Former Champ’s Case Goes to the Jury

SAN LUIS OBISPO (CN) - In closing arguments Thursday, former Ultimate Fighting champ Chuck Liddell's attorney told jurors an escrow officer didn't tell the fighter a developer was defrauding him because she had a financial stake in the project.

The escrow company's attorney said Liddell should blame himself for giving money to the developer, whose lending scheme will send him to federal prison.

"The plaintiffs didn't want to look in the mirror," said Cuesta Title Co.'s attorney Gerard Kelly. "They didn't want to take personal responsibility."

Developer Kelly Gearhart was convicted of defrauding hundreds of people in a real estate Ponzi scheme. Gearhart faces up to 11 years in federal prison at his June 29 sentencing.

Liddell claims he invested $2 million in four plots in a development Gearhart called Vista del Hombre. He says Cuesta Title released his money before escrow closed and without transferring title - all without his approval.

The case was sent to the jury Thursday in San Luis Obispo Superior Court.

Because Gearhart has declared bankruptcy, Liddell and his co-plaintiffs have focused on Cuesta Title, which handled Gearhart's escrows, and related companies Stewart Title of California and Stewart Title Guaranty. The plaintiffs say Melanie Schneider, an escrow officer with Cuesta Title, had personal and financial reasons to help Gearhart commit fraud.

She was close friends with Gearhart's wife, flew with Gearhart on his private jet, briefly lived in the Gearharts' guest house and wound up living with Gearhart's brother, said Liddell's attorney Warren Paboojian. She also invested $50,000 in Vista del Hombre, the attorney said.

"There is no way she could be neutral and impartial," Paboojian said. "She's got a vested interested in seeing the deal through."

Liddell's trial was consolidated with cases filed by several other plaintiffs.

Liddell is credited with helping make ultimate fighting mainstream entertainment. He testified that he began making serious money as a fighter after a 2001 victory.

"I fought Kevin Randleman, knocked him out in a minute and 18," he told jurors on June 8. "They came up and asked me if I wanted to fight three weeks later in Japan. I went and fought in Japan and made about 60 grand in one month. That was more than I'd made in my entire career fighting."

Liddell became light heavyweight champ and a fan favorite in 2005, when he knocked out Randy Couture. He was named Citizen of the Year that year in his hometown of Atascadero.

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 lost 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.

"Did you tell Chuck Liddell, 'By the way, I'm making some money off the same property that you're investing in?'" Paboojian asked Schneider during the trial.

"No, I didn't," Schneider said.

Schneider testified that she didn't know Gearhart was committing fraud. She said she did not tell Liddell to look at a document that released his $2 million, and did not see him sign it.

Liddell said his signature on that document was forged.

"They would have had to trick me to get me to sign something like that," Liddell testified.

Attorney Kelly said Cuesta Title didn't trick Liddell: they followed escrow instructions. A handwriting expert for the defense said the signature releasing the money did belong to Liddell.

On cross-examination, Liddell said he did not consult with a real estate professional before investing, did not keep papers from the investment in his files and did not follow up on it.

"You don't believe you would have signed an instruction that had called for the early release of your funds?" Kelly asked on cross-examination.

"I would never have signed that, no," Liddell said.

Kelly said in his closing statement that Cuesta employees had no idea Gearhart was committing fraud, nor did the investors, who were eager to earn 15 percent interest.

"They jumped at the chance to do business with him," Kelly said. "Everybody wanted to do business with him. And Cuesta's the only one who is supposed to have known, 'Oh, he was a bad guy.'"

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