INSIDE EFI: Under The Microscope

May 4, 2008

Part 3: The good times are gone

(Editors’ note: This is the third and final article in a series examining the high-rolling, multi-million-dollar Paso Robles financial lender, EFI, and its current problems.)


One of the down sides of divorce is its very public nature, proceedings often revealing things about people they’d rather keep secret.

Had it not been for the bitter 2004 divorce of Guth and Charles Applebaum, then co-owners of Paso Robles’ Estate Financial Inc. (EFI) and Republic Properties, much regarding their businesses probably never would have found its way into the public domain. And if legions of investors were not today concerned about money they’ve invested with EFI, details of the pair’s divorce would have interested few.

But now the once high-flying North County hard money lending firm — bending under pressure from simultaneous federal, state and local investigations — is more exposed today than ever before. Complaints have been raised about the firm’s practices and investors have voiced concerns about conflicts of interest, mismanagement, and improper use of EFI’s mortgage fund. Investors have gathered by the hundreds in a series of meetings all over San Luis Obispo County seeking ways to recover monies that had been entrusted to EFI. Last week, the state Department of Corporations lifted EFI’s permit to sell off any of its real estate investments while the agency probes dozens of formal complaints.

EFI is in the business of making construction loans, charging high interest and – when times are good – paying high dividends to investors. When the real estate market began souring, Guth told investors that EFI’s slide was temporary, that it was just a result of the market downturn. But when investors had more questions than answers, the EFI story began to unravel.

Much of EFI’s present quagmire can be traced to Guth’s and Applebaum’s divorce, and to the couple’s increasingly hostile court confrontations over division of their personal assets… battles which continue even today.

Court documents spanning four years show that Applebaum’s departure had several immediate effects: Guth cranked up the sales and marketing machine, and EFI stopped paying much attention to construction projects in progress. In the years immediately following Applebaum’s departure, Guth and her new partner, son Joshua Yaguda, began concentrating almost exclusively on attracting new investors and making new loans.

After all, that was how they got paid: for each dollar that went out in a loan to a building contractor, EFI took one to three percent right off the top. There was more motivation to loan, less to maintain any semblance of quality control of any project.

The increased effort bore fruit. In a little more than 12 months after Applebaum left the firm, Guth and Yaguda had increased EFI’s mortgage portfolio from $95 million to $135 million.

Guth was hitting her stride in a very fertile real estate marketplace. “Fundamentally, I am a saleswoman,” she said in court documents describing the separate professional functions of the feuding couple.

In those 1994 documents, Guth explained why she thought additional business was accruing to EFI after Applebaum’s departure:

“We maintain excellent lender records and notes to ensure investors get whatever special attention they require,” she avowed. “Overwhelmingly, the reason new investors seek us out is because they have been told that when you call EFI you can always talk to Karen or Josh. Secondarily, EFI’s excellent reputation for protecting their investors, providing a continuous stream of loans for them to invest in, and the level of explanation, disclosure and attention they receive from us.”

Applebaum, on the other hand, said he didn’t think EFI’s expanding portfolio was attributable to Guth’s “expertise and personal effort,” but to the simple fact that “demand for capital in the construction market and the ability to pay ten percent when banks are paying one percent.”

And the big numbers Guth and Yaguda were putting up were misleading, he testified: “As of Nov. 28, 2007, of some approximate $172,687,619.32 in construction loans (assets) only $36,160,142.99 was invested in current, performing funds… (thus) “it is clear that only 21 percent of the entire mortgage fund portfolio is current and performing.”

Early in the property division fight, Applebaum sought financial information on one of the couple’s companies, Republic Properties. When EFI would make a bad loan, Guth would transfer it into Republic Properties, he told the court, because “she wishes to use all the cash flow from these investments… to pay interest into EFI.”

Information he sought, including the status of construction projects, was not provided, he reported.

Because Guth was at the time claiming that monthly debt service was costing EFI $107,106, Applebaum said he believed the bad debt portfolio carried by Republic Properties exceeded $12 million three years ago.

In what may turn out to be a fateful commentary, Applebaum hypothesized on Guth’s use of Republic Properties: “The real reason that EFI has had to transfer ‘bad loans’ to Republic for workout is that (Guth) decided to advance certain funds which were invested by investors in one project, to the builder for use on another project. This action is clearly inappropriate. I do not trust (Guth’s) judgment in this or other ways .”

Applebaum described one circumstance involving an office building in Paso Robles, referred to by Applebaum as the “9th Street Project,” which became a particular focus of attention during the property division hearings.

In what she termed an “update” of Republic after her separation from Applebaum, Guth sought $250,000 to finish the 9th Street project, which now serves as the company’s home office.

“I am certain,” he alleged in sworn testimony, “that (Guth) has unilaterally removed sums from the investment account without prior notice or consent and spent them in various ways that she has determined are ‘joint’ expenses.'” He also claimed that Guth “has certainly misappropriated the nearly one half million dollars we placed in the (9th Street project) investment account in October 2003.”

He claimed that the $900,000 construction fund for the 9th Street Project was spent by Guth “prior to putting a shovel in the ground.”

The travails articulated by Applebaum, ironically, echo many of EFI’s investors. Some have expressed concern that Guth has moved investment funds around from project to project in what might be a violation of contractual agreements. Still others hint at fraud.

The good days may be gone for EFI. Many of Guth’s personal assets have been liquidated to satisfy liens, judgments and other payouts. On last Valentine’s Day, the county sheriff delivered an order for Guth to sell her Paso Robles ranch, valued at between $2.5 million and $3 million, to pay the remaining debt to Applebaum and two banks. Sources have told that just last week Guth was busily attempting to raise capital or trade property to cover the Applebaum obligation, hoping to avoid selling the ranch.

And last but not least, her personal income is evaporating. Guth reported a $2.8 million taxable income in 2005. One year later, that had shrunk to only $1.4 million.

Tags:, Applebaum, EFI, Estate Financial, fraud, Guth, paso robles


By: Anonymous on 5/19/08

K in Paso

Very simple. Loans were not funded to builders as required. Projects could not be completed on time. EFI paid interest payments on all loans to avoid scrutiny by investors as it is happening today. New money stoped coming in for some time that could cover back due interest. Interest were covered by EFI as long as funds were trickling in.

Thats why this operation is called a "PONZI" scheme.

By: Anonymous on 5/19/08

The following information was researched using the instructions provided in a public format by EFI, therefore any expatiation of confidentiality is not reasonable. Additionally the following data does not disclose the personal information of any borrower or investor and therefore does not breach any confidentiality that may or may not exist between any parties.

The EFMF portfolio info was last updated May 13, 2008 and the first thing that is apparent is that of the 1,468 loans listed there are more loans in red ink than in black, not a good sign to even the untrained eye.

The info can be sorted by clicking on the column headings. I found some interesting trends through sorting the list by the Maturity Date and then by the Next Payment headings. I was not able to access the History section to get any background information on the individual loans to help understand why so many are in their current condition.

Here is some of the interesting things I found…

As of August 1, 2007 there were 113 borrowers who missed their payments and there were 1,341 loans that were passed their MATURITY date.

Starting the following month it appears that payments stopped showing up at EFI in large numbers. Between September 1, 2007 and January 1, 2008 there were 1,196 borrowers that missed their payment due dates.

Since January 1, 2008 there are 134 borrowers that have missed their payment due dates and as of May 13, 2008 only 25 loans remain current.

Some of my biggest questions are…

Of the 1,468 loans listed in the Mortgage Fund how could so many borrowers stop paying at the same time?

How can the market trends be blamed for such a massive number of borrowers running out of funds at the same time?

Was there some internal mechanism at EFI that contributed to the conditions that lead to so many missed payments?

Did these loans stop producing at an earlier date but EFI was "covering" their payments in order to keep the investors unaware of the real condition of the portfolio?

By: Anonymous on 5/19/08

to Juan

There was some confusion as to how the log on process presented in the letter worked… after several phone calls to Estate Financial I was able to log into the EF Mortgage Funsd info.

It shows the entire portfolio, not my personal account balance. I don't know about the individual investors part of that website.

Call Estate Financial… they should be able to help you log in.


By: Anonymous on 5/18/08

To Juan,

We have two accounts. We can access only one and the information on it is incorrect. Wonder what it cost us to have it set up?

By: Anonymous on 5/18/08

Has anyone been able to get through to EFI online using the instructions they just send out in a letter to fund holders using your investment number?

By: Anonymous on 5/18/08

I have heard several times in the past week that there was a meeting call for yesterday May 17th.

Does anyone have any information about that meeting?

Was it held?

Who was in charge?

Did you learn anything?

All information should be shared at this time or we all will end up fighting each other.

Wouldn't that make Karen happy!!

We will only have a fighting chance if we stick together.

By: Anonymous on 5/18/08

To Vern Kalshen:

I'm not signing any more of her affidavits. I'm not signing anything that comes from her office unless its a reconveyance form to have my principal returned. The latest affidavit form is for loan B237-04. She wants us to agree to 7% interest accrual due and payable "when the loan pays off." What? Care to mention when that might be? 2008, 2015, 2030? the next millenium? Seems like that would be a pretty important piece of information to include in her proposal. She thinks that people will just blindly sign whatever she sends out – like we did when we trusted her. Not any more. Never again. Save your postage, Karen.

By: Anonymous on 5/18/08

To Vern Kalshan:

The last I heard about the Templeton Mixed Use from Karen was ll/1/07,two months after the loan was in default. In that letter she recommended that we "extend the term of this loan until December 2008 and that we suspend our interest payments as well. … In return for foregoing any additional interest paymenst and for the extension of time, they are offering to pay us 50% of the "profits" (unlikely since she took over $llM from investors for what she originally said would be a$9,500,000 project – and not a stick has been hammered in place. She's still waiting, since 2004, for an EIR report.She goes on to say that she believes it is in our best interest to allow them to go forward. Now, nearly 7 months later,she's back again – with another absurd proposal.This project has been in default since September, 2007. Isn't it time to foreclose and turn the property over to the investors? Just when you think she can't get any more outrageous, she goes and does. She goes on to say "… the equity position of the Estate Financial principals will now be for the benefit of the investors." She she be just a bit more obscure? And one more question, is Templeton Mixed Use actually Karen wearing one of her "borrower" hats?

By: Anonymous on 5/18/08

Read the posts on the new article "Banks on thin ice….." The postings there apply to EFI investors.

By: Anonymous on 5/18/08

To Gloria.

It could be very helpful if you gave your inside information to someone who is active in this investigation.

You have the power to directly help many of the familys who are suffering from the results of the EFI scam. If you are willing to help, you can contact me at a secure e-mail site.

or leave a message on a private cell 805-709-6200

Thank you for your help so far.


By: Anonymous on 5/18/08

Vern Kalshan, Loans B106-06 says:

The usual story, That builder is not alone. Unfortunately, many of the loans were shorted. Wonder what happened to the rest of the Money?

By: Anonymous on 5/18/08



By: Anonymous on 5/18/08



By: Anonymous on 5/18/08

Gloria says:

Your all on the right track, but the monies are moving faster than you Know. Here at Heritage Oaks are some of the secret accounts #'s 11XXX, 32XXX ($2,700,941.25) 7075XXX, 7073XXX, 285496XXX, 7406XXX, 7074XXX and the list goes on and on and on not to mention other financial and banking firms. SLO-HAAS, LLC and Atascadero Ventures, LLC are two of many fronts for developers to open and hide illegal monies and launder assets. Federal Tax ID # 77-0582XXX keep in mind some banking officials have gotten some kick backs to conceal real owners of accounts and conceal monies from all of these joint scams, your correct it is a PONZI CON.

By: Anonymous on 5/18/08

Vern Kalshan of Loan B106-06

What was the original invested amount if the interest is $300,000 for 3.111 month? Seems like the original note is in excess of $4,500,000 and the value have dropped significantly.

Check out the details and value. Something is amiss here

By: Anonymous on 5/18/08

Dear EFI,

Vern and Louise Kalshan, as investors Louise Kalshan, Trustee (L482), Vern Kalshan, Trustee (L1335), and Vern Kalshan, Trustee (L3262), will agree that, in consideration of $300,000 paid to all investors of Loan B106-06 as interest for 3.111 months of unpaid interest, they will subordinate their share of the obligation secured by a first deed of trust to a new obligation in the amount of $4,500,000 secured by a new first deed of trust payable to Pacific Mortgage Exchange.


By: Anonymous on 5/18/08

receivership is not what roger fredrickson (atty)wants for us. he is proposing a manager to replace karen and josh. i want to go to the meeting and hear what he has to say to help us. they must have some good advice or they wouldn't have spent hundreds of thousands of dollars researching efi. the meeting is FREE. if you're still a karen and josh lover don't go. this will be a good time to ask all the questions you've been blogging here, but with no answers. before you go, do some research–go to your properties and take pictures of the unfinished projects. check to make sure you have all your deeds. i bet a majority of you will find many are missing from your portfolio.

good luck

By: Anonymous on 5/18/08

All information reported to the courts by the receiver will be available for the investors as well. The receiver's job is to communicate. If we are to shy away from anyone who is trying to make gain for themselves from this situation (self serving) then that means stay away from all lawyers, receivers, accountants, etc. Eventually, certain individuals will have to be hired for the job and yes, they will try solicite their business. It's just the way it is. So let's hear what they have to say. Because in the end, there will be new faces inside the office of EFI. Let's just pick that person or team wisely.

By: Anonymous on 5/17/08

Lets be careful and make sure we take thoughtful action. Anyone who has any self serving position must be looked at twice.

This would be a very large contract for a receiver and if one is installed it would be better if they report to the investors not just the court.

A few people have been paying legal fees for the many,it has not only been to protect themselves but also to help you. There are no shortcuts. we know a legal team has been working on this for months and are ready to give their opinion. Lets just stay the course and see what is planned for the upcoming meeting. We can always go for a court receiver but there might something better available.

At this point Karen has lost all good will and no P.R. firm can get her out of the mess she has brought on her self and the damage she has done to so many familys. I think she just made things worse for herself by spending our money to protect her A– instead of protecting our money.

Keep the faith that behind the scenes many people are working to help us.

There are options that have not been presented to us yet and I for one think we will be suprised with a effective plan.

By: Anonymous on 5/17/08

Hello Everyone,

Thank you for sharing your thoughts. I think we are all in the same boat and would like to have a resolution.

I for one have not had the same cooperation from Karen.

The difference, for myself and many other investors, is that we started asking questions long before the D.O.C. stepped in and required a release of information.

Your concerns about the attorneys seem to be one I am asked often. I have paid for my own legal advice and a small group of investors have retained the larger firm for a legal opinion.

This has taken months of work for all involved and has been done for the benefit of the entire group of fund investors.

In my humble opinion the evidence will speak for its self.

We are all somewhat knowledgeable investors and if we thought for one minute the EFI situation was caused by market conditions we would understand and support EFI in any way possible.

I don't know how long or hard your have looked into the behavior of our fund management but many of us have been investigating for a year of two. Many investors have told me that their issues started as early as 2003.

I am asking you to keep an open mind and not believe everything you are told. The truth will be exposed.

We are all aware that the D.O.C- F.B.I – D.R.E -I.R.S – A.G. and D.A all have open investigations into the business dealing of Guth and associates. With the D.O.C. taking the first action.

For me that is too much smoke not to look for fire.

The upcoming meeting has been called in your interest and we hope you will have a clear picture of what has happened and what is the best course of action.

Your opinion and experiences are as valuable as mine so I hope we will have a chance to discuss our different views on this matter.

I am available to speak to you or any other investor so please feel free to contact me anytime.

Thank you for getting involved.


By: Anonymous on 5/17/08

I doubt Karen's actions were based on collecting managment fees although that is certainly a nice perc. as much as trying to keep all the balls in the air. Her primary concern was probably to keep those interest payments going out since she knew once that stopped the jig was up. You can only blame the builders for so long. An independent audit is the only thing that will reveal the truth. In fact if the investors get control of the fund the audit is the first thing they should do. No ifs ands of buts.

By: Anonymous on 5/17/08

And keep in mind, what you see on your online account statements have been made to look as pretty as possible. If you below bloggers say you see loans that matured a long time ago, yet Karen didn't foreclose a long time ago, then that's trouble. Don't forget, Karen gets to collect her 'assets under management' and 'loan servicing' fees based on the BOOK VALUE (original value) not current value so there was no reason to foreclose on any property right away. This way the fees she collects monthly are even higher!! She's so darn smart, isn't she? I'd trust her with my money any day of the week! Ha!

By: Anonymous on 5/17/08

K in Paso says

It is very simple. A classic PONZI scheme. All loans were paying interest until no money was coming in from sales or new investor’s money. Loans that matured years ago but not completed for lack of funds. Projects couldn’t be sold on time when the market was still rising because builders were not getting their “contracted and paid for” funds.

Anyone still believing in Karen’s ability to “navigate the ship” in the height of the storm when she couldn’t do it in ideal circumstances must be delusional. Investors can face additional liability over and above their investments when Karen’s schemes come to light. Now that most investors are aware of the problem and still going along with Karen will be considered “co-conspirators” in the eye of the law. The best way to avoid such a potential is to go along with Ron Cooper’s suggestion to have a FEDERAL COURT appointed INDEPENDENT RECEIVER. The depth of the problem is deeper than what you see on the surface.

By: Anonymous on 5/17/08

Well the FAQ pages are working now… not much new there.

The account info site for the Mortgage Fund shows the entire fund, not my personal balance… but it could be a treasure trove for understanding how the fund got into so much trouble.

I am not a CPA, but it doen't take Allan Greenspan to know that RED INK is BAD.

Why did so many loans stop paying at one time? Why are so many loans passed maturity?

How does a fund survive on loans that are secured by projects that are not getting completed and paid off on time? This does cause me to wonder how well the projects and the loans were managed?


By: Anonymous on 5/16/08

Does anyon know about a meeting in Atascadero that a builder is holding tomorrow – what it is about and where it is.

By: Anonymous on 5/16/08

Is there anyone out there who has an update on the arbitration hearing that was supposed to take place this week regarding the Mountain View subdivision? Has is occurred yet? If not, when? No answers are forthcoming from Estate Financial in spite of repeated inquiries from investors. Is there anyone in these investments that they will still speak to?

By: Anonymous on 5/16/08

I never wanted receiver, no matter the cost. But now I do.

Karen will be coming to the Investor meeting with a hand picked group to help her manage the fund.

The meeting will be free, except for those who paid Mr. Fredrickson, but the end result will continue to cost us.

I'm not going to vote for that.

By: Anonymous on 5/16/08


All of you, who still have faith in Karen Guth and Joshua Yaguda to resolve the current crises, must wake up to a certain reality.

Reading Karen’s divorce documents, it clearly indicates a pattern of deceit and greed. Shortly after Charlie “walked out” of her life, she made sure to convince the court that the business was hers success. Within one year, according to sworn statement by Karen, the portfolio grew from $95,000,000 to $135,000,000. She knowingly made loans to builders that the funds were not available by the time request for funds came in. Clearly, it didn’t happen as planned; however, she was able to book profits personally by collecting 2% upfront plus 2% management fees. Projects remained unfinished even when buyers were ready willing and able to perform.

In the documents, the court ordered to pay accounting and legal fees payable by EFI personal issues. Today, she hired a PR firm to make her and Josh look better and derail any attempt by investors to get pertinent information while assists are being wasted.

Properties remain unfinished deteriating with additional cost of maintenance (just kidding, no maintenance being done) property taxes, insurance (if any)

Association fees etc.

Repeated requests by some borrowers and investors to work out properties falls on deaf ears as Karen Guth has the audacity to claim that the fund only lost 20% of its value. Borrowers asserting their legal rights to “QUIET TITLE” placing investor’s security at additional risk l. Remember, when a loan is contracted, but funds not available the note becomes “NULL AND VOID”.

For so many years, Karen was not forthcoming to investors and after repeated requests denied the existence of lawsuits, why would any one still believe she is the right person to manage the company to an equitable conclusion.

The best solution for investors is an independent RECEIVER with absolutely no connection to Karen Guth, so all books assets can be compiled and MONEY (if any) can be traced. The cost of an INDEPENDENT RECEIVER is far less than the current situation.

I refrain myself from personal attacks toward Karen and Josh, however they have not acted in good faith to either investors or borrowers. My personal impression is, in case an INDEPENDENT RECEIVER is appointed by the court, he will be able to uncover all the discrepancies. Likely many have been removed or destroyed, there are plenty footprints to reassemble a good criminal case. Some may believe Karen will file for BC should think twice. In a BC filing, she must disclose everything and most investors and borrowers can and would attend at the trustee hearing filling in many blanks she would “conveniently” leave out. Also, BC is filed in Federal Court and the FBI would likely review it.

What I can assume at this time is that this operation is and was a PONZI scheme and that exposes many investors toward more liability. So, lets everyone get together and resolve this before the real stuff hits the fan


By: Anonymous on 5/16/08

Does anyone have an answer to the most important question of all?

Estate made a documented loan to me.

Only 38% of the loan funds were disbursed towards the improvement of the property. Your purported collateral. But the loan, per Estate, is fully funded.

1. What happened to the other 62% of the committed loan? Karen will tell you it went towards interest. Wrong. Interest reserve was included in the loan. Want to know what happened – Estate never had the money they committed to loan to me. It really is that simple. And I will convince a judge of that and all of Estate's investors in my property will become unsecured creditors. Called a Quite Title Action.

2. Every borrower was required to give a personal guarantee. Has Estate made any attempt to collect on any of the personal guarantees – NO!!!!!!!

How is the PR firm going to help with this problem.

Please do not get a receiver because it will really mess up my plans to dislodge you from your secured position. Sorry to be such an a_s. But business is business.

By: Anonymous on 5/16/08

Congrats. Estate investors. You have a long way to go but you do seem to have thier attention. Press forward on all avenues untill you are sure a solution is at hand. Have the meeting with the attorney and continue to explore oversite commitee with Estate. An audit by an experieced CPA seems necessary in all cases. Good luck. Karen may come around she has a lot of issues to work through in order to let down her guard. Don't let vengeance get in the way of a rational choice.

By: Anonymous on 5/16/08

Well said Mike. Why are investors set up with their own on-line service? What are people finding on their statements inside this data base? I'm suspecting it's similar to the statements investor's already receive. Big whoop! If the FTD investors are seeing info regarding the status of their property current condition be prepared that what you may see is not kept current or not accurate. There may be liens on the property you don't even know about. Or defaults/foreclosures. If all you are seeing is your personal financial statements, then this is a waste of EFI's (your) money.

By: Anonymous on 5/16/08

If all of Karen's books are open for review, next Monday hire an accountant to evaluate them. HAS ANYONE SEEN A BALANCE SHEET OF EFI? If so, please write in and share that info. I'll bet you find a note from another company. Once that note is looked into, chances are you'll find it's uncollectable. Just like the divorce documents stated about Republic Properties debt to EFI – THAT NOTE IS UNCOLLECTABLE says Charlie (x-husband). If that's the case EFI knew for a long time they were broke and lied to all potential and existing investors about the status of EFI. That, again shows fraud!


By: Anonymous on 5/16/08

EFI (Karen and Josh) didn't just screw up. Greed paved the path. Karen made loans to collect loan fees for herself. Not for the investors, but for HERSELF! She made more loans than she had money set aside. How can this be you ask? No she doesn't have a printing press. She was hoping the money would come in from future investors while promising the borrowers by secured contract that they will receive this money. Every loan she made, the more money Karen received. Many times the fees were built into the entire loan. Example: the borrower needs a loan for 10 million. Karens fees are 4%. She builds that into the loan so now the loan is 10,400,000.00 The Karen gets a 400K check back from the borrower. But she loans it all from the investors money. Thats a sweet way to get 400k from the investors. Now she starts allocating the money out in phases to the builder. But, low and behold, at some point she runs out of money because she never set aside the 10,000,000 for the borrower. She was hoping that money would come in the future from new investors. The market starts it's decline. Not enough investors come to EFI so now she can't fulfill these loans. I understand this is against the law. She's suppose to have all that money seperated out for the builders. She didn't. And you wonder why they are suing her? There was no care or concern for the investor's money. Karen was out to make money for themselves off of you, the investor! Very sickening! Very! And this is only a small portion of the garbage going on in that company!

By: Anonymous on 5/16/08

That letter from EFI was the biggest joke! No PR firm is going to be able to save Karen and Joshua. If she didn't already have so much fraud alleged against her she wouldn't need a PR firm! Oh brother! She's spending your money faster than you can imagine on non-property related issues. Do you feel stuck? I'm sure you do.

Agan, the comittee of investors who are suppose to be allowed access to more details of each project is just a blessing to Karen. She's already saying that she's working on getting this advisory comittee together …..but when? Another delay. All that information should be readily available for the investors now, last week, last month, and last year! They're working on it? Give me a break! That information should have ALWAYS been on the table.

Here's a prediction – Lance, Joe, whoever goes into EFI and asks for info. Either their questions are too easy and Karen skates away like a queen in the ice capades. Or their questions are organized, detailed, demanding and Karen either tells them she's doesn't know the answer and will delay again. Or as many of you know Karen can loose her temper and demand the meeting is over.

Please stop giving Karen and Joshua the benefit of the doubt. They screwed up and didn't care for the investors money. Why let her keep managing it is beyond belief to me!

By: Anonymous on 5/16/08

What is the PR firm costing? Why didn't you answer all 6 questions? Regarding Question 3, you shuld be more specific. What does Karen mean when she says she' putting together an advisory committee for the mortgage fund (see comment by Truman below)?I think it would be much wiser to hire an accountant who would be able to assure us investors that all is well. This would do more for Estate Financial than a PR firm. That's what investors want to know and aren't being told. If you hire an accountant, they you and Karen should be able to get on with all the other work that you need to do like getting the builders to complete buildings. Just a suggestion.

By: Anonymous on 5/16/08

To Mike Knecht

My feelings exactly. What a waste of postage. And hiring a PR firm, what nonsense. They are crying poor and spending our money on making Karen look pretty? How about using the money to do what Josh was supposed to be doing? Like overseeing building projects? Like being sure that our unbuilt houses have at least fences around them to keep out graffitti artists? Like removing the "squatter" who is living in the finished house in Olivenhain/Encinitas? Like letting us know the status of the building projects? If they are finished, are they for sale? For how much? Any offers? Like when are they going to foreclose on the rest of the nonperforming loans – even Mommie's? But, no. Instead of hiring someone useful, they hire a PR firm? I'm beyond words. The first advice the PR firm gave them was for Karen to keep her mouth shut and stay out of the picture – kind of like what John Kerry's PR people said to him about his wife.


By: Anonymous on 5/16/08

Can the "respected PR firm" answer this "skewed perspective" from the Department of Corporations, California’s Investment and Financing Authority website?….

By: Anonymous on 5/16/08

Their very freedom depends on delay delay delay.

The return off your money depends on the opposite.

By: Anonymous on 5/16/08

Regarding the 5-13-08 Letter from Estate Financial

Joshua states, we have six questions, we will answer three? Why not answer six?

I would rather hear the answers to the remaining questions. Where has my money gone, what is EF’s rationalization for the Dept of Corp intervention and when will things improve, i.e. liquidation of properties so what ever money is left can be returned to investors?

This seems like a rather desperate maneuver to stave off attacks prior to the Frederickson meeting. I have some experience with internet sites and even if the effort was legitimate, rather than a dodge, the technical complications will prevent any meaningful information being conveyed to investors. I went on the site, typed in the required information and was given the information regarding someone else’s investment information. If you are Robert Wilson, give me a call and we can talk. There isn’t any APN’s listed, just Estate Financial loan numbers. Once again, we have to take it on faith. I have an idea where we are going to take it and it has nothing to do with faith.

The answer to the first question is the same baloney that Joshua has given all along. We don’t have time to answer everybody’s questions so we are talking to small groups and individuals. How do the investors know that? Is there a list that is posted of all the people who have met with Joshua? It sounds like investors will just have to take Joshua’s word for it, sort of like taking his word that investor money has been placed in property in the mortgage fund. He can’t give APN’s, he just needs your trust.

The second question refers to hiring a PR firm to get out Joshua’s defense of what has happened. Wouldn’t be cheaper to release the books to a forensic accountant and let him put out an explanation of what the real situation is to investors. Karen Guth seems capable of putting out all the PR people can stand with out any help.

The third question simply says Josh is working on it. I don’t see how that is an answer as much as it is a continuation of his and his mothers plea to be left alone and they will tell us what progress they make, if and when they make it. Joshua says he is negotiating day and night but why waste time on negotiating with individual borrowers when the biggest borrower of Estate Financial investor money seems to be Karen Guth, who used to do business as Republic Properties but has switched the name to First Press Partners LLC.

The closing paragraph doesn’t even make sense. Estate Financial has the utmost faith in Estate Financials ability to withstand this crisis. Say what?? Joshua’s trumpeting about his continued existence in the face of so many other financial institutions closed doors might be construed as a testament to Karen and Joshua’s desperate refusal to open the books for investors to see. The most interesting thing about the letter is while it does have typos but it doesn’t have Karen Guth’s signature, which is a first.