his clients merely followed escrow instructions, as they were required.
Liddell, he argued, should have done more research before investing with Gearhart and later signing documents that released his money.
Liddell claimed his signatures on addendums and additional escrow documents were forged.
Gearhart defrauded hundreds of investors. He pleaded guilty in 2012 to two counts of wire fraud and one count of money laundering at the U.S. District Court in Los Angeles. But because Gearhart declared bankruptcy, those who sued focused on Cuesta Title and their related companies, Stewart Title of California and Stewart Title Guaranty.
Liddell was joined by two others parties with multiple defendants. While the jury awarded Liddell $1,982,727, it has yet to decide on the other plaintiffs.
Pemberton goes back to Liddell’s autobiography to detail how he came to have $2,000,000 to invest.
While did make significant money as a fighter. In his biography, Iceman, My Fighting Life, Liddell wrote that he made $500,000 for his loss to Quinton Jackson in 2007.
And six months after my fight with Tito (Ortiz, 2006) I was still getting checks in the mid-six figures from my share of the pay-per-view, he told co-writer Chad Millman. In June 2007 I spent $1 million buying my mom some property and a house and fixing it up. And I still had plenty of money left over.
That same year, after suffering back-to-back losses, Liddell invested $2 million with Gearhart.
Now that the jury has awarded Liddell the funds, they have to be collected, which can be a challenging process.