Fullerton Executive Loses Resort Case : Courts: Jury says president of mortgage company fraudulently attempted to control a resort near Paso Robles. It issues a $7.6-million judgment against him.

A jury has issued a $7.6-million judgment against a Fullerton mortgage company executive who it said defrauded the operator of a lake resort near Paso Robles.

Larry Gold, president of Bear State Mortgage, was found last week to have made false representations, broken an oral contract and breached his fiduciary obligations in his dealings with Water World Resorts Inc. and its owner, Dan Heath.

“This was business fraud, pure and simple,” said Michael W. McCann, a Santa Barbara lawyer who represented Heath. “The outcome of this case allows Dan Heath to retain ownership of his business.”

But Jerome Edelman, the Orange-based lawyer who represented Gold, said that he will ask Superior Court Judge Paul Coffee for a new trial and for review of the judgment because the San Luis Obispo County jury was “way off” in rendering its July 16 verdict. Gold, he said, was actually the one who was victimized.

The case stemmed from a series of loans and business arrangements that Gold made with Water World, which operates the resort, marina, rental cabins, campgrounds and other recreational facilities around Lake Nacimiento. McCann said the operation’s success depends on rainfall to replenish the lake’s water. In good years, he said, revenue is $2.5 million to $3 million.

Heath had sought help from Gold with financing for the resort and for a hotel and golf course overlooking the lake, McCann said. When the financing didn’t come through, Water World lost the right to build the golf course and hotel, he said. The jury found Gold tried to maneuver himself into a position to take over the resort.

Edelman, however, said Gold made a series of loans to Heath, making an investment in the resort of about $5.5 million. When Heath began having trouble repaying some of the loans, Edelman said, Gold took a 10% ownership stake in the resort and extended the payment deadlines.

Heath had the money to build the hotel and golf course but refused to begin because “he wanted to stick it to Mr. Gold,” Edelman said. Gold kept investing in the resort because “Heath is a promoter and a good salesman, and he sucked him in,” Edelman said.

The judgment against Gold and Bear State Mortgage includes $6.8 million in compensatory damages, $100,000 in punitive damages and $734,483 in interest. McCann said that, although Gold invested as an individual, the jury found that he was acting in conjunction with the mortgage company and that it is liable as well.