Ex-UFC champ Chuck Liddell wins $2m lawsuit against SLO escrow company

A San Luis Obispo County jury awarded former UFC champ Chuck Liddell nearly $2 million Tuesday against an escrow company he says helped developer Kelly Gearhart defraud him.

Liddell, a Cal Poly business graduate who lived in San Luis Obispo for 20 years before moving to Southern California, 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.

Verdicts in two previous trials favored the defendants.

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.

While Liddell testified that he had only invested in homes and education for his family prior to the Gearhart project, he 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.

The former light-heavyweight champ now promotes ultimate fighting as an executive for UFC. He also stars in a series of Duralast commercials and is set to appear in two movies.

A former Cal Poly wrestler, he lived in San Luis Obispo 20 years before moving to Southern California in 2011.

This story was originally published June 23, 2015 at 6:55 PM with the headline "Ex-UFC champ Chuck Liddell wins $2m lawsuit against SLO escrow company."