Hard money lending schemes creating fiscal chaos, devastating SLO County investors

March 13, 2008

By KAREN VELIE and DANIEL BLACKBURN

A number of San Luis Obispo County investment firms have allegedly participated in schemes that may have already cost local investors more than $500 million, setting the stage for a colossal fiscal collapse unrivaled in this state’s history.

Utilizing a variety of hard money lending ploys and inappropriate management practices, the firms in question have created an environment that may shadow private finances in this county for decades, dozens of informed sources have told UncoveredSLO.com during the course of a two-month investigation.

“It’s like Enron for Paso Robles,” said David Farmer, an attorney with Farmer and Ready, a San Luis Obispo law corporation representing clients who believe they have been defrauded. “Those who claim this has to do with the downturn in the market need to take a cold shower.”

Professionals with intimate knowledge of details of the unfolding venture disaster said that hundreds of local investors who counted on these hard money lending institutions to manage and grow their savings will be lucky to recover pennies on the dollar.

One firm under particularly heavy fire from unhappy investors is Estate Financial of Paso Robles, whose president, Karen Guth, has declined comment on her alleged role in the unfolding disaster. Guth also owns Pasolivo, an olive oil producing company, with her son, Joshua Yaguda.

UncoveredSLO.com interviewed several dozen individual local investors, contractors, lawyers, law enforcement agencies, and lenders while researching this article. Some are directly involved in hard money lending; others have been watching the pending implosion from the sidelines.

Hard money lenders specialize in real estate-backed loans and short-term (bridge) loans. In these latter kinds of loans, funding is provided based on a collateralized real estate value. Higher interest rates can be charged because the loans often do not conform to ordinary bank standards.

Traditional credit guidelines that help shield banks and other lending institutions from high default rates don’t usually have a role in hard money lending. Loans are based on the value of the underlying asset rather then the borrowers credit rating. These kinds of loans originate with private investors, small groups of investors, and firms like Estate Financial that court individual investors.

A number of investors, lenders and builders contacted by UncoveredSLO.com have asked that their names not be used for a variety of personal reasons. One said he had yet to tell his wife that their entire investment was likely gone.

“Bob,” a North County barber for four decades, who thought he had retired two years ago, now faces a loss of most or all of the $450,000 he invested with Estate Financial.

“It looks now like I will be going back to work,” Bob said. “I get about $800 a month in Social Security. I built a home and sold it. I bought properties and sold them. I am 64. I have been under so much stress my blood pressure is through the roof. My plans for enjoying my retirement have gone to hell. I’ll have to cancel all my plans and go back to work. I will have to work till the day I die.”

A 62-year-old former telephone dispatch operator for GTE, “Pam” combines her Social Security and retirement package for about $1,700 monthly income. She bought a condominium in Santa Maria, sold it, and invested the proceeds with Guth at Estate Financial, thinking she had achieved financial well being.

“I am going back to work, cleaning houses,” she told UncoveredSLO.com. “I don’t know if I can clean houses until I’m 80 years old. I am very angry. We trusted her [Guth].”

To encourage investors, Guth distributed an Estate Financial brochure which claimed investors would receive trust deeds filed in the county, fire insurance policies, and title insurance.

Numerous investors told UncoveredSLO.com that their names were never placed on any deed of trust, and that they never received copies of fire or title insurance policies.

One local investor, “Mark,” discovered earlier this week that one of his investment properties had been sold in June, though he received no money.

“Estate Financial sold one of the condos for over $400,000 in June, Mark said. “They never told me. If they used the money for something else, that is not right. A couple of days ago, when I found out it sold, I asked for money. I was told I wouldn’t get it back and that Estate was researching what happened.”

Estate Financial is alleged by its investors and others to have co-mingled funds, paying from one investment to fund interest payments on another. Though similar in some aspects to a “Ponzi” scheme, Guth’s program often paid off many of the first trust deeds.

A few years ago, Shell Beach attorney and broker Kirby Gordon of Gordon Properties attended a meeting with Guth and his client, John Mielziner, to discuss the investment options available, and to learn how Guth managed those investments. According to Gordon, Mielziner, and dozens of investors, Guth claimed that funds were dispersed “progressively” (paid in steps as construction work is completed).

“We were told there was a draw system,” Gordon said. “They specifically told us that someone would inspect to make sure that the draw work was done – usually seven draws. That appears not to be the case.”

Many local properties have been fully funded, even though nothing has been built.

Ron Cooper, a developer for 25 years, went to Guth to help fund a project in San Dimas along with investments from his daughter, son and himself.

“She told me in writing we could start the work,” Cooper said. “She didn’t tell me she didn’t have the money. The money my family and I invested is gone. It’s ruined me. She knew she was out of money a year and a half ago. She was still taking investor money.”

Cooper received enough money to get the property’s entitlements, although no inspections of the properties were ever made.

“There was absolutely no oversight,” Cooper added. “Over the past 25 years, I have dealt with numerous banks and private lenders. I’ve never before had a lender approve a voucher and send a check without an independent inspection.”

Guth proceeded to foreclose on the property even though she failed to distribute the construction funds as promised. In response, Cooper filed three lawsuits against Estate Financial, Guth, and Yaguda.

“Phil” invested in a project on El Camino Real in Atascadero. In papers sent by mail for Phil to sign, the project was described as a 1,700 square-foot, four-bedroom, and three-bath house. When Estate Financial quit making interest payments in October 2007, Phil went to check on his investment.

“I measured the house at 1,100 square feet,” Phil said. “It only had three bedrooms and two baths. The loan-to-value is completely off.”

Another issue is Guth’s reported failure to disclose to some investors that she was a partner in numerous Estate Financial funded construction projects.

“We had no idea she was a partner in those projects,” Phil added. “No wonder she doesn’t foreclose on those properties.”

“Mike,” an investor into Estate Financial for $700,000 claims Guth told him his projects were completely funded and all they had to do was sell. Mike checked on the property. There was no house.

“All the money has been funded and all I have is a slab,” Mike said. “I will be shocked if I get anything back. She is not supposed to pay out money until the work is done. She won’t give us our money back.”

Most of the properties had no MAI or licensed appraisals preformed. Appraised value was determined by Estate Financial employees. “It’s like going to surgery to fix a broken bone without an X-ray,” said one local lender.

As a result of the alleged exaggerated appraisals and lack of oversight, many of the properties are “upside down”; even if finished, the properties are worth far less than is owed.

For example, one project, if completed, will sell for approximately $3 million. The title, however, shows 45 liens on the property that include unpaid taxes and penalties, deeds of trusts, and sub-contractor liens for flooring, electrical, landscaping, and appliances that add up to around $5 million. Add another $1.5 million to finish the property and the value is already off by 50 percent.

A group of eight investors attended a meeting with Guth to discuss issues last fall. “Guth told us if we sue we will only get 10 to 20 cents on the dollar,” Mike said. “Guth told us she is out of money; it was all paid back to us in interest.”

A few days ago, investors in the pool fund were informed that a limited liability corporation (LLC) had been started in their names. Guth is now requesting investors sign and return the documents. The agreement apparently would allow Guth to take out loans in investors’ names. Management fees would be determined by Guth, who would control distribution of the funds, according to numerous investors.

Though many investors would like to foreclose on some of the projects, they are unable to do so. Often, numerous people have invested in each project. Guth has refused to disclose to investors the names of other clients, who would need to agree on a course of action or go to court.

“Forget value, forget everything else, how do you get investors to agree?” wondered one local lender.

Attorney Farmer went to San Luis Obispo District Attorney Gerald Shea’s office searching for solutions.

“A possible remedy is for the District Attorney to start a civil suit with a receivership,” Farmer said. “Then investors could move forward with foreclosures. It is a serious problem and the public needs to demand that a public agency do something about it.”

Currently, the District Attorney’s office is directing concerned investors to contact the state departments of corporations and real estate.

“After it goes through Department of Corporations (DC) and the Department of Real Estate (DRE) we can look at taking other actions such as a receivership,” said Deputy District Attorney Steve VonDohlen. “I can understand the human fear factor. We ask that anyone who thinks they have been a victim of crime to report it. We are looking forward to getting the results from the state. Our office then will review for possible filing of criminal charges any cases that these investigating agencies submit to us after they have completed their investigation.”

Send on-line complaints to the DRE at http://www.dre.ca.gov/pdf_docs/forms/re519.pdf and to the DC at http://www.corp.ca.gov/about/pdf/doc29.pdf. Or call the DRE at 559-445-5009, option 3 or the DC at 866-275-2677.

Stay tuned to UncoveredSLO.com for more on this breaking story. Anyone with information on hard money lending issues in SLO County is asked to tip your editors at tips@uncoveredslo.com.

 Tags:, department of real estate, EFI, Estate Financial, fraud, Guth, hard money, lender, Paso Robles, yaguda


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Stefan

By: Anonymous on 3/16/08 [Delete]

Thanks dewdog. GREAT SUGGESTION. If we all pool our resources we can start the process immediately and effectuate the process economically and effectively. To fight Karen Guth and Joshua Yaguda we need numbers. p.s. Title report on one of my properties does not show the lenders names. it just lists Estate Financial. So we have to get the information through another means.


By: Anonymous on 3/16/08 [Delete]

To all concerned. The first thing that you need to do is to identify the property that your money is invested in if you know what it is. Next you need to go to a Title Company and have a preliminary title report done on the property. That report will report all of the recorded information on that property. It should reveal how much money was borrowed on the property. Who borrowed the money. It will also list the people who provided the money thru EF. It should have each individual name of the person who provided the money and what percentage they have invested in the total amount borrowed. The report will also list if there are any delinquent property taxes. Also listed will be any liens that have been filed against the property. There could also be 2nd loans against the property. This preliminary title report will tell you the exact status of the property on the day it is filed. The most important part to all of you will be if your name is on the title of the property that you think your money went to. I would recommend that if you know who the investors are on each property that you ban together and immediately get this report and take immediate action to secure your property. Time is of the essence, it's not time to be Mr. or Mrs. Nice Guy. Unfortuinately you are going to lose most of your money but if you act quickly you may be able to recover any equity that may be left in the property. Good Luck.


By: Anonymous on 3/16/08 [Delete]

We need the Attorney General to do something right away. I want as much of my money recovered as posible. I want anyone who defrauded me prosecuted.


By: Anonymous on 3/16/08 [Delete]

We are al looking for the bottom line. Guth is not competent or trustworthy in the managemnet of our affairs. There is NO WAY I'll agree for her to borrow funds in my name and manage it. We have been cheated and lied to. I don't believe she is out to do anything except save herself and take everything she can. Funny that she suddenly cares.


By: Anonymous on 3/16/08 [Delete]

It is not that I necessarily trust EFI, but I believe they are trying, I have seen evidence of it. I certainly do not trust any trustee to look out for us investors. They get paid regardless of the job they do. No trustee or administrator could begin to grasp 600 loans and projects as well as those that are in up to their noses in it. I am looking for the bottom line, not revenge.


By: Anonymous on 3/16/08 [Delete]

Tom, Your rear may or may not be hanging out but you deffinetly have it in a sling.If you want to trust Guth then I don't trust you.


By: Anonymous on 3/16/08 [Delete]

The investors can collectively elect a Trustee that they agree on and ask to court to appoint that person. They don't have to spend 30%. They need the court to legally appoint a person and a commitee to take over (voted on by the investors for the investors).


By: Anonymous on 3/16/08 [Delete]

Larry, my rear is just as exposed as anyone elses, why do you assume it is not?


By: Anonymous on 3/16/08 [Delete]

Tom: It's clear you're covering you own ass and don't give a damn about us little people. My $100,000 is more important to me than your $__________ is to you.


By: Anonymous on 3/16/08 [Delete]

Nancy, when a trustee gets hold of the properties he will be ordered to dispose of the and you will be guaranteed to get almost nothing. In addition, it iw just another layer of expense, usually 30+%


Stefan

By: Anonymous on 3/16/08 [Delete]

You all deffinetly need help and a professional to start the negociations on your behalf. If you can get an attorney to bring this to a judge right away all the better. The thing to remember is that this has to managed, not necessarily liquidated. You want the greatest return than can be achieved with whats available to work with. Hopefully there will be some answers and a plan of action at the Monday meeting.


By: Anonymous on 3/16/08 [Delete]

Get a grip. If she's been screwing you, why would you expect her to now be helpful. I understand you invested with her because you trusted her and perhaps needed someone to take of you.


Now is Come To Jesus time. Time to come to terms with reality, get legal representaion and go on the offense to protect your own best interest.


Otherwise you are little more than helpless, trembling sheep who deserve a shearing.


By: Anonymous on 3/16/08 [Delete]

Why won't Ms. Guth reveal the names of the other investors in our properties, so we can decide ourselves what we want to do with our collateral. She must have something to hide. I'd like to know what it is.


By: Anonymous on 3/16/08 [Delete]

Now that Karen Guth has all your savings, she wants you to sign an LLC agreement and let her borrow money in your name. Then you will be in debt too and she will have control of the money that you borrowed and owe. The best part is, apparently she say's that this plan is the only way. Do it her way or get nothing!! She watched Dumb and Dumber a few times too many.


By: Anonymous on 3/16/08 [Delete]

To the big investor Tom. I'm not going to relax until I know that Guth doesn't have control of my finances or property anymore.There is no way I would trust her no matter what she say's. We need to have everything transfered to a Trustee (manager) who can sort this out and determine the best course of action that will serve everyone. I know about her new plan of action (LLC and borrow in our names) and I think it stinks.


By: Anonymous on 3/16/08 [Delete]

It was obvious and clearly identified in the Trib article that Guth was partners in many of EFI's projects. How hard across the face do you need to be slapped before you wake up and realize you've been defrauded?


Time is not on your side, it is on Guth's. She will do anything to stall, evade and delay having legal action initiated against her.


The longer you wait the harder the screwing you will receive.


By: Anonymous on 3/16/08 [Delete]

Investors, building, contractors, subcontractors – we need all of you to come to tomorrow's meeting. We all need to help each other to get some of our money back.


By: Anonymous on 3/16/08 [Delete]

/Tom you say RELAX,and your one of the largest investers(I'm sorry) I hope we well see you monday at http://www.sanluisbayinn.com on monday at 12 noon to hear what Karen Guth's Builders/Developer have to say about her..And the F.B.I.


By: Anonymous on 3/16/08 [Delete]

dewog: Hope you're going to be t tomorrow's meeting. I couldn't agree with you more. If we don't act RIGHT NOW whatever assets Guth/Yaguda have will fly away. They are already trying to convince some investors to have their investments transferred to a new LLC whereby she continues to control our properties AND gets paid a fee for managing the properties. It will never end unless we act now. See you Monday!!


Stefan

By: Anonymous on 3/16/08 [Delete]

This appears to becoming a huge case of fraud and or theft. Not only are the investors victims but don't forget aboout the little guys like the painters, carpet guys, landscappers, concrete and appliances people who also invested in these properties and never got paid. This may be TOO big for the District Attorney who should currently be in the middle of this. In short time if the local DA fails to participate in an investigation I would recommend that the State Attorney be called in to take over. Time is of the essence before Ms. Guth liquidates and disappears.


By: Anonymous on 3/16/08 [Delete]

My response is to Tom. I was RELAXED and trusted in Karen Guth to manage my money for the last four years. She took full advantage of my RELAXATION, and managed to steal my money from "under my nose"!!!! Cindy said it perfectly; it is like a thief breaking into your house at night. The door was locked but a TRUSTED neighbor had the key!!!! Now, all I want to do, is take control of my projects and get Karen Guth out of my hair; to keep Karen Guth from fleecing me anymore.


By: Anonymous on 3/16/08 [Delete]

Jim Smith and Jerry Holland are builders/contractors that I believe had some type of a financial relationship with EF.


By: Anonymous on 3/16/08 [Delete]

I do not think that bring charges or suits against EFI will get any money back. I do believe that they are doing everything they can to save as much as possible for us. I suggest everyone settle down. I am one of the largest investers. Just relax please


By: Anonymous on 3/16/08 [Delete]

This is going to get a lot bigger than just the EF Investors. There is another hard lender that has packed up and "blew the country". They are from North County. We are all going to feel this for a long time to come. Laws will probably change as a result of this fraud.


By: Anonymous on 3/16/08 [Delete]

I'm sure the Monday meeting will draw lots of attention. From there it will be easy to announce a second meeting in North County and get all the newspapers to advertise it (and Congalton). That way all the partners will be able to locate each other. Maybe KSBY will announce it too. Good Luck to all of you.


By: Anonymous on 3/16/08 [Delete]

Just a suggestion from someone on the outside who has a lot of sympathy for the investors:


Hold another meeting in the north county. Evidently that is where most of the investors live and work. You need to work at it to get as many people together as you can.


Also, don't rise to those that try and bait you in comments here or anywhere else. It is counter productive and may be coming from the wrong side of this in order to disrupt unity.


Best of luck.


By: Anonymous on 3/16/08 [Delete]

I never heard of Holland or Smith. Who are they? What can they add to this saga?


By: Anonymous on 3/16/08 [Delete]

I never heard of Holland or Smith. Who are they? What can they add to this saga?


By: Anonymous on 3/16/08 [Delete]

We will have Part II of our discussion about this issue on my radio show Monday from 5 to 6. Jerry Holland and Jim Smith will focus specifically on Karen Guth and other Paso Robles lenders. Please tune in and call in Monday at 5 on News/Talk 920 AM radio.


Stefan

By: Anonymous on 3/16/08 [Delete]

Slo Bear actually has an informative blog site. Many could learn a lot there and so while he wasn't very nice to everyone here, his blog is worth looking at.Check out

http://www.centralcoasthousingbubble.blogspot.com


By: Anonymous on 3/16/08 [Delete]

What kind of webpage does this SLOBear have?

Do you have the webpage address. Would nice to see what he is up to. Thanks.

Maybe we can check is background also to if he has ever made a mistake.


By: Anonymous on 3/16/08 [Delete]

Slo Bear, You aren't getting it. There is a difference between a high risk investment and fraud. This is about fraud. I understand that you are investment savy and have an excellent website. What you are missing is the fact that many savy investors were taken in by EF. Those investors followed the rules and disbursed approx. 15% of their portfolios into the EF venture. Others who less knowledgeable were "taken in"and invested a great deal more. This is not about a high risk investment going bad it's about fraud. I FEEL SORRY FOR EVERYONE ONE OF THESE INVESTORS ESPECIALLY THE ONES THAT DIDN'T KNOW ANY BETTER. If you can't be kind and work towards helping them then stay away, but don't rub it in.


By: Anonymous on 3/16/08 [Delete]

Hey SLOBear,


I think these investors could live with a 12% loss. We are talking about more like a 90+% loss. Get a clue. This is like a thief breaking into your home in the night. The doors were locked but a trusted neighbor had a key.


By: Anonymous on 3/16/08 [Delete]

SLOBear: Truly glad to hear Karen Guth didn't steal anything from you. But focus, if you will, on the facts. There's $500M MISSING. And Ms. Guth won't (can't) account for it. The 12% we were promised did not include a promise to lose our money. Bye the way, how are you related to Ms. Guth??


By: Anonymous on 3/16/08 [Delete]

SLOBear

You have really got a SICK attitude. Obviuosly you must be someone who has been taken care of all of their life by the governemnet and consequently have never taken any chances to get ahead. You have no compassion for anyone, except yourself, regardless of what the cause was. SICKO


By: Anonymous on 3/16/08 [Delete]

Hey SloBear,

That was cruel. Maybe you have a bit more savy when it comes to investing. I wouldn't have invested with Guth either but I feel very sorry for all these investors. What happend to them is something that can happen to most people. Look at Enron.


By: Anonymous on 3/16/08 [Delete]

Hey Anne – so you invested a large sum of money in a non-FDIC, non-SIPC regulated business and you wonder why folks don't feel sorry for you? Give me a break. The rate of return defines the risk you were taking.


Guess how much money Ms. Guth stole from me? Zero. Not by accident.


Stefan

By: Anonymous on 3/15/08 [Delete]

We the contractors that Karen Guth has ruined, are now building an 8 x 10 stone castle; and we hope that she likes women.


By: Anonymous on 3/15/08 [Delete]

In response to those of you that are wondering how we could be so stupid or greedy as to invest with Karen Guth. Before I invested my money, I sat down with Karen and some of her staff, to go over how my money was to be used and how the returns to my investment worked. If Karen had done what she said she was going to do, and followed the rules that she said she was going to follow, and had cared just a little bit about her investors, then we would be ok and be able to ride out this economical downturn. BUT she did not do any of these things she said she would do. Mainly, she mismanaged our money; using our money to go into business for herself. Upon investigating my projects, I found I have 9 examples (projects) of GROSS MISMANAGEMENT by Karen Guth and Joshua Yaguda. It was very shocking, and unbelievable at first. Now we are trying our best to save something out of this huge mess.


By: Anonymous on 3/15/08 [Delete]

The investors meeting will be held at the San Luis Bay Inn in Avila Beach on Monday March 17,2008 at 12 noon. Go into the Lobby, turn left to the hallway that leads to the Conference Room (the old restaurant for those of you that remember it). Some contractors will present some of Karen Guth's management practices. Some lawyers will let us know what they can and cannot do. After the meeting we can compare "war stories" and cry on each other's shoulders!!! Actually, I will have copies of the Complaint Forms from the Dept. of Corporations and names and phone numbers of government contact persons. See you there!!!


By: Anonymous on 3/15/08 [Delete]

Go to http://www.estatefinancial.com

and you can read all about Ms. Guth, Yaguda and Estate Financial.


By: Anonymous on 3/15/08 [Delete]

I wonder what Yaguda has in his name? Like mother like son? I hope he doesn't plan on inheriting any of this money or property.


By: Anonymous on 3/15/08 [Delete]

Quote Yaguda: "Most of our investors are Mom and Pop types who aren't very smart." Thanks for taking advantage of us Yaguda.


By: Anonymous on 3/15/08 [Delete]

Absolutely no oversite. No project inspections. No line item budgets. Money was not put into segregated accounts as required by loan documents. Seconds recorded against properties with faulty subordination agreements so investors first could turn into seconds. Borrowers, Investors, contractors – all should get together NOW – this coming week to take legal action.


By: Anonymous on 3/15/08 [Delete]

I heard she has been this type of business for 20 years. Does anyone have any idea how long she has been in North County?


By: Anonymous on 3/15/08 [Delete]

If Ms. Guth got her $5,866,100 loan from Heritage Oaks Bank and if it was legitimate, which I'm sure it is. And if the loan has a 80% loan to value then that loan is against a single property that has an APPRAISED value at over $7,000,000. There is still some equity there but it appears that she is encumbering the property that she has to the maximum. I wonder where the $$$$$ is going. When the properties are foreclosed on maybe Ms. Guth will have her money and be on her way-hopefully to the slammer.


By: Anonymous on 3/15/08 [Delete]

Has anyone been able to look into Ms. Guth's past? I think she came from the east coast. It would be interesting to know what she may have pulled off back there prior to coming to the North County with her fortune.


By: Anonymous on 3/15/08 [Delete]

To Just The Surface,


Great score. If everyone pokes around I have no doubt more will be found. This is just what these investors need right now (to find the money). I hope swift action is taken on this situation. I don't think the DA or attorneys can wait for a state investigation. The assets need to be identified and put in receivership ASAP.


Stefan

By: Anonymous on 3/15/08 [Delete]

I can't help but wonder what Guth's game plan was. Did she think that she would get away with this? It just doesn't make any sense.


By: Anonymous on 3/15/08 [Delete]

This is directly from the County Assessor. Guth has yet another shell company that owns real estate.


She however chooses NOT to pay her taxes like the rest of us.


Secured Property Taxes Last Updated: 3/14/2008

Bill Year Bill Number Amount Billed Total Paid Total Due

2007/08 021,401,001

SECOND PRESS PARTNERS LLC $32,677.61


Prior Years Delinquent Taxes Last Updated: 3/14/2008

Original Default Date Total Due

6/30/2007 Valid for the month of March 2008 $47,648.33


Crook, Crook, Crook. Bring on the DA's Office


By: Anonymous on 3/15/08 [Delete]

jamesbrain

Your absolutely correct. Although this is where Ms. Guth comes in by not advising them correctly what to do with their investments. It appears that she may have taken advantage of these unknowledgeable investors for her own personal gain.

Legitimate financial advisors, which was part of her fiduciary duties, will advise people how to invest their money according to their assests. I've never heard of anyone advising someone to put everything they have into one investment.

I'm familiar with some of the hard money lenders and the "good ones" will not invest ones entire investment into one project. Unfortunately like alot of other people these "good" hard money lenders are having difficulties also. The whole economy is in ruins and it is going to get worse. The bad hard money lenders are only part of the problem.


By: Anonymous on 3/15/08 [Delete]

Between Guth's shell company, FIRST PRESS PARTNERS LLC and her personal real estate she pays approx. $40,000 per year in property tax. translating to 4 million in value. That is just in SLO County. The investors should be at ease knowing she is doing just fine.


As far as Heritage Oaks Bank.


The good news is they normally sell their loans immediately after closing. Chances are some other institution is on the hook for her scam.


By: Anonymous on 3/15/08 [Delete]

Have to agree that some of these investors deserve to get burned, though of course not this badly:


"Bob, a North County barber for four decades, who thought he had retired two years ago, now faces a loss of most or all of the $450,000 he invested with Estate Financial"


Putting all of one's money in a single too-good-to-be-true investment is a mistake most twelve-year-olds wouldn't make, but for some reason retirees seem to be prone to this sort of thing (see victims of Charles Keating, Enron, etc.).


Stefan

By: Anonymous on 3/15/08 [Delete]

It is scenarios such as this that make it likely I won't ever be able to invest any of my Social Security money privately.


The barber, the phone dispatcher, and others have imprudently invested their nest-eggs and now they are reliant on their social security! Had they been able, they may have invested it in more hard-money asset classes.


Financial literacy continues to be a problem. I can see a legitimate reason to invest say 5-15% of a total portfolio in these types of things, depending on the disclosures and details.


Unfortunately, leverage and risk do work both for and against you.


Who else out there is the next to go completely broke?


By: Anonymous on 3/15/08 [Delete]

RETIREMENT ON YOUR SOLE MONIES?? EASY IN COSTA RICA. I LIVE ON 700+ S.S. MONTHLY. 200 RENT,(NEW 2 BDRM)POWER AND WATER $11.00 MONTHLY. $30,000 HOME PAY $10 YR PROP.TAX. FERNDOG92701@YAHOO.COM OR 011-506-3019212. RECOVER WHAT YOU HAVE AT A LOSS AND GAIN HERE IN COSTA RICA. LOVE AND GOOD LUCK. I FEEL FOR YOU. FERNANDO


By: Anonymous on 3/15/08 [Delete]

Anybody been burned by Cameron Financial/First Choice Mortgage? They recently went under taking many down with them.


By: Anonymous on 3/14/08 [Delete]

Investors meeting Mon. March 17 at 12 noon. Contractors from some of the projects want to meet with the EFI investors; to share information and concerns about EFI investments. Originally, the meeting was scheduled to take place in Santa Margarita, CA; but due to the overwhhelming number of interested attendees, we are trying to relocate to the Conference Room at San Luis Bay Inn. Will post on this blog Sunday evening the final decision on the meeting place. Attorneys, news media, etc. have shown an interest in this meeting also.


By: Anonymous on 3/14/08 [Delete]

This all hurt's too much to talk about it in open space. Many of us are here (I hope). Thank You. We will (I Feel) always owe you for your honesty and help. People don't understand how much this hurts. Again. Thank You and don't expect a lot from us, "we are hurting" But I tahnk you.


By: Anonymous on 3/14/08 [Delete]

SLOBear

Not guilty. Maybe you can explain what "real estate industry" refers to.


By: Anonymous on 3/14/08 [Delete]

Cheers to Marcia. That say's it all. Marcia, I'll see you at the Monday meeting for the first time. I feel like you do. GOD BLESS KAREN AND DAN AND DAVE. I will never forget what they have done to help me.


By: Anonymous on 3/14/08 [Delete]

Thank You, Thank You, Thank You. I felt so lost,confised and helpless. Now I feel a sense of empowerment. One more thing…GOD BLESS DAVE CONGALTON FOR GETTING THIS ON THE RADIO SO THAT I COULD FIND YOU.


By: Anonymous on 3/14/08 [Delete]

I also cancelled my subscription to the Trib months ago. There is no longer any investigative reporting. The papers are controlled by outside interest. Anyone with advertising $$ can steer a Tribune article or report. The same seems to go for some other papers but the Tribune is the worse of the worse. I think money can be recovered if everyone acts fast.


Stefan

By: Anonymous on 3/14/08 [Delete]

The Trib, which I canceled long ago, just does not have the smarts in their ranks to cover articles like this. They cannot understand. Local papers are nearly bankrupt and are hiring know nothing young agenda-driven "journalists" who can't really cover things other than the local new store opening.


By: Anonymous on 3/14/08 [Delete]

My wife and I are long time investors…these are bad times, but not as bad as I'm hearing on KVEC…we have 1 defalt in escrow and it pencils out to 81 cents on the dollar when escrow closes


By: Anonymous on 3/14/08 [Delete]

How does that story go about the pot that was borrowed and had a child….and later dies?

Everyone with their fingers in the pot, REALTORS as much as the banks, title companies and anyone profiting from sale of moving of paperwork is responsible by the fact that it made financial gain for them.


By: Anonymous on 3/14/08 [Delete]

Someone feeling guilty? I didn't mention anything about Realtors in my post, so let's not make assumptions.


However, since you are on the topic, how many folks did you tell "buy now or be priced out forever" or "real estate always goes up in price" or "everyone wants to live on the Central Coast" or "it's different here" or "you can just refinance in a couple of years" or "just get some cash back at closing"? All are classic Realtor lies.


You and your colleages share alot of culpability in this mess by creating a false sense of urgency and false demand. I expect to see you working the counter in a Blockbuster by the end of the year.


By: Anonymous on 3/14/08 [Delete]

My sympathy to anyone defrauded.


Investor interviews seem to be with people who

a) Invested a ton of money, and

b) Invested a significant portion of their assets.


There are going to be a lot of lessons learned when this fully unravels, but I hope the loudest and clearest lesson is never ever put all your eggs in one basket. Especially if it sounds too good to be true.


By: Anonymous on 3/14/08 [Delete]

SLOBear

Whoa, wait a minute here. Realtors have nothing to do with this fraud. Read carefully and you will see that it is a small number of developers, most are very hard working and honest. These developer got together with Ms. Guth, a financier, and defrauded, stole or whatever you want to call it from investors. Where do the Realtors come in. Are they part of this because maybe they tried to sell the bad deals that Ms. Guth put together and hopefully regain some of the investors money? I guess if something is bad just blame a Realtor.

Cheap shot Mr. SLOBear.


By: Anonymous on 3/14/08 [Delete]

One thing I think we all agree upon – Julie Lynem could be the worst business editor we have ever seen. The Trib has been asleep at the wheel, turning a blind to all of the fraud and corruption within the real estate industry.


Do you think you can guess which industry is the biggest advertiser in the Trib?


By: Anonymous on 3/14/08 [Delete]

I wish everyone the best. I'll say a prayer for all of you and I hope you recover your money. This is a terrible thing.


By: Anonymous on 3/14/08 [Delete]

The Tribune is the biggest piece of S— rag. How could they not have known this. People told them and they still made everything sound cozy. I'm not a happy camper.


By: Anonymous on 3/14/08 [Delete]

Whoyah Congelton! I'll call in to your show. Thanks for the help. I'm ready to rumble-literally.


By: Anonymous on 3/14/08 [Delete]

Karen and Dan will be on my show tonight (Friday) at 5:05 to discuss this story. Tune in to KVEC 920 AM.


By: Anonymous on 3/14/08 [Delete]

Thanks for the info dewdog. If there are any investors wanting to get together send private e-mail to this site so that we can contact each other and form a plan.


Stefan

By: Anonymous on 3/14/08 [Delete]

Just in case anyone is feeling sorry for Ms. Guth, her large loan at Heritage Oaks Bank does have a monthly payment. The exact information is not available on DataQuick although if you took that amount at an interest rate of 5%, less than Estate Financial charges, and amortized it over 30 years the monthly paymnet would be $31,490.50. Not bad for someone in a distressed situation. There must be a war chest somewhere. Good luck investors.

Don't forget the 2 other loans at Heritage Oaks Bank that are also being serviced.


By: Anonymous on 3/14/08 [Delete]

I heard a rumor about some investors having a meeting on Monday. Does anyone know anything about this? Are we all invited?


By: Anonymous on 3/14/08 [Delete]

Thanks dewdog,


Keep the info coming our way.


By: Anonymous on 3/14/08 [Delete]

So much for the Republican rant that business does it better –and no government regulation is necessary. The whole economy is in the toilet thanks to these idiots and those that voted for them.


By: Anonymous on 3/14/08 [Delete]

I guess somebody would probably want to look into Ms. Guth's house in Atascadero that Estate Financial foreclosed on and then it was placed in Ms. Guth's name. Did the investor's disappear from title? Heritage Oaks Bank was there again for $617,000. I wonder why Ms. Guth didn't fund thru Estate Financial?


By: Anonymous on 3/14/08 [Delete]

People who didn't do any work got paid "in full" and people who did do work got "screwed".


By: Anonymous on 3/14/08 [Delete]

There are contractors all over who did do work and haven't been paid. Thats why there are so many liens. This is going to have a far greater impact on the county than many realize. If Hertiage Oaks Bank got scammed with the rest of us then, I don't feel so bad.


By: Anonymous on 3/14/08 [Delete]

get the court to put a lienon that beach house and any other assets that have been acquired with our money.


By: Anonymous on 3/14/08 [Delete]

Thank You for telling us all where to start complaining. The DA has done nothing.


By: Anonymous on 3/14/08 [Delete]

"BUYER BEWARE"

Obviously Ms. Guth took advantage of these investors and took their money. But on the other hand the investors should have had knowledge of what they were getting into or should have seeked outside advice. These hard money loans are very high risk and are very tempting when there is Peter to rob to pay Paul. The trail of money will probably tell the story. It appears that Paul has left town.

With all of this going on one may want to wonder what Heritage Oaks Bank is thinking. Per DataQuick, Heritage Oaks Bank lent $5,866,100 to Ms Guth on 2-2-08. Sounds like they may possibly take a hit too if everything is true that we are hearing about.

Things must have gone well for Ms. Guth and her operation as she purchased a $790,000 Cayucos beach house August of 06.


By: Anonymous on 3/14/08 [Delete]

Correct on the fraud issue. The DA has a reputation of being weak on investigating these crimes. Jerry Shea needs to step up.


As far as The Tribune. They may be protecting someone that advertised with them.


Guth also pays herself very well, while stealing your money.


Best of luck to the victims.


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