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EFI forced into Chapter 11

June 25, 2008

By KAREN VELIE and DANIEL BLACKBURN

Creditors forced hard money lender Estate Financial Inc. (EFI) into Chapter 11 bankruptcy proceedings Wednesday in Santa Barbara’s Central District of California United States Bankruptcy Court.

Five petitioners listed more than $6.9 million in debt owed by EFI as the catalyst for their action. The petitioning group includes builders who claim EFI failed to follow through on agreements to fund projects. They further contend the lender did not defend against a lawsuit as agreed.

Some investors allege EFI failed to return their investment after the sale of secured property, and failed to record their names on deeds of trust.

“The purpose of their [the petitioner’s] action was to protect fractionalized interest holders and builders,” said Ron Cooper, a Los Angeles developer who was instrumental in starting the action.

The court’s ruling means that, as of Thursday, all EFI financial transactions will fall under review by the U.S. Bankruptcy Court. The action also requires EFI owners Karen Guth and Joshua Yaguda to provide to the court monthly reports incorporating all purchases, expenditures, and company actions.

“She is under one hell of a scrutiny right now,” Cooper said. “I feel great about this.”

The court plans to serve Guth, EFI’s president, with papers on Thursday.

Asked if she was aware of the Chapter 11 bankruptcy proceedings, Guth said, “Who did it?” She then refused further comment.

Guth will have 20 days to respond, by either filing a motion disputing creditor claims, or by demonstrating to the court that all EFI’s debts are current.

“There are 1,339 defaulted loans listed on her Web site,” Cooper added. “How could Guth, with a straight face, make a plea to a bankruptcy judge that she is paying her debts current?”

In approximately a week, the group plans to ask the judge to appoint a trustee to manage Estate Financial’s investments.

“Karen Guth stated at the Madonna Inn meeting [on June 17] that EFI will take in $4 million in the next few years,” Cooper said. “She plans for $2 million of that to go towards management fees. We don’t want that to happen.”

One of the petitioners, Steve Gardility of Encinitas, a builder who did significant business with Guth, claims losses of more than $6.26 million due to EFI’s negligence or fraud. He wrote in an e-mail to UncoveredSLO.com that he encountered serious problems in getting EFI to make construction loan payments when due. That in turn caused him problems with his subcontractors.

“I received many threats from some subs for non-payment, and worthless vouchers issued by me,” Gardility wrote. “I have used all my funds, personal loans, substantial credit lines, trying to complete my projects. It is still a mystery why EFI didn’t have the funds available when each contract called for the funds to be segregated and paid within two weeks after submittal of vouchers.”

E-mail comments or questions regarding this action to estatebk@ymail.com . A meeting for creditors hosted by the petitioning creditors is slated for July 8 at 6 p.m. at a site to be announced on UncoveredSLO.com.


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By: Anonymous on 6/26/08

Huh? did you expect us to "staay the course" until the $3.5 – $4 Million dollars comes in "within the next two months" so you can grab your "accrued servicing fees"? Well, it aint happening. You are toast, not just you two swindlers – but your staff who lied and misled, your investor cronies that you paid off from the fund after you stopped paying interest to other investors, and your builders who took the money and spent it on God knows what – certainly not the projects that it was intended for. The judge is not going to be able to come up with punishments that will punish you enough. The legacy of shame that you leave to your grandchildren should make you hide your fake red head. make you proud. And as for your "world famous olive oils"? Can't wait to read about them in the New Yorker and Wine magazines. Shame on you Karen Guth. Shame on you Joshua. Shame, shame.

By: Anonymous on 6/26/08

To Karen and Josh,

Wait a minute, I thought YOU were the ones who came up with the idea to have your permit revoked by the Department of Corporations??? Now, why would Mr. Preston DuFauchard, California Corporations Commissioner, be joining with Frederickson's plaintifs? Hmmmmmm???? Pack your bags old girl, and you too sonny boy, your on your way to the BIG HOUSE!!!!

By: Anonymous on 6/26/08

Insider is obviously one of the good ol boys (or girls) in ATown. Probably going to suffer in the landslide of EFI and Hurst. Greed always catches up with you Insider!


Your constant comments about the ATown council cleary indicate that you are suffering from a severe form SGS :)


By: Anonymous on 6/26/08

Check the Tribune website. They have the PDF.

By: Anonymous on 6/26/08

to DeepBlueSLO


Whats this about the DOC being a party to a law suit against EFI. That's knew please tell more. We know thier permit was revoked but this is the first we have heard of a suit by the DOC. If this is true EFI RIP.

By: Anonymous on 6/26/08

I have followed this case and those surrounding Hurst and 21st Century for over a year and I need to give my 2 cents.


Dan & karen have outlined trouble at EFI since 2003. If we assume that new investor money was not going into new projects but to make interest payments to other investors – there are going to have to be reparations made by any investor who received funds from 2003 to 2008.


Talk to your attorneys about this and they will tell you that you will likely have to pay ALL interest payments you received back into a general fund to be divided among the creditors and investor. There is precedent for this in other similar cases and people will want to throw up when they get a court judgement asking for any monies they were paid during the time the fund was operating fraudulently.


Also, having the Dept. of Corporations becoming a co-plaintif in a lawsuit against EFI today bodes very poorly for Karen and Josh. This is going to get much worse.


I sincerely wish you all the best.

By: Anonymous on 6/26/08

I am assuming the Fund is a limited partnership since that is the usually the best structure for a real estate syndicate for tax purposes. I then assume EFI is the general partner since all limited partnerships require a general partner. I then assume that Karen and Josh are the operating managers. I am not sure but if EFI and the managers are proved to have commited fraund or some other criminal act then they could be held liable for the actions of the Fund. I also assume the investors are limited partners and cannot be held liable beyond thier initial investment. The question I have is if the general partner is held liable for thier acts associated with the fund are the entire assets of the fund subject to collection by the judgement holders. I think you can see where I am going with this. Could Cooper have wanted a Chapter 11 so that they could collect thier judgement in full from the funds ends of any and all sales until paid? Chapter 11 would greatlly increase thier odds of collecting the greatest amount. I am not even saying there is anything wrong with this because in the end the investors may do the best in this manner also. Certainly EFI would not like this scenario. A chapter 7 would make it much less likely that they would collect much on thier judgement. Again not an attorney just food for thought.

By: Anonymous on 6/26/08

I am invested in the mortgage fund and trust deeds. I believe the strategy was for Hanno to go in to look at fund books, transfers, assignments, bank statements,etc., document the irregularities, present his findings to the judge, the judge orders a receivership for the Fund AND EFI. Hanno, who was already in place, would be appointed receiver. He would be accountable to the court. His responsibility would be to protect the assets of both the fund and EFI (which are totally interrelated since the fund is invested in almost 100% of trust deed loans) and to get the best return for the investors that he can. Cooper knew this. His motive for throwing a monkey wrench into the mix is suspect. Who knows how it will end up now.


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By: Anonymous on 6/26/08

Filing involuntary BC against EFI was not a decision we took lightly. The choice between Chapter 7 or 11 was considered in earnest. We choose 11 to be able to wind things down in an orderly fashion vs. a fire sale. We considered all the investors interest not only our own.

For years, I have tried to work with Karen and Josh but at the end in my last attempt with Josh to work things out, I was rudely instructed to leave.

I have invested considerable time and money in my projects while being blindsided by EFI. So far my family and I have paid huge price for EFI’s mismanagements and false promises throughout the years.

There are many direct and indirect results coming from this fiasco and finally I had to act to defend and protect my family and myself.

I have a strong empathy for most investors and strongly believe by going this legal route we can make things more equitable for everyone.

Karen and Josh had many opportunities to make things work but failed over and over. I expect personal attacks on this site but if any one does it please put your name to it. Otherwise you are just a non event deserve no answer.

You will have an opportunity in court to voice your opinion in a civilized fashion and I will present my side of the story too.

So far Karen was able to make many people believe in her, but it is becoming clearer that she has no credible story any more.

I believed her for years, but it got me to go broke.

You all have a choice, follow her misrepresentation or start the recovery process.

By: Anonymous on 6/26/08

I agree that Hanno was on to something, but my understanding is; that was for the "fund"— I happen to be a DOT holder. I realize that the fund has it's fingers in the majority of all loans (if not all), so it would have been helpful, but I also had big concern that we would be the last on the list— I don't need to be first, I just would like all the investors to be on the same playing field.

By: Anonymous on 6/26/08

to: finally something is being done

hanno powell was on the right path to receivership-i believe. this scared ron cooper–he had to file this bk because the receiver would have helped all. ron cooper and steve gardality just want to help ron cooper and steve gardality. hanno's inspection would have a positive result. ever wonder why ron and steve didn't do this before fredrickson?

By: Anonymous on 6/26/08

I for one am glad the BK has been filed– at least something is being done and it takes the control out of Karen & Josh's hands— we all know with their hands it, nothing good was happening, at least this gives everyone a chance to have something— I too am in favor of donating all to the DNC:-)


This site has been very imformatived but also a lot of it has been words, it's nice to see action–


I believe all the harsh criticism is coming from the Karen and Josh camp— after seeing Karen at work at the Atas. meeting- it sounds just like her— I have never seen anyone so rude to people– she should have been kissing butt instead of discussing everyone's personal issues— that tells me she is quite ignorant and arrogant– does she think taunting people helps the situation, or brings folks to her side? It just shows who she really is, and unfortunately it isn't pretty!

By: Anonymous on 6/26/08

to: want to know

ask ron's kids why daddy filed this suit before powell finished his inspection. do you think it had to do with a better return on daddies investment? now he will be able to get his kids investment back for free. kids win, investors loose. get it?

By: Anonymous on 6/26/08

Would someone please post the facts so the rest of us can know what's going on between the two filed cases? This is no place for bickering back and forth. If you have information that will enlighten us, post it here and let us know for Pete's sake! Jeez, it's beginning so sound like one of Karen's informative meetings. If someone knows what's going on, post it. What's so secret?

By: Anonymous on 6/26/08

cooper you duped us says:


look at the idiot 'cooper the duper' brought with him–steve gardillibean. this moocher has been living rent free in your investment for two years. bk facts to the courts have to be,just that, facts–not steve gardillies dream sheet.


You must be crwaling in yourcave. Ignorance is blissful, be happy.


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By: Anonymous on 6/26/08

ron.c. & steve.g.

remember the past when it comes to court time,we all know your history. i hope you and steve get just what you two deserve–court costs. i thought karen and josh were dog dirt–you've just redefined the term.

By: Anonymous on 6/26/08

Wonder if 'Anonymous' ever wrote that fullyfunded person? Probably not. Some folks like to swim in their misery and shot gun at anyone in their path without knowing all the facts. Too bad.

By: Anonymous on 6/26/08

To insider: I'm with you. The fighting is pointless. I say, you can't reason with an unreasonable person. Let's move on.

By: Anonymous on 6/26/08

This is all a bunch of who shot John. You can either fight or organize. I guess fight.

By: Anonymous on 6/26/08

Anonymous says:


To The (Wrong)Reason,

The timing is just a little too coincidental, dontcha think? You scrambled to file once you knew that a receiver was imminent. I hope your action is thrown out and you end up paying court and attorney fees. By the way, pretty brave of you to have your kid file instead of signing your sorry name to the document.


I don't your name here. Whats the point?

By: Anonymous on 6/26/08

look at the idiot 'cooper the duper' brought with him–steve gardillibean. this moocher has been living rent free in your investment for two years. bk facts to the courts have to be,just that, facts–not steve gardillies dream sheet.

By: Anonymous on 6/26/08

If you believe Karen and Josh are the only people capable of managing the fund or you believe their spin that a receiver would cost more than those two, than this is a bad thing.

By: Anonymous on 6/26/08

The petition lists five entities. Two of those are Pippin LLC and San Dimas 18 LLC. Ron's daughter is the managing member of the LLC's. So she is the one listed.

By: Anonymous on 6/26/08

I don't get it. How would did the bankrupsy file cause problems for receiver file? Please write if anyone knows.

Thank you.

By: Anonymous on 6/26/08

To Ron Cooper,

Just curious, why did you not sign the document instead of your family member?

By: Anonymous on 6/26/08

TO Anonymous


If you want to slam me – I have no problem, but put your name on it so I can respectfully and intelligently respond to you. If you continue to hide behind anonymous then your comments are no more than a shadow on the fools soul.


And the person who said I was hiding behind my child by having her sign the petition rather than me. Please man, I've listed my home number, my email address, paid for and conducted meetings in front of hundreds of you.


So who are you???

By: Anonymous on 6/26/08

Again…….. are you going to write me 'Anonymous?' I'm leaving for the day so write with phone number and I'll call you. I'm walking out the door in two minutes. Write now and I can answer some of your questions. I don't have time to be your pen pal on this blog. BTW, I don't bite and I'm not as sharp as I'm coming across here. So feel free to write.

By: Anonymous on 6/26/08

To Voting

I'm not voting on anything until it becomes more clear what is going on. At this point I think all votes would be moot.


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By: Anonymous on 6/26/08

Sign over for EFI to borrow more funds. Do they send a STUPID sticker for your forhead with the documents. Who the hell would loan EFI any money anyway? You've got to be kidding. It's time for the rubber room now. Stop everything now. Send in the bean counters and start over before its too late.

By: Anonymous on 6/26/08

Explain to me again, why would Roger Frederickson consult with Ron Cooper? To help him strategize? Pulleez!!

By: Anonymous on 6/26/08

Are you going to write me or just keep complaining. I'm beginning to wonder who you are and what your motives are?

By: Anonymous on 6/26/08

It was pretty obvious what Frederickson's plan when he took it to court on the 16th.

By: Anonymous on 6/26/08

To those who are receiving ballots regarding specific properties:


If you vote to allow EFI to finish projects by borrowing money. . . are you aware that you become the "borrower" with the borrowed money in the hands of EFI?


Talk about making a bad situation worse. . .


Think before you vote?

By: Anonymous on 6/26/08

Lets say your the lender of a Trust deed and the Court needs to liquidate assets of EFI. Lets say for simple numbers EFI lended $1,000,000 to Mr. Builder. The Court would have to sell that asset for over $1,000,000 to consider it an asset which of course can not be done since that property due to the poor managment is worth only $500,000. So whats the court going to do. Give it back to the Trust deed holders of course. The trust deed holders should have already started forclosure proceedings by now and should be in the process of getting thier property back. Of course there will be costs associated with the return of that property. Property taxes unless you think Karen has been paying them as well as the costs of sale. I seriously doubt any liens will fall in front of you. If there are any mechanics liens unless they were on there prior to the loans being funded which could be since there was so much refinancing going on they will wash out since they would have to pay you full value before taking the property. In the end it all comes back to organization. You need to organize the fund or have a reciever run it for you. No one wants to spend any more money but in the end it only cost money to do nothing for so long. Karens on her way out. The BK court will take a few months to move forward and you need to organize. The fund needs organization and the first trust deed holders need to recognize the Fund is thier partner. You can be a part of the liquidation or you can sit back and watch.

By: Anonymous on 6/26/08

Wrong again. If you would like to contact me to learn more, write me at fullyfunded93401@yahoo.com now. It's easier to take this off the blog and talk. Leave your number and I'll call.

By: Anonymous on 6/26/08

Roger kept his plan a secret. If he had informed Ron of his plan, I highly doubt Ron would have gone forward with his BK. Also, if Roger would have openly announced his plan, I feel he would of had many, many more investors throwing money at him to support the motion. Why give money to a laywer who won't tell you what his plans are? Don't get me wrong, I'm sure Roger is a very good lawyer. I just didn't understand the reasoning for this to be top secret until the last minute. I don't blame Ron.

By: Anonymous on 6/26/08

To The (Wrong)Reason,

The timing is just a little too coincidental, dontcha think? You scrambled to file once you knew that a receiver was imminent. I hope your action is thrown out and you end up paying court and attorney fees. By the way, pretty brave of you to have your kid file instead of signing your sorry name to the document.


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By: Anonymous on 6/26/08

Anonymous says:


Thank, Ron,


Good job of screwing all those that you've been relying on for information for months. Think you'll be able to buy back your projects for 10 cents on the dollar which was your main goal all along? Couldn't wait for the receiver to be put in place could you. Doesn't surprise me that you would be one of the long time borrowers from Estate Financial. Birds of a feather…


So you still think that Karen was doing a good job of managing your assets. So far no one had done anything significant other than the Fredrickson group. You waited for a miracle instead of stepping up to the plate.

Ron's action will advence and preserve everyone's interest not only the creditors but investors as well. It will take some time for you to comprehand and honestly, no suprise here.

By: Anonymous on 6/26/08

To Anonymous: Do you really think Ron was not working on this long before Fredrickson announced his filing for a receiver? Time is traveling fast but Fredrickson just announced barely over two weeks ago of his receiver plan. What Ron planned took a very long time. He didn't drive to a local lawyer and announce on a whim that he wanted to do a BK. Get over yourself. Also, again, Karen could have Ch11 BK after a receiver was placed. Why wait for that mess? Ron didn't KNOW others were working toward a receiver back then. What would you do if you had the impression no one was moving forward? As a creditor, he can't insert a receiver. As a creditor he can initiate a BK.

By: Anonymous on 6/26/08

Like I said, thanks, Ron. Don't try to make this sound like you filed this action for the benefit of the investors. You and Karen belong in adjoining cells.

By: Anonymous on 6/26/08

Wait a minute. Don't jump the gun. The property will be returned to the trust deed holders. That property does not go to EFI. They may be one of the investors which simply means the court will be in charge of any funds that would go to EFI. Just because the court may be in charge of liquidating EFI's interest doesn't mean they can bargain basement the trust deed holders interests. Sure they can sell thier furniture and computors but you are not EFI. If the trust fund has a reciever he or she will be your partner on the deed. This is probably the death nail for Karen since she will have to list all assets including anything she thinks the FUND owes her and anything that comes from the eventual sale of properties of the FUND would then go to creditors like anyone who has a judgement so in that way Cooper has put himself in a possition to get some of what would have gone to Karen. Maybe. If he did it will probably only be a small percentage since creditors usually only get pennies on the dollar. Remember the investors are not creditors. If you want to be creditors you would need to sue EFI and get a judgement which I am not sure would be of much use in bankruptcy. Like I said I'm not an attorney but this may have provided the investors total protection of thier properties which is probably the best protection you can get. It will also provide complete disclosure by Karen. She has no choice its the Federal government. You may want the sue Karen personally for fraud and get in line on her personal assets as unless she files a personal BK are exclude from this action.

By: Anonymous on 6/26/08

Everyday those unfinished buildings sit and are attacked by the elements, they will need to be torn down. If this drags on, the buildings will have levels of mold & dryrot and therefore (almost) worthless.(except for the dirt) not to mention they were all permitted under the OLD building code.

By: Anonymous on 6/26/08

Thank, Ron,


Good job of screwing all those that you've been relying on for information for months. Think you'll be able to buy back your projects for 10 cents on the dollar which was your main goal all along? Couldn't wait for the receiver to be put in place could you. Doesn't surprise me that you would be one of the long time borrowers from Estate Financial. Birds of a feather…

By: Anonymous on 6/26/08

Either Karen or the appointed reciever will need to prepare a buisness plan that will clearly outline the steps that will be taken to manage the buisness in such a way that it will either survive as a buisness or provide a better result to the creditors than a chapter 7. If this can not be done the BK court will place the entire mess in chapter 7 for liquidation of the assets. Although I'm not an attorney thats the way I understand it.

By: Anonymous on 6/26/08

Having anyone but Guth and her son running the show is best for everyone. I want the courts looking out for my interest. About time. Ron wanted to finish his project. I say a finished project is worth more than a non-finished project.

By: Anonymous on 6/26/08

Ron Cooper did none of us a favor. Looks like he was only thinking about himself and Karen.

By: Anonymous on 6/26/08

not so fast VII


Keep it up

By: Anonymous on 6/26/08

couldn't have said it better.


My name is "not so fast VII" and I approve this message.


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By: Anonymous on 6/26/08

My low ego and self esteem drives me to write making me feel important. Seeing my writing in print makes me feel whole. Yes, I'm hoping by wasting your time, you'll learn to love me through my forced posts. It is people like me who know we are of superior intellenge so we must keep writing. Taa, taa.

By: Anonymous on 6/26/08

If I dislosed my agenda, well, then it wouln"t be hidden. I do plan on gifting ALL my shares to the DNC and taking the write-off. but, that is no part of my agenda

By: Anonymous on 6/26/08

That recent loan? Just another way for Karen to put more money in her pocket. End of story!

By: Anonymous on 6/26/08

Loan Specialist


EFI was making many loans with the full knowledge that there was no funds available. They financed refinenced laons as they bcame due. It kept matured loans that were not funded properly in the first place, off the bad loan list while booking additional fees to itself. With the BC action, we are going to find the paper trail and connect the dots.

By: Anonymous on 6/26/08

Take a look at loan B101-07


Loan made 4/01/07 – at that time existing loans were not being funded, EFI was scrambling to get money to pay investors interest, yet EF made a loan for $138,433.70 at 8.25% – 4points lower than other loans.

On EFI's Collateral/Underlying Loan Report of 11/26/07 the outstanding principal for this loan was $16,250.79. On June 5th the outstanding balance is $138,433.70. So all hell is breaking loose and EFI is funding Mr. Esposito's loan.


Folks you'd better get someone to run this company quick.

By: Anonymous on 6/26/08

anna says:


To not so fast IV: What is your hidden agenda? And how do plan on controlling this already rolling ball?


We all have an agenda and they are all the same. We want to know where the money went and get back as much as possible. Whats so wrong with that?

By: Anonymous on 6/26/08

To not so fast IV: What is your hidden agenda? And how do plan on controlling this already rolling ball?

By: Anonymous on 6/26/08

I love the way David gets to the real issues. Strong willed and perfectly fair.

Thanks David for getting it straight on. Keep these freaks running.

By: Anonymous on 6/26/08

To MJC, you write "Furthermore, my name is Mike Cooper and I do know exactly who took my money."


So, who took your money?

By: Anonymous on 6/26/08

I'm here and I do have a hidden agenda.

By: Anonymous on 6/26/08

Not so fast III: No one has a hidden agenda here. There will be a board appointed to reflect the interest of creditors. On this board will be some INVESTORS, acting as creditors -you'll see why later. A laywer acts on their behalf. Try to find reasons why this will work for you instead of against you. It's already in play and there is no stopping it.


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By: Anonymous on 6/26/08

Regardless of Hannos efforts and all the state level activity occuring now, if Ron Cooper didn't step in, Karen Guth could have pulled a Fed Ch 11 BK even after a receiver was finally placed. Many similar cases have ended that way. Federal codes override all state level decisions. This BK may have shaved off weeks/months of pain by being implimented now. I'm in favor of this decision.

By: Anonymous on 6/26/08

Often times, the players open witha CH 11 and later move on to Ch 7. Reality Check!

By: Anonymous on 6/26/08

From my research a Ch 11 was the better choice rather than a Ch 7. If Ch 7 happened, the projects would not be finished out and sold as is. Ch 11 allows for proceeds of one sale to supply money to complete another project or even wait on it until that project has an increased value. This is beneficial for all.

By: Anonymous on 6/26/08

Hanno Powell is still in play. Don't stop giving him information! This information will be used in the overall picture and will save you bundles in legal fees if a trustee takes over both the EFI and the Fund. So please don't stop feeding Hanno. Due to his research, he will save a lot in legal fees by bringing the trustee staff up to date. Secondly, there is a good chance due to his knowledge that he'll stay in play once a trustee is appointed! So don't stop feeding Hanno Powell! The stronger he is, the stronger we all are!

By: Anonymous on 6/26/08

I think David just likes to see his name in print. Posting and then denying a post as a threat of a law suit is oh so fitting for him.

Dan, you got duped. How ell do you know David Ciaffardini?

By: Anonymous on 6/26/08

I don't understand? I did not see David Ciaffardini name anywhere else on this blog– ????

By: Anonymous on 6/26/08

Please do not post using other people's names. We will have to filter comments if this continues.

By: Anonymous on 6/26/08

To Thanks says:


Sorry to see you blogging inaccuracies, but Mr. Powell can go right ahead with what is was doing. The involuntary BK does not stop that t all. The involuntary is against Estate Financial, Inc. not the fund. Mr. Powell is auditing the fund.


By: Anonymous on 6/26/08

Anonymous says:


You just don't get it!!! The money never gotto Ron Cooper or other borrowers. If you are an investor, havesome more COOL AID> you needit to numyour pai


To Anonymous:

First of all what is "pai"? 2nd, Why are you so concerned with talking up Ron Cooper, who are you and what involvement do you have with anything? Furthermore, my name is Mike Cooper and I do know exactly who took my money.

By: Anonymous on 6/26/08

BK says:


Actually, quite often Chapter 11s do get converted to Chapter 7s and then it truly is a yard sale. Given the company is dead in the water, that seems to be the next process. Cash on hand is probably little to nothing. The value of the properties is dropping fast and will so for the next year to 18 months at least. Most probably can not be sold for some time. Plan on wating for 2 years to receive your 12cents on the dollar.


Actually, there was a fire sale with proceeds going toward paying management fees past due accordingto Karens comments. This BK filing stopped it and will have a look at the status of EFI. This action stopped the bleeding while potentially investors getting more money back.

I think we all in for a rude awakening when the books are open.

By: Anonymous on 6/26/08

I did not write the previous posting. Some lowly person is stealing my identity and posting with it. There is only one David Ciaffardini in the world. And if there is a way to prosecute someone for stealing an identity for fraudulent purposes such as this, I will be looking into it. I believe someone is using ths website to break the law. This is a very serious matter. Let this serve as a warning.


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By: Anonymous on 6/26/08

Thanks Ron! says:


Thanks Ron, your BK filing now stays all local actions versus Estate Financial and prohibits Mr. Powell from doing anything without a petition to the BK Court in Santa Barbara. SLO investors and contractors just got used as Judge LaBarbera just lost jurisdiction. Let us know if you have anything else great you can do for us up here in SLO.


How about blaming the real villian….Karen Guth.

By: Anonymous on 6/26/08

Thanks Ron, your BK filing now stays all local actions versus Estate Financial and prohibits Mr. Powell from doing anything without a petition to the BK Court in Santa Barbara. SLO investors and contractors just got used as Judge LaBarbera just lost jurisdiction. Let us know if you have anything else great you can do for us up here in SLO.

By: Anonymous on 6/26/08

Actually, quite often Chapter 11s do get converted to Chapter 7s and then it truly is a yard sale. Given the company is dead in the water, that seems to be the next process. Cash on hand is probably little to nothing. The value of the properties is dropping fast and will so for the next year to 18 months at least. Most probably can not be sold for some time. Plan on wating for 2 years to receive your 12cents on the dollar.

By: Anonymous on 6/26/08

What this doesn't change is your first position on 1st TD.

Not so sure how this effects share ownership value, but am confident that ownership in shares will remain the same

By: Anonymous on 6/26/08

According to Wikipidia, "When a troubled business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. A chapter 11 filing is usually an attempt to stay in business while a bankruptcy court supervises the "reorganization" of the company's contractual and debt obligations. The court can grant complete or partial relief from most of the company's debts and its contracts, so that the company can make a fresh start. Sometimes, if the business's debts exceed its assets, then at the completion of bankruptcy the company's owners all end up without anything; all their rights and interests are ended and the company's creditors are left with ownership of the newly reorganized company."

By: Anonymous on 6/26/08

Most of the major airlines have files chapt 11 BK and are still flying. Chapter 11 is a reorganization tool that dismisses debt. Chapter 7 is a garage sale. This is not chpt 7. It really remains to be seen how this will play out. Generally, the creditors take it in the shorts, so if EFI is your creditor, you might not be so happy with this.

By: Anonymous on 6/26/08

To Great: Karen and Dan are reporters. Don't jump on the messenger!

By: Anonymous on 6/26/08

To Great: Whether it's a receiver or a trustee, the developers will still have the same rights, regardless. The law will give them what they rightfully have coming. This is not builders verse investors. Everyone was effected by Karen fraud, everyone! Hanno is still in position. Don't fret.

By: Anonymous on 6/26/08

Excellent move on EFI's part. The vote on the 300 BILLION DOLLAR taxpayer funded mortgage bailout is going to the senate. Guth could end up OK if EFI get's in the handout line early. Karen is thinking on her feet well and her investors should thank her. Someone great once said, "Weather the storm". I agree. Everything will be OK when Obama defeats McCain.

By: Anonymous on 6/26/08

Karen and Dan, maybe you should contact a local bankruptcy attorney to see what this really means. Doesn't bankaruptcy court have an automatic saty of all actions? Does that mean that Mr. Powell is now prohibited from conducting his review? Does that mean that L.A. Developers have now taekn this action so as to prevent SLo folks and contractors from pursuing their claims in a timely fashion? Perhaps it would be helpful to do some actual research rather than just printing the statements of self-serving L.A. Developers who are trying to jump in line in front of SLO folks and builders. Get some real analysis from a detached third party!


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By: Anonymous on 6/26/08

Tick, tock, tick, tock, the time loop in the time space reality is shortening fast for EFI

By: Anonymous on 6/26/08

Keep in mind this is in Federal court. Karen won't be able to fight this. She shows her books she loses. She shows her face defending herself and she lies under penalty of perjury.


This animal is finally backed into a corner and there's no escape. Prison time! Karen don't bother running, you are being watched. Karen's new wish list will be something like this: hoping for seconds at the meal line, hoping her cell mate doesn't snore again tonight, wishing for a pair of shoes that really fits, praying Bertha doesn’t harass her in the shared wash room again, and hoping her fellow co-conspiracors will be convicted soon for company. Need I say Joshua's wish list will be much, much, much more desperate. No warm feelings for either.

By: Anonymous on 6/25/08

Those words from Karen whisper through my head "We will weather the storm. We are here for the long term"……


Karen, not when you are a theif!


By: Anonymous on 6/25/08

Finally says:


Sweet mother of J…

What SWEET JUSTICE this is!!!

The cord is cut!


Oh well, lets see the FAT lady sing, than we celabrate. If theFAT lady does not sing, we make the birds in the office sing the songs that are in the hidden recoeder.

By: Anonymous on 6/25/08

Did anyone think that a man like Ron Cooper who tried so very hard to communicate with his investors would take this laying down? Not! His instrumental involvement was to be expected! Good for you Ron! Now perhaps you can have the communication you've been waiting for so long!

By: Anonymous on 6/25/08

Sweet mother of J…

What SWEET JUSTICE this is!!!

The cord is cut!

By: Anonymous on 6/25/08

Well, how would any of us know about this stuff without UncoveredSLO.com? Nobody knows how all this will play out and if other brokers will fall apart like EF has, but how would we know? How would we network and share ideas, meet and compare notes?

It's all pretty much been Uslo.com. A free and diligent press. Our DA has been worthless, the local ink press has been limp wristed at best. Only Uslo has been on this like they should, just what we need.

I bet at least one more broker will crash, and soon. And many of the builders associated with that house will be in trouble. Lots of dough is missing, when answers are compelled heads will roll.

Support a free press, give to Uslo.coml. If you have a business you can advertise, or ask your business friends to advertise. I hear many are 'worried' that Uslo is too controversial- what planet are they from? Is telling the truth about current events controversial? Jeez, this country is full of sheep!


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