In 1877, Hart was sent to Beechworth Gaol for 12 months for stealing 13 horses. He met Dan Kelly while in prison. When he was let out of gaol he went to Bullock Creek to look for gold with Dan Kelly. He is reported to have said here's to "...a short life, and a merry one." He was at Bullock Creek while Dan and Ned Kelly were in hiding from the police. The gang, which on that day included Joe Byrne, heard gunshots and discovered a police search party camped nearby at Stringybark Creek. The next day the gang went to the camp to take the policemen's guns. Three policemen were killed and the gang were made outlaws, which meant that they could be captured dead or alive for a reward. At this time the police did not know Hart was a member of the gang. As a member of the Kelly Gang he often rode around in women's clothes to avoid being caught. During the search for the Kelly Gang, the police were told to stop women riders to see if they were really women. The stories of how Ned's sister, Kate Kelly, did things to help the gang, were probably really about Steve Hart.