Former Morgan Hill producer Gary Harmon ran a vast, pyramid-style scheme to defraud investors in his various entertainment ventures by dropping celebrities’ names and promising to help young people gain training and careers in the arts, according to court documents.
Harmon, a 41-year-old former Sobrato High School teacher, faces two counts of grand theft and three counts of communications containing untrue statements and omissions of material facts in Santa Clara County Superior Court.
He was arrested March 23 in Nevada, on a Morgan Hill warrant, in relation to these charges. He has since been released on $250,000 bail, and his next hearing is scheduled for July 13 at South County Courthouse in Morgan Hill.
Harmon also faces a “white collar crime enhancement,” based on the allegation that he used “fraud and embezzlement” to steal more than $500,000 from the victims, according to the criminal complaint filed by the Santa Clara County District Attorney’s Office.
Morgan Hill Police reports contained in the case’s court file list at least four victims who Harmon allegedly convinced to invest in his production companies or projects, with promises of repayment and profits that were never realized. The reports claim Harmon exaggerated or fabricated relationships with beloved celebrities—including country music legend Willie Nelson, Apple co-founder Steve Wozniak and former Motley Crue frontman Vince Neil—to fraudulently sell hundreds of thousands of dollars worth of investments to the marks, according to police.
The fraud goes back to 2012, when Harmon—then the director of ISE Entertainment—asked Drew Perkins to loan him $125,000 to help produce “The Vince Neil Poker Series,” according to the police reports. Harmon promised to pay Perkins back in full by September 2012, plus interest and a share of the television series’ future profits.
Perkins transferred the money to Harmon’s ISE account at Wells Fargo, but he was never fully repaid, according to police. ISE and Neil signed an agreement to produce the series in August 2012, but the television program never got off the ground.
Neil himself gained an advance payment of $20,000 for the series. This sum came from the ISE account into which Perkins dropped $125,000, according to police.
The MHPD investigation report claims Harmon spent large sums of Perkins’ investment on transfers to other accounts, luxury car rentals, airfare and credit card payments.
Complex scheme?
Then in summer 2012, Harmon met Morgan Hill couple Jesse and Roni Jo Castillo, according to the police reports. Harmon told the couple that he was Nelson’s manager, and expressed interest in representing the Castillos’ daughter, a musician and artist.
Harmon introduced the couple to another producer, Kerry Wallum. Wallum and Harmon later claimed they were the owners of another film production company, Luck Films, as well as Boulder Creek Guitars, which was based in Morgan Hill at the time, the court documents claim.
Harmon also told the Castillos he was about to close a $10 million deal with Wozniak, the couple told police.
The Castillos were thus convinced by Harmon to invest $125,000 in Boulder Creek Guitars, which Harmon said was going to “help students work with other musicians” and “work with Sobrato Arts to help students be involved in the arts.”
The Castillos were promised they would be repaid in 90 days, with a profit on their investment, but they haven’t seen a dime, according to police.
When Jesse Castillo started asking questions of Harmon about where the money went, Harmon allegedly told him Boulder Creek Guitars was raking in at least $60,000 per month, but did not present any paperwork proving that claim. Furthermore, the company was not paying rent or other bills, the police reports say.
When the Castillos demanded a list of Harmon’s expenses made with their investment, he omitted thousands of dollars’ worth of cash withdrawals, transfers to other accounts controlled by Harmon, restaurant purchases and even a cruise, according to the police report.
Around November 2012, Harmon convinced another victim—Mary McGreevy—to loan him $140,000, the court documents say. Harmon told McGreevy he needed the cash to pay off his debt to Perkins so Harmon could begin marketing a new program called “iJams,” which he said was developed by Wozniak.
Harmon promised to repay McGreevy’s $140,000 by February 2013, plus 10 percent interest and 5 percent of proceeds from the Vince Neil series, reads the police report. McGreevy told police she has not been repaid.
MHPD investigators could not find any evidence of a deal or personal relationship between Harmon and Wozniak.
Police reports claim Harmon used McGreevy’s investment to repay Perkins $100,000, but also for personal purchases at airlines, restaurants, bars, movie theaters, limousine services and other expenses.
Partial repayment alleged
Harmon’s latest victim, according to the court documents, was his former friend and business partner Mike DiRubio, also a Morgan Hill resident. Harmon and DiRubio had worked together with the ARTTEC production company, and in 2014 brought big-name acts such as Kiefer Sutherland, Queensryche and Survivor to perform in Morgan Hill.
DiRubio claims that in 2013, Harmon embezzled more than $250,000 from him by reneging on a promise of a share of ISE and recurring income, in return for the investment. Harmon only returned about $71,000 to DiRubio, according to the police investigation.
As the weeks went by after making his initial investment, DiRubio noticed his name had been removed from the ISE bank account and he began asking Harmon about it, according to police. Harmon eventually told him his money went toward the Boulder Creek Guitars transaction.
Harmon allegedly made about $72,000 worth of cash withdrawals from DiRubio’s investment, police claim. He also spent $26,000 on personal credit card payments, $20,000 to Luck Films (partially to repay McGreevy), $70,000 to Boulder Music Group and $97,000 to a nonprofit of which Harmon was director until May 2013.
Wallum did not receive any of the funds invested by Harmon’s alleged victims, and he was not an authorized signer on any of the bank accounts into which the investments were deposited, the police report says.
Boulder Creek Guitars is now based in Gilroy, and is not affiliated with Harmon or Wallum. Current owner Tom Strametz declined to comment on the Harmon case.
In recent years, Harmon has filed a number of civil lawsuits against DiRubio, Wallum and other parties who have accused him of fraud.
The court documents add that Harmon’s employment with Sobrato High was terminated in 2011, “after he was caught removing equipment from the school theater.”
