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.)

By DANIEL BLACKBURN

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 UncoveredSLO.com 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


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Stefan

By: Anonymous on 6/5/08

Insider,


I don’t have figures from the auditor to determine precise percentage the fund loaned to Karen’s Affiliates. The issues are however much more significant than just simple numbers. DOC revocation order is a civil action at this stage and for all practical purposes makes no change in their operation. Who in their right mind would invest with Karen at this time? Although she claimed to have stopped loaning since last year, the list of loans indicates different with one made in January 2008.


On April 16, prior to the Atascadero meeting (she hijacked so cleverly) several investors met with in the office she bluntly stated; “there are no legal action against EFI”. It was a brazen lie and she should have known it better. By than number of Complaints were filed against EFI including by Ron Cooper, between EFI and a City amongst many.


In her latest Newsletter dated June 2, 2008 she clearly misstates facts despite information available through simple searches through the internet. If she makes statements disregarding facts available through public sites, what other things is she hiding or covering up something?


I am appalled by the latest meeting originally proposed by Fredrickson’s office, having postponed for so long on lame excuses. She makes it sound like she is in charge and doing it on her own accord for the benefit of the investors.


Unfortunately, I expect nothing less from her knowing how deceptive she has been for so long. Her conniving originally aimed at Charlie (x-husband) and evolved against anyone questioning any aspect of the (miss) management of the Company. She has no regard for the investors at all.


Continually claiming that the current real-estate market and credit crisis is to blame her predicament is another big misrepresentation of reality. She must be either so out of it (being under constant pressure) clueless of reality or just a plain crook.

I don’t which one, events will reveal the truth.


If loans were made according to the criteria published and funded properly,

losses would be minor or insignificant. Many of the loans on the list provided were made in 2002 while we are in 2008 as of this writing. Something is amiss there.


Loans made to her own affiliates are in even bigger than to (real) borrowers i.e. Three Bell Vinery, Templeton Mix Use and others.


Loans proceeds were used to pay interest on previous unfunded loans to make investors happy and it worked until the music stopped. That is clearly a “PONZI SCHEME” and we know that to be a Federal Violation witch is a Fraud in the Law books.


Now to the fun part; She may claim to have a certain value in the Fund, but according to the list provided the numbers are way off. Much of the money has been used up or booked as interest payments to keep investors at bay.


When some of the lawsuits succeed and they will for clear ‘BREACH OF CONTRAT” with number of claims against EFI and others, likely Fraud could be proven either in civil or worst, criminal proceedings. Not only EFI, Karen and Josh could be liable for damages, but investors as well. She clearly points it out in her “UPDATE” dated June 2, 2008.


One more serious consideration for all investors; For sometime no one can claim ignorance of the allegations. Anyone not opposing her being in charge of the FUND can be guilty of conspiracy. I have serious questions about the role of the PR firm at investors’ expense. Karen’s claim of trying to work with builders is clearly a misstatement. Ron Cooper tried for sometime and look what it got him. She failed to show for the deposition and under court order to comply now. Should she fail or refuse to show up along with Josh, a bench warrant can be issued.


In my humble opinion, she has too much to hide and is the least qualified person to carry on managing the FUND or even going to EFI’s office. Josh being her son and partner is just as unqualified.


Stefan

By: Anonymous on 6/5/08

Is Karen a pathological lier? At this point, it's reasonable to doubt anything she writes, says, etc. If you believe her still can I invest money for you? I promise to give you 25% a year and give you a pretty financial statement every month.


Can't wait for the meeting. Wonder how else she'll stick her foot in her mouth. Thanks for the info from 'WHY NOT?' Most people didn't know the DOC was still working on the case.

By: Anonymous on 6/5/08

I stand corrected. Karen stated (Some of you have asked about loans we've made to affiliates. First Press Partners and all other entities under which the principals of EFI have borrowed represent only 6.6% of the total loan portfolio, well under the 15% maximum allowed under the offering.)


However the post financials reviewed by the auditor states that in 2006 Estate its partners and afiliates represented 17% of total loans and in 2005 22% not the 6.6% she claims. Remember 15% is the absolute limit by law and one of the reasons her license to sell was revoked.


Stefan

By: Anonymous on 6/5/08

insider


20% of what? They never had that kind of money even if the fees and interest spread is added in. Each time a loan was refinanced, they assigned portion of the loan to the Fund with apprasal determined by Josh. Now, on paper they own so much of the Fund. When andif liability arise from lawsuits as they forwarned investors, will they step up to the plate to the 20% liability?

Another question to ask at the meeting.

By: Anonymous on 6/5/08

In the financial statements on thier web page it states they own like 20% of fund. Sounds like they have aquired a lot of equity in projects without being responsible for the same amount of the loans associated. Did they put a lot of thier own cash in. I doubt it. Interesting.

By: Anonymous on 6/5/08

So does she believe she is only lying 8.4% ? Thanks "WHY NOT" for bringing that point to front.

By: Anonymous on 6/5/08

According to Karen Guth, There are only Seven lawsuit against EFI (See latest newsletter from the PR firm) She also puts everyone on notice for the potential liability from these lawsuits (digest that). Estate Financial Investor Update to the investors was dated June 2, 2008. She already knew about the revocation order and its contents.


(Estate Financial, Inc. is currently named either directly or indirectly in 7 lawsuits, though this number will change. One suit is from an investor, two are from borrowers, and the remaining four are from sub-contractors. Some of these we will be forced to litigate while others will be dismissed. While we have not intentionally failed to respond to any of these, a few defaults were filed during a change in representation. Motions to have these set aside are being prepared and we continue to do all we can to keep this number down.)


(Here is what our offering circular says about investor liability on these lawsuits. EFI will act in good faith and use reasonable judgment in selecting borrowers, making and servicing the loans. However, investors are exposed to the risk of litigation by a borrower for any allegations (warranted or otherwise) regarding the terms, actions, or representations of EFI in making, managing, or foreclosing on the loans. Investors may be named as defendants in any such litigation and could incur legal fees and costs in order to respond to allegations or to defend any resulting litigation.)


Read further, you will be comforted to know Karen’s version of truth regarding loans made to her or through their own affiliates (more to digest).


(Some of you have asked about loans we've made to affiliates. First Press Partners and all other entities under which the principals of EFI have borrowed represent only 6.6% of the total loan portfolio, well under the 15% maximum allowed under the offering.)


ORDER REVOKING THE EFFECTIVENESS OF PERMIT

On May 21, 2007,

Failing to disclose that loans to affiliated companies exceeded 15% of the Fund’s total assets in direct contradiction of the representations made in the Offering Circular.

Failing to disclose that as of December 31, 2006, more than 5% of the Fund’s loans were to affiliated companies of the Fund Manager: Republic Properties, Inc., First Press Partners, LLC, and Second Press Partners, LLC in direct contradiction of the representations made in the Offering Circular.

NOW GOOD CAUSE APPEARING THEREFORE, IT IS HEREBY ORDERED that the Permit issued by the Commissioner to Estate Financial Mortgage Fund, LLC. on May 21, 2007 is hereby revoked. This order is effective as of the date hereof.

Dated: May 28, 2008 PRESTON DuFAUCHARD

Sacramento, California California Corporations Commissioner


Stefan

By: Anonymous on 6/5/08

The DOC has shut them down. The dominoes are starting to fall.

By: Anonymous on 6/5/08

Based upon the foregoing, the Commissioner finds it is in the public interest to revoke the permit issued to Respondent and that Respondent’s proposed plan of business and proposed issuance of securities is no longer fair, just and equitable because the Respondent’s Offering Circular contains material misrepresentations about the investment and the Respondent is not conducting business as disclosed in the Offering Circular.


NOW GOOD CAUSE APPEARING THEREFORE, IT IS HEREBY ORDERED that the Permit issued by the Commissioner to Estate Financial Mortgage Fund, LLC. on May 21, 2007 is hereby revoked. This order is effective as of the date hereof.


Dated: May 28, 2008

Sacramento, California


PRESTON DuFAUCHARD

California Corporations Commissioner


http://www.corp.ca.gov/ENF/pdf/e/EstateFinMort_or


http://www.corp.ca.gov/ENF/pdf/e/EstateFin_order_


Stefan

By: Anonymous on 6/5/08

My focus is on the DOC, DRE, and the DA's offices. I have active complaints with the first two and am planning on dogging the DA on a regular basis.


I don't believe anything short of a court appointed receiver is going to get our money back… if there is any chance of happening at all.


My dad was a cop and an investigator for the state his whole life and I just am predisposed to go that route. We need the DOC and the DRE to finish their work before the DA gets involved, and without their findings of any wrong doing we are all going to have a hard time in the courts getting past go.


Also, my resources are not sufficient enough to be pissed away on law suites… I'll spend more on legal fees than what I will be able to recover, and if I don't prevail I'll be paying her lawyer too.

By: Anonymous on 6/4/08

Congratulation to Karen again!!!!! She managed to take control of the situation on her own terms. But why not? Investors deserve every punch because they are taking it. When you go to the meeting, just make sure drop a few bucks, othervise you will get a bill anyway. Fredrickson?? He is getting paid by some of the investors so what does he care? I am not sure if any one is getting the full picture? Good luck to all. The money is gone and additional liability will befall on all investors. Karen still gets her portion.

By: Anonymous on 6/4/08

Can I not get through to anyone that understands? A regular lawyer can't answer these questions nor can they perform efficiently. A lawyer who specializes in this can. Hurry!

By: Anonymous on 6/4/08

to K and get real


Just because the attorney is making them call the meeting does not mean you can't take over and throw them out at that meeting. I think thats the whole point. Is the attorney thats been setting this whole deal up going to be there. The attorney is forcing them to call the meeting by the bylaws. Hang in there and throw the bums out when you get to the meeting.

By: Anonymous on 6/4/08

Seriously, too many investors are split as to what to do about EFI and Karen. This split is ruining your chances of getting significant money back. If you are feeling you are wasting your time here (as with K in Paso) and you are walking away, then Karen won. Ask yourselves WHY ON EARTH DO THE INVESTORS HAVE TO FOLLOW THE OFFERING CIRCULAR when Karen doesn't? Has she shown EFI's full books to any investors? No. According to her circular she HAS TO! And to add insult to injury she's breaking the law on top of it. If the SLO firm is allowing Karen to announce the time and place of the meeting then move on. This case should be in the hands of lawyers who have ALREADY filed against Karen/EFI and ALREADY are acting to remove her with a receiver. If the SLO firm hasn't marched forward with this, then investors are screwed! You don't have to follow the circular, call a receiver, it's the last breath any investor has!!!


Stefan

By: Anonymous on 6/4/08

I'm done here, I guess I'll just have to wait for the money fairy to make things all better with EFI or I'll join the class action suit if one should materialize. For now I am just going to lick my wounds and move on. I need the sleep.

By: Anonymous on 6/4/08

Results of membership vote to call a meeting have been given to EFI's lawyers to give to Karen. EFI is to notify membership of time and place of meeting. According to our contract, the place is to be at EFI offices unless otherwise specified.

By: Anonymous on 6/3/08

Anonymous says:


JUST AN UPDATE;


So, Karen failed to act in a fiduciary way, now investors are officiay put on notice:

Get ready to bend over a little more, while we promise to act on your behalf. what a pathetic joke.

By: Anonymous on 6/3/08

Josh get the car warmed up now!

By: Anonymous on 6/3/08

JUST AN UPDATE;


Don't worry, you have the best management team in place


Estate Financial, Inc. is currently named either directly or indirectly in 7 lawsuits, though this number will change. One suit is from an investor, two are from borrowers, and the remaining four are from sub-contractors. Some of these we will be forced to litigate while others will be dismissed. While we have not intentionally failed to respond to any of these, a few defaults were filed during a change in representation. Motions to have these set aside are being prepared and we continue to do all we can to keep this number down.


Here is what our offering circular says about investor liability on these lawsuits. EFI will act in good faith and use reasonable judgment in selecting borrowers, making and servicing the loans. However, investors are exposed to the risk of litigation by a borrower for any allegations (warranted or otherwise) regarding the terms, actions, or representations of EFI in making, managing, or foreclosing on the loans. Investors may be named as defendants in any such litigation and could incur legal fees and costs in order to respond to allegations or to defend any resulting litigation.

By: Anonymous on 6/3/08

Rumor or Truth


Nothing new in here. Why do you think she hired the PR firm? She'll hijack the meeting again, so why don't you just suck it up!

BTW, I am curious about the number of lawsuit she can't remember.

By: Anonymous on 6/3/08

Is there going to be a meeting? Does anyone know for sure?

By: Anonymous on 6/3/08

I hear that the proposed June 17th meeting notice is going to come from Karen Guth (Estate) not Roger Fredriickson AND that Guth/Yaguda will be managing the meeting.


Now that can't be true – can it?


Stefan

By: Anonymous on 6/3/08

I'm not allowed to give my name


Go by the site, the trees are dying, but who cares?

By: Anonymous on 6/3/08

I have been speaking to many investors for months trying to assure them that there are people working as hard as they can to help save their investments.

This morning at 8:15 I received a call from a 91 year old investor who said that the $500,000.00 he has in the fund was his retirement and he needed the money.

He had been up at the crack of dawn and drove to the project in Golita so he could report on its condition. He just wanted to try to help and do something. I recorded all the details he gave me and tried to reassure him that the information would was very helpful and that he had done a great job.

I cried when I got off the phone because I cant help him or any of the desperate seniors I have heard from.

If anyone has information,

It is your responsibility to take it to the attornys. This could be you or your parent reaching out.

Karen you should be so ashamed of yourself and as a mother to have ruined your son's future in the name of greed. Dont look in the mirror only a devil will look back.

If you can help e-mail effundinvestors@yahoo.com

By: Anonymous on 6/3/08

Doesn anyone know why Karen has just posted auditors statement for the mutual fund from 20002 through 2006 on the website? Where's 2007? Has anyon evey seen one for the EFI trust deeds? I don't know is i'd believe one anyway. The prospectis says thata individual loan tranactions are not monitored or controled on a current basis by EFI auditors, its attorneys, or any other third party or governmental agency and that we must rely solely on the integrity and skill of EFI. I feel sick.

By: Anonymous on 6/3/08

Sure feels good to get another missive from Karen. That girl is one smooth communicator. And it has NOTHING to do with that expensive PR firm that we're all paying for no matter what some of those local trouble makers might say. Money well spent, I say. Now Karen has a bit of time to herself so she can start communicating. She’s always wanted to – just been so dang busy managing and whatnot. Who needs more help in the office answering e-mails and letters and phone calls and giving out information (What do we need that for anyway? Karen’s got it covered.) and providing some accounting and finding out what the heck is going on with our projects? Why, Karen and Josh have that covered, always have. Glad that Karen informed us that there are 7 lawsuits pending (so far), but who’s counting and we are liable for whatever missteps she may have inadvertently made – gives us plenty of time to lawyer-up and be prepared to defend ourselves – although I’m sure those lawsuits are are all frivolous – just a bunch of unhappy souls with nothing better to do. Thanks, Karen – can’t say you’re not thoughtful, always thinking of us investors. Yesseree – that Karen and Josh, they sure know how to manage alright. Hope they don’t manage us all the way to the Poor House on their way to the BIG HOUSE! Ha! Ha! Just a little humor there. Let's just wish them the best, and remember, we don't want no interloping manager thrown down our throats. Karen and Josh are the only people in California, no, in the whole United States of America, that are brilliant enough to manage an investor portfolio (some say they’re the only ones in the WHOLE WIDE WORLD!) Let's stick with Karen and Josh. They're the greatest. The last thing we need is for some smart-guy attorney telling us that it's in our best interests to replace Karen with a new manager. I mean, really, NOBODY is smarter than the team we have in there right now. They've got to be good, otherwise all those friends wouldn't be lining up to get hired to finish projects, file legal forms, list and sell houses, foreclose on properties and make recommendations about what should be done with unfinished projects. Smart people who do good work always surround themselves with like-minded people. So all I have to say is “You GO GIRL!”

Oh, yeah, you too, Josh.


Stefan

By: Anonymous on 6/3/08

Truman says:


If honesty was Karen and Josh's strong attribute, none of these issues would be relevant. So get over it and face reality!!!

By: Anonymous on 6/3/08

Quick gather the cash and pack the bags.

By: Anonymous on 6/3/08

Just yesterday I received a letter from Karen and Joshua explaining the lawsuits that EFI and the fund are involved with. I am beginning to understand Karen and Joshua better, now that they are communicating with us.


Even with the investors on their back, the DRE and FBI looking into their actions and the DOC accusation against them they CONTINUE TO LIE.


Or, maybe they are just without any management capabilities whatsoever., and truly don't know about all of the lawsuits filed against them.


First and foremost are these the same lawsuits that Karen denied even existed a few months back. Of course they are.


Ask Karen about the Pippin lawsuit and th City and Sanger v. Estate Financial – two she forgot to tell us about in her letter. And there are others.


Karen, with a cheap laptop and very few skills any one of us can search the entire State court system and find out every case you are involved with. How stupid do you think we are?


By the way, setting aside default judgments is no easy matter. There has to be a good reason, not just that you changed attorneys.

By: Anonymous on 6/3/08

The Winery building: If you look behind the large Oak tree, in the center of the property, you can see the metal building (appx 10,000 square feet).

By: Anonymous on 6/3/08

There's not even a building there I heard. Is that true?

By: Anonymous on 6/3/08

The winery is NOT completed. Per original plans, it is about half done.


Stefan

By: Anonymous on 6/3/08

Three Bells Winery. Is it completed to the tune of over 6 Mil? Are any of her projects worth the amount lent on them? Interesting that she was able to afford a new pool for her compound this summer.

By: Anonymous on 6/3/08

I read in the paper that the District Attorney has filed charges against Dan De Vaul for providing shelter for the homeless. Karen Guth is responsible for some people becoming homeless but no charges are filed. Go figure.

By: Anonymous on 6/3/08

And yet another reason a court appointed reciever or management team should be placed immediately!

By: Anonymous on 6/2/08

WHERE ISTHE MONEY GOING?


Three Bells LLC (the Winery) * Loan # B193-06 * June 2, 2006, Construction Deed of Trust recorded doc # 2006 039325 for ………………………………………….….…….$3,665,720.


By May 25, 2007, $5,884,437.10 had been SPENT through Construction Loan B193-06, Karen Guth giving the ‘ok’ to pay on most (maybe all) disbursements. By Dec 12, 2007, there had been 61 1st Trust Deed Interests recorded, for a total of 78.562% of the construction fund ($3,665,720) or ……………………………………………………………..………..$2,879,852

As of Dec 12, 2007, Estate Financial, the FUND, and other unidentified sources contributed …………………………………………………………………..…….…$3,320,077

TOTAL $6,199,929


You may wonder why the additional $2,534,209 over the original construction loan of $3,665,720? June 18, 2007, Lawsuit filed CV 070535…..Three Bells, LLC (Third Press Partners LLC, Karen Guth/Josh Yaguda and Signature Homes, LLC, Al Damico) v Al Damico FOR FRAUD, $1,200,000 or more, is mentioned is the suit.


On Dec 13, 2007 a Notice of Default was recorded on doc#2007 0749885 with the default amount totaling ……………………………………………..………………$6,199,929


Not funding a project is different than over funding a project. Remember, Karen Guth reviewed the funding requests before paying them. Oddly enough, there were three mechanics liens filed for non payment of construction work. Although required county inspections were performed, there is no evidence of jobsite lender inspections.


Signature Homes LLC, Al Damico, is the borrower on a secured note recorded on doc#2007 038750. Estate Financial Inc is the lender. The amount is $190,635 and the note is secured by APN 040-111-024, THREE BELLS. Item 11 on the Title Report dated June 21, 2007…trustor had no apparent record interest in land…Trustor: Signature Homes, LLC . WHOSE PROJECT LENT SIGNATURE HOMES THE MONEY? Why didn’t Estate Financial Inc secure this note to the project that lent the money? And, how can a project lend money?


FYI: First Trust Deed Investors in Three Bells, LLC


Based on the Default amount, you have 46% interest. Karen (Estate Financial) has 54%.


Karen Guth has Power of Attorney over your project, and used it. She (Josh) signed the Deed of Trust to Heritage Oaks Bank. Recorded Doc# 2008 018650, April 14, 2008.


The cavalier manner in which Karen Guth uses her power with other people moneys to benefit herself and her associates, is inexcusable.