Estate Financial evaluator appointed

June 16, 2008

San Luis Obispo Superior Court Judge Barry T. LaBarbera Monday initiated a complete evaluation of the books of Estate Financial Inc. (EFI) mortgage fund.

LaBarbera appointed Hanno Powell — an attorney from Fresno experienced in receiverships — to look into EFI’s records unencumbered for 30 days.

A group of investors, prompted by an article, hired attorney Roger Frederickson to help protect their investments. Frederickson filed a lawsuit and asked the courts to appoint a receiver.

EFI is one of a number of hard money lenders currently under fire in San Luis Obispo County. Investors have accused EFI of failing to provide required documentation; file deeds of trust as required by their agreements; and pay investors following property sales.

Last month, regulators from the California Department of Corporations revoked the firm’s license to sell mortgage fund securities and part interest in real estate investments. The Department of Real Estate is currently investigating numerous complaints filed against EFI.

While hundreds of investors waited in the court room, the judge and attorneys discussed issues for more than an hour behind closed doors. LaBarbera then announced that an evaluator would be appointed, and that the mortgage fund would be responsible for $10,000 towards the cost of Powell’s evaluation.

LaBarbera scheduled a hearing for July 22 and 23, in which Powell’s findings will be used to determine the management of Estate Financial’s $170 million mortgage fund.

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By: Anonymous on 6/18/08

After reading all of todays comments I cant understand why the over all tone is so hostile. Did we forget this forum is ment to help solve the problems.

We each have our own experience with EFI but one thing we have in common is that our agreement with EFI has been compromised.

If the appointed auditor fines no wrong doing I will be the first to say I was wrong.

However evidence is growing that misconduct will be found.

This blog has been demanding action for months and now that someone is actually taking a legal step you are complaining about that.

It is time to be more worried about the money you might loose and not just worried about the money you might have to spent toward resolution.

Please lets post information that is helpful and vent to your spouse.

By: Anonymous on 6/17/08


You make many good point. With so many different individuals its very hard to come to a common ground.

Still, the problem is not that the economy went down, that comes with the territory. Evryone understand losses. The money was sucked out by related entities and interest was paid to investors with newi nvestors money. So the money is gone its not just a drop in value. Karens best action for herself is devide and conquer. She is doing a great job at it.

By: Anonymous on 6/17/08

Unfortunately $10,000.00 is probably a tad shy for accomplishing the task at hand. The "hold out and you'll be fine" approach will be fine for some. Others who leveraged their homes or invested all of their nest egg don't have the ability to weather the storm. That's only one example of the problems arising from the diversity of the investors….many of whom likely never should have invested a cent. So that's why there's no "one fix" to the problem. If you're a member of the first group….you were supposed to be assured that you weren't subject to the problems of the second. If you're among the latter, your money should still be in your pocket…..Sorry, but doing nothing doesn't fit the facts at this point. Getting upset with those who seek to address their predicament is misdirected. If the regulatory agencies would seriously undertake some responsibilites, perhaps the attorneys fees and costs could be avoided, but their responses have been dreadfully delayed. If you really want to point fingers, you shouldn't be pointing at each other. Whomever is really responsible for your problems must be enjoying your apparent confusion……

By: Anonymous on 6/17/08

"not", can this blog provide spell check please :? just kidding, operator error

By: Anonymous on 6/17/08

loss note lose…. please correct although it seems to work either way

By: Anonymous on 6/17/08

Once again the truth of the equation is lost. Not about investment strategy and profit and lose. Ethics and fraud are the real issues.

By: Anonymous on 6/17/08

Most likely a 40% drop in real estate values will translate into a 40% loss of your investment. What happens when your mutual funds take a 40% hit, your investment continues to grow? Where does that logic come from? Certainly not Investments 101. Investments 101 : Rule#1 never invest more than you can afford to lose.

Rule #2 A little more risk is ok when young, but as you get older move more money into safer more consevative investments. We all hate to lose money, its just to hard to earn those investment dollars back. But there is a reason why hundreds of hard money lenders statewide are in trouble thousands Nationwide. So you think they all just woke up one morning and decided to become crooks? The entire industry nationwide? Very , very logical.

By: Anonymous on 6/17/08

to get a life

The best thing that has happened is if all transactions are stopped until someone has reviewed Estates actions. Who knows by time liquidations take place the market may be improving. There certainly could be no worse time to sell than now and no worse person to appove the sale than EFI. How do you know that any sale made now would not just be another transfer to some dummy co. of Karens. Of course any proceeds of the sale could at least pay Karens fees past and present. I don't know how many hands will be in your money but at least there is two less meaty hooks in there now. You've been screwed for years you can at least wait a month for an honest opinion.

By: Anonymous on 6/17/08

Get a Life

Thanks for noticing the difference about these comments. Lets face it, we were all duped one way or the other. Who is smarter or not makes no difference. One day you must face that the money is gone and what value still there is being eroded.

Again, I refer to her own 'NEWS UPDATE"

The Fund will not establish a reserve from which to fund withdrawals and, accordingly, the Fund's capacity to return a Member's capital account is restricted to the availability of Fund cash flow. For this purpose, cash flow is considered to be available only after all current Fund expenses have been paid (including compensation to the Manager and affiliates), adequate reserves have been established for anticipated Fund expenses, and adequate provision has been made for the payment of all monthly cash distributions on a pro rata basis which must be paid to Members who elected to receive such distributions upon subscription for Interests."

Again read the quote very carefully than you realize that Karenis getting paid first. Previously she made a side not a few months ago that they have started taking management fees only since last October. Coincidently when your interest checks stopped coming in the mail. Accordingly, she is taking what she beleives its hers Rest assured, she will not make distribution to investors for a long time.

By than the cost of holding vacant lands and values declining while management and administrative expenses will consume all thats left.

Again, no prayer or hope will help.

By: Anonymous on 6/17/08

OK, after reading all of this blog tonight I am slightly confused. What does Robert Fowler and his sale of 1771 Singletree have to do with any of this EFI stuff. I am not sad that he has lost 100K of his investment. Not my problem

By: Anonymous on 6/17/08

Anonymous #2-

Now, now lets not start the name calling. Obviously I am smarter than you think. Then of course you thinking I am an "ignoramous" as you say may be to my benifit. I invented something that made me wealthy. I suggest that calm down before the tail and ears come out. Hehaw

By: Anonymous on 6/17/08


Is my info correct about the freeze. I did not get that info from EFI. After reading the front page of the paper today I was amazed since I too was at the court house yesterday. I didn't hear the judge with my own ears say that the mtg fund couldn't sell any properties that it has an interest in. Of course I could barely hear the judge anyways

(I'll chalk that up to age). When I read this I began to question, research etc. I didn't understand this to be the case…now am worried about any progress I feel I have had on my fractional interest loans. DO YOU KNOW THIS TO BE TRUE? I tried to call your attorney today but couldn't get through, that was expected however. They are probaly fielding many calls. I tried to call EFI but they were out of the office.

By: Anonymous on 6/17/08

To:You all need to get a life.

How did you become independently wealthy being such an ignoramus.

The EFI problem has nothing to do with the market improving or declining. It has to do with theft and incredible mismanagement – like disbursing loan funds without any inspections. "A breach of fiduciary responsibility?"

By: Anonymous on 6/17/08

Prayer and hope can only go so far. God gave us some brain to use it. This is one that time.

By: Anonymous on 6/17/08

Get a Life

Please don't take my comments as offense. You likely getting information from EFI. My information is much more varied and many different sources. Just keep following this site.

You'll find some non-sense comment and many relevant information.

By: Anonymous on 6/17/08


Honestly I really hope I am not surprised! I have discovered plenty already but honestly nothing that jumps out as criminal. I am personally adjusting to not having my normal income. I personally only receive approx $600 per month now. I do think we need a tighter ship. But what I do not like seeing is all progress with sales halted. I am personally speaking as a fractional interest individual now. What affects the fund affects the majority of my money in the fractional interest loans. It concerns me that from my understanding in my own investigation (correct me if I am wrong PLEASE!) If any of the properties that I am curently a fractional interest investor sell in the next month, because the freeze on the fund we can not sell these properties because the fund has a small investment on each property. That scares the shit out of me! If I am wrong, and the info I received from my own investigation is untrue then please let me know because I will go back to being a closet watcher, quiet.

By: Anonymous on 6/17/08

To get a life.

Thank you for finally saying what most of us are thinking. Yes we all may be fed up. I was fed up trying to get answers from EFI. I finally realized by being civilized…I got answers. Honestly did anyone read all the fine print when making these loans? I didn't until recently. Now I only have 100K invested so I am not a big investor like you get a life but I agree let them do their jobs. I will continue to go to all the meetings and inform my, I will continue to read all I can, and like you said I will continue to make my own decisions based on my own findings. The last thing I want is my money to go to the attornies. I don't have much but what I have I worked hard for. Thank you to all who let me know about this site. I didn't know about it until yesterday when I overheard many of you talking. It appears that so far this blog has been 1 sided. I am in the middle…luke warm about all of this. However from past experiences the more people involved the less I receive. How many hands do we intend to put into our cookie jars?

By: Anonymous on 6/17/08

Get A Life

Thank you for clarifying things here. It is unfortunate that we can't discuss this over a diffrent setting. I have tried to work with Karen for some time and got me nowhere. I am doing my own things now to protect my interest. If Karen ran her business as she stated years ago we would all have some losses but not a disaster. You will be shocked soon when you learn the gravity of the situation.

By: Anonymous on 6/17/08

No I am not a true follower I just hate seeing my money being flushed away. I am an independantly wealty individual. I barely know Karen, Josh or any other individual at EFI. All I know is the more I try to have patience with all of this the more road block I see being put up. I have discovered alot of discrepancies in the parerwork trail in my loans, I have had properties that have refinanced with out being paid off. I am like all of you. All I know is that I have a lot of personal friends that got SCREWED when 21st Century MTG closed their doors…some still trying to obtain the legal right to foreclose on there properties…some who after paying attorney fees only received a faction of their investments back. I own an incredible amount of investment property in the county which has gone up and down over the past 30+ years. You loose some and you win some but if you hold tight you end up winning the majority. I agree that there has been very sloppy management of our recordings!!! I am not denying that. All I am saying is that I am retired and do not want to have a heart attack over loosing my assetts over a few whinny people who react hastely. Thank you to the 6 people who think they are trying to protect my investments. I really applaud your inthusiam. However the chain reaction of the lawsuit filed will eventually hurt us all. Please rely on your own investigations not the word of others! Make smart decisions. The way I see it if you have enough money to invest you not all that stupid so don't start being stupid now.

By: Anonymous on 6/17/08

You All Need To Get A Life

Congratulation to you for getting 15 grand a month.What you don't know where that money came from thats why you talking like an ignorant m. How come any property that got sold lately, no funds were disrsed but went to "reimburse/pay" fund managers expenses. You should sit back and take the punches little longer and watch every penny melt away.

Glad Karan still have some true beleivers in such a difficult times. She needs a tru follower and here you are.

By: Anonymous on 6/17/08

To You All Need To Get A Life….

Are you one of the brokers that she is feeding the properties to sell???

What part of Karen making loans to herself and not paying them for more than 3 years appears okay to you? And what part of her paying herslef millions at the same time is okay with you?

By: Anonymous on 6/17/08

Are you all crazy??? We we all at the same meeting? I sat for 3 hours in the court room…and 2 hours at the Expo meeting. The truth of the matter is a handful of you are screwing the rest of us. As of yesterdays court proceedings any current properties that are foreclosed upon and currently being marketed for sale or are currently in escrow CAN NOT be sold until the July 22nd meeting. THANKS! We will probally loose the buyers thanks to all of you winers! No boby was complaining when they were receiving fat interest checks including me at 15K per month! Maybe you all should have been better diversified. DUH! I purchased an investment home 2 years ago for $400K…today it is valued at $235K. Can I file a lawsuit because I lost almost 50% in 2 years. NO. So stop bitching and hold on. The market is turning as it has for the past 30+ years that I have lived in the community. High interest% = HIGH RISK, SHUT UP..SIT TIGHT…AND HOLD ON. If you continue to push you will loose it all!!! However the receiver and attornies will sit back and laugh as they drive their new BMW's and vacation in Tahiti on our money.

By: Anonymous on 6/17/08

William L.

Harold's info is still on.

You can't post bank account numbers if thats what you are talking abou.

By: Anonymous on 6/17/08

SLO Uncovered you just lost your creditability by removing Harold information. What was posted is {PUBLIC} information and at least helped me verify some shady dealings. Others can not now do the same. Censorship you just lost my support. Did Karen buy you off ?

By: Anonymous on 6/17/08

I'll re-post from last week…

K in Paso says:

I have a little more info from the DRE… I spoke to the investigating officer in charge of the EFI case yesterday. He told me that they are still working on the investigation and that it is taking extra time because they are going over the audits of EFI's books they did when they were at EFI.

The DRE will post any action they take on the DRE web site at these links:

EFI's License

Joshua's License

Karen's License

If you haven't filed a complaint with the DRE, there is still a little time to do so…

Licensee/Subdivider Complaint (RE 519)

Complaint Form Information (RE 519A)

June 10th, 2008 at 6:55 AM

By: Anonymous on 6/17/08

I really want to feel good about this. Really I do!!! BUT I just got off the phone with a BK trustee and forensic CPA in the SF area. He confirmed that giving an auditor 5 weeks and not allowing him to bring in his team is very inadequate! He doubts fraud will be found that can't be washed away by Karen's attorney. Not enough man power or time to be thorough. This, of course, makes me question the judge's motive. Time to think about moving this to a new level. Too many conflicts of interest in this tiny town.

By: Anonymous on 6/17/08

Does anyone know if the Department of REal Estate is still looking into this?

By: Anonymous on 6/17/08

to Anonymous

I don't think they knew what I wanted to hear on account I was wearing my tin hat ::wink::

BTW, your stsement failed to carry weight. Where is the smoking gun?

By: Anonymous on 6/17/08

EFI couldn't have had a vote because they didn't follow the rules for sending out notices and ballots, it had nothing to do with the judge. They are saying whatever it is they think you want to hear.

By: Anonymous on 6/17/08

insider…you should have been there….the meeting was never intended to a "vote meeting". The ballots were to be mailed out next week to all, when it was suggested they we wait until the report came in fron the court mandated audit..and EFI agreed.

I went in on the fence looking for reason to hang em and walked out still pissed, but not ready to pull any triggers…no one presented any real cause to throw them out, even though oppurtunity was afforded them. For the radicals on this site, it was a hugh setback. The most pathetic part was one of the plantiffs reminding all of us of how much money they spent…I swear she was going to pass the hat.

By: Anonymous on 6/17/08

At least two good things are on going. 1) Someone who knows how to look for corruption is looking at the books and 2) The funds assets are temporarily frozen. What possible good spin could Estates hired hand have put on any of this? Did he have the enthusiasm of a man getting paid or the appathy of a man with a large outstanding bill for services rendered?

By: Anonymous on 6/17/08

Hey Anonymous – you talk about "…Blog Trolls who hide behind anonymity…" while you yourself post anonymously. Surely you jest!

By: Anonymous on 6/17/08

I thought the meeting was to call for a vote on the managment. Was there any question as to why the proxy ballots were not mailed out?

By: Anonymous on 6/17/08

Interesting meeting. Pretty much a cheering event for EFI. Their mouthpiece gave a long and boring sort of legal bit of mumbo jumbo. Interesting though, he is the same white collar crime defender that Hurst uses!

A bunch of disgruntled investors talked for a bit, the only credible comments in two hours.

I don't think anyone asked the real question-where are the built out projects, where is the money? That is the essential question for all the brokers (especially Hurst). If the money was used to build things where are they? The market has not fallen that much. Karen spent a lot of time on how little bare lots are worth-there

shouldn't be any bare lots if she had done her job. No one ever asks these brokers where their heads were when they approved these investments-they are supposed to get good appraisals with a falling market in mind. They are supposed to know these things. They were trusted to know and act in good faith-they didn't.

These investments are to build things, let's get that in our minds as a given. The money is either safe in a trust account or a project is built-or the money was stolen.

By: Anonymous on 6/17/08

Well meeting was a waste only thing i learned is karen took out a oan from Heritage Oaks Bank # XXXXXX and the money is gone into other peoples pockets it was on APN # XXX-XXX-XXX

As for the posting on Atascadero Ventures, according to both the County Clerks office and Lawyers representing PCF, Inc indeed Atatscadero Ventures is in default to the tune of over $21,000,000.00 and climbing so why are you hiding ? Mr. Anonymous it is a recorded document go see for yourself.

By: Anonymous on 6/17/08

Just got back from the big meeting… snolking gun and no vote to oust anyone until the auditors have filed their report

By: Anonymous on 6/17/08

OOOHHHH! Sounds like a conspiracy theory. Too bad it is not really that complicated or that exciting. There is absolutely no validity to any of the previous accusations against Atascadero ventures or any of their affiliated businesses. Making statements against legitimate businesses and a Judge's integrity is downright low. But considering the moral integrity of most "Blog Trolls" who hide behind anonimity and the webmasters who protect them, it is not surprising.

By: Anonymous on 6/17/08

Attention all those who have a concern of all these rip offs contact LA Times Investigative Reporter Scott Reckard he is digging into financial scams by these people.

By: Anonymous on 6/17/08

Thank you, i shared your information with my CPA she informed me your correct, that several of the inner circle investors backing Karen and others got the scoop to shred records yesterday and gave me the bank where some of the monies went, the Oxnard Branch of Beverly Hills City National Bank x1XXXX09 and XXX19X91

Apparently Sterling Hills, LLC and HFL Express,LLC got some of the monies and HFL took two of there Jets from SLO Airport recently housed by ACI. So this is bigger than we all thought. Got to go to the meeting again thanks.

By: Anonymous on 6/17/08

T. Norton

Thank you and Thank you again. Some of us supected and your comments.

By: Anonymous on 6/17/08

I ran into one of the people involved in this mess last week. he told me to get out ASAP, the house is going to fall and if the truth be known some may got to jail. He said he is selling off all his personal investments. He listed one of the homes his company had to buy back in his name now at 100,000.00 less than he bought it for. I checked it is 1769/1771 Singletree Ct. SLO he was correct. He said when they got served with a $21 Million dollar default notice on there emepty lots in Atascadero recently they knew the gig was up. He was happy that the judge did NOT issue a " Do Not Destroy order" he said effective this morning he told his money man to destroy all files and records. This is wrong so here is the address of the people destroying the records 11940 San Vincente Blvd. #209, Los Angeles, CA some one better hurry soon and get an order to cease all document destruction, they are also moving monies from HOB to City National Bank. It seems this really was a long going Ponzi Scheme.

By: Anonymous on 6/17/08

this is a loss for everyone…just wait and see what this will cost

By: Anonymous on 6/17/08

As one who got screwed by many of those developers you revealed. I can NOT go to the Police or FBI because my monies were not from the right sources. NOT illegal by i never reported the gains. On other investments thus i am loosing $345K, the problem is their are over 22 like me and we are all screwed. I know that Point Center Financial, Inc. as associated hard money loaner filed 21 Million dollar default against one of the named enterprises who is involved with HOB, am told the money is long gone so good luck at the meeting today. I would not trust the Judge appointed either he is in deed with one of the crooked buuilders named.

By: Anonymous on 6/17/08


Don't underestimate the judges's character. All judge hear cases that have some resemblance to others. Remember, in this county most people know each other and judges are in the same commuity. Why can't he go to the coffe pce? Should he lock himself out of human interacton and expecting to understand people? Comon folks! It would not be only unfair to him but uwise for us. Maybe it is better that this judge heard this motion who has an understanding of the situation. Fedrickson's office done the right thing under the circumstances. We all owe a great deal to the plaintiffs who pushed the issue so far. Where have others been other than blogging and crying?

By: Anonymous on 6/17/08

Anyway we slice yesterday's dcesion, it was not good for Karen and Josh. Her books must be in such a disarray that she probably wouldn't know what to hide that will incriminate her in some way. I looked up the "auditor's" bio and on the surface he seems to be well qualified. The title given to him less powerful than a receiver, however its a good start. Should Karen try to hide something it would constitute

"obstruction of justice" in the big scheme of things.

Today's meeting is mportant in some respect where Karen has to make a plausable explanation about the judges deceision. Either way is not good for her.

More people show up the better. Please take the effort its your money. You worked so hard for it, don't be complacent now.

By: Anonymous on 6/17/08

Does anyone know who the other lawyers were with Roger yesterday?

By: Anonymous on 6/17/08

Connected says:

To all fund investors,


Today was a defeat for Karen.

We have an independent auditor

{the receiver} appointed.

This person is a bulldog and wont miss anything. He has legal access to all books records accounts and transactions. If he is denied anything he will report directly to the judge.

He will find the smoking gun.

This is what we wanted, the judge just gave it to us with a different name.

As far as tomorrows meeting.

This will be the Josh and Karen show. There will not be any presentation form the legal team.

Now that legal action action is under way our attorneys can not participate.

There will be NO vote.

Karen was required to send all investors proxy ballots and she did not comply with her own rules so any vote is invalid.

real information will not be discussed. Hopefully we will receive a copy of todays ruling but dont expect any legal advice.

Karen and Josh will control the meeting and spin todays events. No one will be there to challenge their statments.

This meeting may be a waste of time. You must deceide if it is worth your effort.

June 16th, 2008 at 10:09 PM

By: Anonymous on 6/17/08

Yes, Your correct this is wrong the judge has compromised himself, Not only did the Lawyer he appointed Hanno is a friend of Atascadero Ventures, LLC LAwyer Adam Daner who is a Hertel Lawyer appearing before this very judge on a Law Suit they went to Law School together and associate and share inside information not a good matter. I smell a rat…

By: Anonymous on 6/17/08

Something is very odd here the yesterday morning this judge was at a local coffee house near the court and said, he is also the same judge on a Hertel case that also involves Atascadero Ventures, LLC and EFI interests so i suspect a sham he should recuse himself.

By: Anonymous on 6/17/08

Something is very odd here the yesterday morning this judge was at a local coffee house near the court and said, he is also the same judge on a Hertel case that also involves Atascadero Ventures, LLC and EFI interests so i suspect a sham he should recuse himself.

By: Anonymous on 6/17/08

Meeting at Madonna Expo is totally irrevalent. Karen did not mail proxies to those who are unable to attend. Any vote will be invalid. She knows it and should never have scheduled it. I'm tired of her grandstanding and lying. I'm staying home to do my hand laundry.

By: Anonymous on 6/17/08

Roger Frederickson – 1; Karen – 0. You're playing with the Big Boys now, Karen.

By: Anonymous on 6/16/08

I bet Hurst will be next, long overdue.

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