Former UFC Champ Gets $2 Million Jury Award

SAN LUIS OBISPO (CN) - A jury Tuesday awarded former mixed martial arts champ Chuck Liddell nearly $2 million from an escrow company he accused of helping a developer defraud him.

Liddell, former light heavyweight champion of the UFC, was one of hundreds of people who lost money to Kelly Gearhart, a former Atascadero Citizen of the Year who will be sentenced Monday on federal fraud charges in Los Angeles.

Gearhart ran a Ponzi scheme, paying himself and other investors with new investor money. After Gearhart declared bankruptcy, the roughly 500 plaintiff investors focused on Cuesta Title Company, which handled Gearhart's escrows, and related companies Stewart Title and Stewart Guaranty. Investors claimed the title companies knew Gearhart was committing fraud but failed to disclose it.

The title companies are under the umbrella of Houston-based Stewart Information Services, which reported revenue of nearly $2 billion in 2012.

Investors lost battles against Cuesta Title in two previous trials, one by jury and one by a judge. But Liddell won his fight, the jury awarding him $1.98 million after a 5-week trial.

Liddell told the jury he was raised by his mother and grandfather, who didn't have much money. In his autobiography, "Iceman, My Fighting Life," co-written with Chad Millman, he said his mother was on assisted living. His mother encouraged him to invest in real estate when he began making money as a fighter.

According to trial testimony, he met Gearhart through friends and began swapping tickets to UFC fights for flights to Las Vegas on Gearhart's private jet. Eventually, Gearhart persuaded Liddell to invest in a commercial development project called Vista del Hombre.

Liddell bought four lots for $2 million.

For escrow, Gearhart directed Liddell to Cuesta Title, where Gearhart's friend Melanie Schneider was a loan officer. Without his knowledge, Liddell testified, Cuesta Title released his money before escrow closed and without transferring title to the properties.

Liddell's attorney Warren Paboojian said Schneider knew Gearhart was using investor money to pay other investors and himself, but didn't tell Liddell. Because she had invested $50,000 in the project, Paboojian said, Schneider had a stake in the project - and a conflict of interest.

Schneider testified that she did not know Gearhart was committing fraud, though she had lived in his guest house, flown on his private jet and eventually had a romantic relationship with Gearhart's brother.

Gerard Kelly, an attorney for Cuesta Title, said his clients merely followed escrow instructions.

Liddell was joined in the trial by two other parties, both with multiple plaintiffs. The jury has not yet reached a verdict in those cases.

Liddell, considered the face of the UFC, was one of the most successful fighters in the sport and was paid well, driving a Humvee and a Ferrari and living in a house featured on the MTV show "Cribs." As his success grew, so did his fight earnings, which increased from $160,000 for defeating Jeremy Horn in 2005 to $250,000 for defeating Randy Couture a year later to $500,000 for a loss to Quinton Jackson in 2007, according to his biography.

After another loss four months later - the first time he'd lost back-to-back fights -Liddell decided to invest for his retirement.

"I'm still smart with my money," he wrote in the book, published in 2008.

But Kelly's attorney said Liddell wasn't smart at all, failing to diversify his portfolio and failing to research before investing with Gearhart.

"Mr. Liddell barely did anything," Kelly told jurors during his closing argument. "He called his mom and then he plunked down $2 million."

But Liddell testified that he would not have authorized release of his money without the title. He said that documents authorizing the release were forged.

"I've never seen that document," he testified. "There's no way I could have signed it."

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