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State regulators cancel EFI sales permits

June 9, 2008

By KAREN VELIE

Estate Financial Corp. (EFI) of Paso Robles can no longer solicit nor accept investor money because the troubled lender’s state permit to do so has been revoked.

Specifically, regulators from the California Department of Corporations (DOC) have stopped the firm from selling mortgage fund securities and part interest in real estate investments. The revocation follows on the heels of an earlier suspension.

“We revoked their permit to raise funds,” said DOC Director of Communications Mark Leyes. “They can continue to service existing funds and investors. It does not shut them down.”

San Luis Obispo County’s District Attorney’s Office is investigating numerous complaints from county residents and others who believe their principal investments with EFI have been misused. Local prosecutors are working with DOC investigators to examine the allegations.

“We are doing what we can to make sure the district attorney has what they need to do their job,” Leyes added. “The revocation is just one piece of the puzzle. If there is malfeasance that rises to the level of criminality, it will be up to the prosecutors.”

A top county prosecutor agreed.

“The DOC is also looking at more aggressive or criminal acts they can refer,” said Deputy District Attorney Steve Von Dohlen. “Then we review and decide whether or not to file criminal charges or more investigation.

Prior to taking funds from an investor, the permit required EFI’s owners, Karen Guth and Joshua Yaguda, to provide prospective investors with a questionnaire regarding their individual financial standing. The DOC concluded Guth and Yaguda failed to fill out the required forms. Guth also failed to disclose that she was a partner in more than 15 percent of EFI funded construction projects as stated in a circular distributed by the EFI.

Sources contend Guth knew she was over her allotment and had started to dump properties. A check of county records for properties having “EFI” listed as the grantor or the grantee showed 267 records changes in 2008.

Yaguda declined to comment on the state agency’s permit revocation and referred a reporter to EFI’s Web site.

EFI is one of a number of hard money lenders currently under fire in SLO County. Hard money lenders specialize in real estate-backed short-term bridge loans. These high risk loans are based on the value of the underlying asset rather then the borrower’s credit rating. EFI, during better times, paid investors approximately 12 percent interest on their investments.

On April 28, the DOC suspended EFI’s permit while the agency investigated an onslaught of charges. In response to the allegations, EFI requested a hearing to challenge the suspension, but later withdrew the request.

EFI stopped making interest payment last fall and numerous investors concerned about their money filed complaints with the regulatory agency.

In response to allegations Guth and Yaguda failed to protect investors, the San Luis Obispo law firm of Sinsheimer Juhnke Lebens and McIvor has invited more than 1,600 investors to attend a meeting June 17 at the Alex Madonna Expo Center to discuss replacing the $170 million fund manager.

Guth and Yaguda fired back with a letter last Friday claiming the law firm, required to have 10 percent of fund investors interested in the meeting, represented only a half dozen investors. The mother-son duo claimed the law firm dis not have the expertise to manage the fund. In the letter, EFI did not mention that permits had been revoked the previous week.

Tags:, district attorney, EFI, Estate Financial, San Luis Obispo County


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By: Anonymous on 6/12/08

There is finally a real opportunity to help remove Karen and put in a qualified person. Roger filed a complaint Tuesday morning and the case is being heard tomorrow, Friday morning at 8:30 am. It’s being heard by judge Barry T. Labarbera. The hearing will take place in Department 2 of the Superior court. This courtroom does not typically open until 9:00 am but we may be meeting as early as 8:30 am. Karen will be bringing a large group of her supporters. Roger at the last minute has asked anyone who would like to support his case to please be at the courthouse for this hearing. It has taken months of work to get to this point. Let’s not let Karen derail this effort! Sorry for the late notice, however this has turnout to be extremely important. Anyone who can possibly attend should adjust their schedule to be there and just make it happen.

By: Anonymous on 6/12/08

Anonymous says:


MJC says:


Unfortunately we are all losers in this argument.Including Karen and Josh. There will be no winners regardlessofthe outcome opther than Attorneys CPA etc.


Anonymous; MJC never said that and does not agree. There will be some that will come out way ahead of where they would have otherwise been.


Unfortunately Anonymous there are some of us that will never be made whole again even if our investments are returned in full. The damage has reached to far into ALL of the other parts of our lives like a Cancer.


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By: Anonymous on 6/12/08

Even the Lakers lost after a 24 point lead. But really, who didn't see this coming considering the circumstarces.


For the Lakers ther may be no chance left for this season at least. For the rest who may not have had the exact outcome they wanted today maybe tommorow will be more redemtive.

By: Anonymous on 6/12/08

MJC says:


Unfortunately we are all losers in this argument.Including Karen and Josh. There will be no winners regardlessofthe outcome opther than Attorneys CPA etc.

By: Anonymous on 6/12/08

MJC says:


Thanks for that clarification Loser, I feel much better, I assume it is Loser and not Looser. If I am wrong I'm sure you will correct me. In the mean time, have shot of Koolaid with your next chill pill and try not to take this personally.


Its Loooooser. I let you have the KOOL-AID any way you wish.

BTW. What is that 8;30 hearing tomorrow morning?

By: Anonymous on 6/12/08

Thanks for that clarification Loser, I feel much better, I assume it is Loser and not Looser. If I am wrong I'm sure you will correct me. In the mean time, have shot of Koolaid with your next chill pill and try not to take this personally.

By: Anonymous on 6/12/08

MJC – Just to clarify


Don't feel so important. You were not imy mind when I refered to "Anyone dares to demand answers, threatened with restraining order with police escort off the Office premises.


By: Anonymous on 6/12/08

It's over. Either a receiver will be appointed Friday (Karen's Friday the 13th) or a Trustee will be appointed in the very near future.


Guess Karen and Josh are not "here to stay." Thank G_d.

By: Anonymous on 6/12/08

There is a receiver hearing tomorrow 8:30 AM in the SLO court. The Judge may or may not appoint a receiver.


Tomorrow should be an interesting day.

By: Anonymous on 6/12/08

As to the possiblility of EFI keeping thier DRE brokers license. There are many reasons to revoke a license however it would seem on face value the recent revocation of thier DOC license would be enough as noted in the following DRE regulations for termination of a license. This is specifically a reason to terminate a license as issued be the DRE. Which it seems has allready happened.


Violation of Corporations Code . Section 10177(n). Violation of any of the provisions of the Corporations Code or of the regulations of the Commissioner of Corporations relating to securities as specified in the Corporations Code.

By: Anonymous on 6/12/08

Be aware that when one does not enter a name when blogging, this site defaults the name to "anonymous". It appears that this site is laoded ith them.


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By: Anonymous on 6/12/08

Anonymous says:


Cindy


Even if your info ia accurate, I would consider you a blog slut.


I will consider the source, the biggest coward on this site and hiding behind mama's dress while using the name "Anonymous".

By: Anonymous on 6/12/08

Okay, my mistake. I've been corrected, I should have say "nor" do they refer in anyway to Karen Guth or EFI.

By: Anonymous on 6/12/08

I just want to make something clear. It was not Karen Guth who threatened me with a restraining order and it is not Karen Guth with whom I invested my money. My blogs are not directly related to or do they refer to Karen Guth or EFI.

By: Anonymous on 6/12/08

To all who are affected by EFI some subtle information needs to be examined closely.

EFI’s latest “ESTATE FINANCIAL INVESTOR UPDATE “Ms. Guth complains about negative press and this site’s venomous comments that in her opinion counterproductive.

Her generous updates on the DOC action misstate the true nature of what happened to throw gullible investors off course again.


You can all read through the latest UPDATE so I will not repeat it.


Important item to point out in case anyone has any doubt in their mind where Karen’s interest lies.


Interestingly, she could not make any arrangement with investors and builders claiming to protect the Member’s interest in the Fund.


Casually, she points out a very important fact abut reserves and any cash distribution. Read it very carefully;


Relevant passages from the offering circular:


"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."


"Notwithstanding anything to the contrary stated above, distributions of capital accounts to any withdrawing Member in any calendar quarter shall be limited to $25,000 per such calendar quarter for such Member. Additionally, the Manager shall not liquidate (and Members shall not be entitled to withdraw), within any single calendar year, more than twenty percent (20%) of the total Fund capital accounts outstanding at the beginning of such calendar year."


We all must ask the question! Who is she protecting? Prior to anyone able to withdraw any money, her expenses i.e. “Fund expenses” and (including compensation to the Manager and affiliates),


Anyone dares to demand answers, threatened with restraining order with police escort off the Office premises.


Just a food for thought.

By: Anonymous on 6/12/08

The previous post was not by anoymous it was posted by me, MJC


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By: Anonymous on 6/12/08

Ron Says

Ron Cooper says:


For those of you who want to stop drinking cool aid and want something concrete done about this matter, something with teeth behind it, like a court, Please email me and tell me what you think should be done.


Please believe me, it will be helpful for everyone if you let me know what you would like to see happen.


My email is ron@cooperdevelopment.com


I tried emailing the people that still have my money and my emails recieved no response or acknowlegment what so ever. I was also threatend with Restrianing orders if I contacted anyone requesting my money back.


Tell me Ron, what request should I email to you?


You are more than welcome to call me or email me. I really do not want to continue down this path I have more important things to do than read about people drinking Koolaid hiding themselves behind a masked name and a computer screen.

By: Anonymous on 6/12/08

Anonymous says:


to ron cooper:


and you picked a blog to accomplish that? LOL


So what are you saying? Who else done anythig as much as Ron? If it was not for him, Karen would still be serving high dose of "KOOL-AID" without a second tought. Come to think of it, she is doing it as we write and you "FOOL" or "IDIOT" still taking while trying to convince otheres to do the same. BTW, isn't your name Joshua Yaguda?

By: Anonymous on 6/12/08

Iv'e talked to 5 EFI investor freinds of mine in the last two days and onlt two were aware of the meeting next Tuesday. The unknows had not opened their mail. This might be an indicator of a poor showing on the 17th. If you know someone, you might want to give them a call.

By: Anonymous on 6/12/08

'Anonymous' – Where have you been? Ron's put on two meetings, he's many times posted his phone number and email willing to communicate. He's been very helpful, more than any single investor I've heard about. What have you done for the situation?

By: Anonymous on 6/12/08

to ron cooper:


and you picked a blog to accomplish that? LOL

By: Anonymous on 6/12/08

RE: Every time an inaccurate or negative article,

comment, or blog is posted, it hurts our portfolio, our assets, and our investors. Fear feeds

fear, and acting from fear – especially unfounded fear – hurts everyone.


No, Karen and Josh, you have hurt the portfolio, your assets, and the investors. Get real.


Past silence from you has fed fear.Your mean words to investors feed fear. Your overspending has fed fears.

Your arrogance has fed fears.


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By: Anonymous on 6/12/08

To Anonymous. In response to your question – my power is my willingness to use my real name, expose myself to critique by people who are anonymous, and most importantly, have open, honest and educated dialogue with everyone and anyone about this mess.

By: Anonymous on 6/12/08

to Ron Cooper


What powers do you possess that allows you to make anything happen?

By: Anonymous on 6/12/08

Yes, you are right, those girls in the office are NOT THAT IGNORANT! They are not going to walk away scott free. If they all tell the truth to the agencies (even if they already lied) then they will most likely walk. If they stick with Karen, it's over. We know they read these blogs and the FBI can prove it. They can't claim ignorant. "Ye best start believin' in Ponzi schemes, girls. You're in one!"

By: Anonymous on 6/12/08

For those of you who want to stop drinking cool aid and want something concrete done about this matter, something with teeth behind it, like a court, Please email me and tell me what you think should be done.


Please believe me, it will be helpful for everyone if you let me know what you would like to see happen.


My email is ron@cooperdevelopment.com

By: Anonymous on 6/12/08

In one breath Karen says she cooperated with the DOC and allowed them to revoke her license. The revocation is permanent.


In the next breath she tells us that EFI will weather this storm, is not going anywhere, and will recover and be around for a long time.


How can that be true if she is permanently barred for getting a DOC license which is required to raise funds. No new funds, no viable EFI.


Current investors have definitely lost all they are willing to lose. So in order to be viable she will have to raise new funds – which she is barred from doing by the State of California.


But let's give credit where credit is due – to Karen's PR firm. They are good!

By: Anonymous on 6/12/08

Karen has the nerve to state that the Department of Corporations has issued a final order revoking the two permits WITH HER FULL APPROVAL?? So she approves of what they've done? Do you think the DOC would have acted any differently if she didn't approve? Give me a break. Does she think we are stupid? And read the DOC document revoking her permits. Karen committed NUMEROUS VIOLATIONS which caused the DOC to act. She tries to make it sound like it is really no big deal and she doesn't really care about that permit anyway. She then has the nerve to add: PLEASE TAKE NOTE, THE DOC HAS NOT TAKEN ANY ACTION TO AFFECT OUR BROKER'S LICENSE, WE ARE STILL AUTHORIZED TO ACT UNDER THAT LICENSE. Hellow out there!! The DOC couldn't take action to affect Josh's brokers license if they wanted to, that's the job of the Department of Real Estate, which, as you know IS STILL INVESTIGATING HER!!! She

MUST think we're stupid. Or does she believe her own lies? Does everyone in that office believe those lies or are they just repeating what Karen tells them to say, like Lupe told Mr. Baxstressor yesterday? What culpability will those employees have when the authorities come in and the subpoenas go out? Are the employees as delusional as Karen is? Save yourselves, girls, start making those phone calls and start singing, or are you willing to go down with Karen and Josh? You WILL BE HELD ACCOUNTABLE. Saying that you were just doing what Karen told you to do is not going to fly with the judge.


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By: Anonymous on 6/12/08

Did everyone read the latest e-mail from Karen that came in last night – “Greetings from Estate Financial”?


Relevant passages from the offering circular: 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)….


And we know who the “Manager and affiliates” are, don’t we? So, Karen and her LLC’s (affiliates) are first at the table to collect for managing the Mortgage Fund portfolio (which includes numerous loans to herself under her affiliated LLC’s) which is 100% in default. What’s wrong with this picture? And why did she think it was a good time to remind us that she comes first?

By: Anonymous on 6/12/08

I am not going to drink anybody's kool-aid at this time. Ron may have his own agenda, but don't we all? At least he is willing to have dialogue with us!


I am pretty sure that a vote will not take place on the 17th because proxy ballots have not been mailed out to the EFMF investors. I doubt that Karen will be the one to do that.


True, it would be nice if control of the mortgage fund could be gained so that the TD holders could work together with the fund members and in turn get the builders projects finished or sold.


But, I don't think that a new manager will be enough because they will lack the authority of a court appointed receiver and the oversight of a judge. A new manager will have his/her own agenda and loyalties – that is another dixie cup of kool-aid that I am not interested in at this time.

By: Anonymous on 6/12/08

Listen FOOL, the point was not about drinking Karen's OR Ron's cool-aid. It was to refrain from drinking ANY cool-aid. Be your own man/woman and quit following the losers. Plain enough?

By: Anonymous on 6/12/08

Anonymous says:


I suppose you will be drinking Ron Cooper's cool-aid?


So far Karen's KOOL AID we know what it tastes like.Time for a new one.


For you,keep on drinkig hers.

Just wonder what will it take to wake up?

By: Anonymous on 6/12/08

I suppose you will be drinking Ron Cooper's cool-aid?


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By: Anonymous on 6/12/08

I wonder what flavor kool-aid she will be serving at the meeting?


I ain't going to drink it!

By: Anonymous on 6/12/08

Please take note, the DOC has not taken any action to affect our broker's license, we are

still authorized to act under that license, and we believe that protecting the investors is

our first and foremost responsibility.

The California Department of Real Estate is continuing its own audit and investigation.

We have regular contact with this agency and continue to work with them in an open and

cooperative fashion. To date they have taken no action against our license.

In an effort to keep our investors better informed, we have initiated a regular emailed

communications with information as it arises. We are also posting information and

keeping an updated FAQ page on our website, at http://www.estatefinancial.com.

We’d like to thank our many investors and colleagues for their unwavering support

during what has been a difficult season. In spite of some negative and disturbing reports

about the mortgage lending industry in general, and Estate Financial in particular, the

vast majority of our investors have consistently and frequently communicated their faith

in our company and in our ability to come through this period with our integrity and their

assets in-tact.

In closing we would like to caution the public against relying on “provocative” sources

for news about us. Some Internet sites, chat rooms, and blogs are in the business of

inciting readers with incendiary or controversial comments. We hope that discerning

readers interested in accurate, unbiased information will go to reputable sources for their

news and take the rest with a grain of salt. Every time an inaccurate or negative article,

comment, or blog is posted, it hurts our portfolio, our assets, and our investors. Fear feeds

fear, and acting from fear – especially unfounded fear – hurts everyone.

— Joshua Yaguda and Karen Guth


Just have faith in me little children!

By: Anonymous on 6/12/08

Please take note, the DOC has not taken any action to affect our broker's license, we are

still authorized to act under that license, and we believe that protecting the investors is

our first and foremost responsibility.

The California Department of Real Estate is continuing its own audit and investigation.

We have regular contact with this agency and continue to work with them in an open and

cooperative fashion. To date they have taken no action against our license.

In an effort to keep our investors better informed, we have initiated a regular emailed

communications with information as it arises. We are also posting information and

keeping an updated FAQ page on our website, at http://www.estatefinancial.com.

We’d like to thank our many investors and colleagues for their unwavering support

during what has been a difficult season. In spite of some negative and disturbing reports

about the mortgage lending industry in general, and Estate Financial in particular, the

vast majority of our investors have consistently and frequently communicated their faith

in our company and in our ability to come through this period with our integrity and their

assets in-tact.

In closing we would like to caution the public against relying on “provocative” sources

for news about us. Some Internet sites, chat rooms, and blogs are in the business of

inciting readers with incendiary or controversial comments. We hope that discerning

readers interested in accurate, unbiased information will go to reputable sources for their

news and take the rest with a grain of salt. Every time an inaccurate or negative article,

comment, or blog is posted, it hurts our portfolio, our assets, and our investors. Fear feeds

fear, and acting from fear – especially unfounded fear – hurts everyone.

— Joshua Yaguda and Karen Guth


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By: Anonymous on 6/12/08

MJC says:


As you well know I am very much in favor of a positive out come for you and your projects, but what about people like me, Ron?


Karen was offered a resolution with builders and investors. She would not hear of it. She doesn't care about you, the borrowers and none of the investors. As far as she is concerned, we all are trouble for her.

She slamed the phone on investors and borrowers when asking questions. She lied to investors about the number of complaints against EFI. She lied about the DOC licenses. Wo do you think you are? Just because you gave your last penny you still think she owes anything of value? You have kids, parents to support or for Gods sake need to eat, maybe shelter over your head? Who gives a damn about you? We are just giving her an undeserved stress. So you stop it! Have you not been reading her Information letter? These blogs are just bunch of whiners who have nothing better to do. This fiasco is the result of President Bush and his cronies. Maybe the terrorist caused your problem. She was just doing her job by sucking everyone dry.

So stop your unfounded complaint and crying!!!

By: Anonymous on 6/12/08

Karen says: " Across California and the rest of the nation, private money lenders like EFI are

experiencing precisely the same kinds of events as we have. And although local investors

may feel “alone” in this crisis, it only appears that way because of the size of our

portfolio in a relatively small community. Increased loan defaults, drops in portfolio

values, investor complaints and even increased regulatory scrutiny are now pervasive

across our industry. We are by no means alone in this crisis. Already several large private

money lenders have closed their doors, leaving their investors to fend for themselves. It is

a testament to our strength and longevity – 20 years in this community – that we are still

here and working hard for our clients. Strength like this can only come from the broad

support of steadfast and determined investors, who are determined to protect their

investments through this period. We have every intention of remaining a vital entity for

many years to come."


YOU'RE NOT A VIABLE ENTITY NOW! YOUR OWN WEBSITE SAYS YOU HAVE 1,440 LOANS OF WHICH 1,439 ARE IN DEFAULT. IF THAT'S VIABLE MY ECONOMICS PROFESSOR REALLY FAILED ME AND MY FELLOW CLASSMATES.


Lie, lie, lie, lie, lie

By: Anonymous on 6/12/08

Karen: How long will you continue to think we are all stupid. The DOC has nothing to do with a Brokers license. That's the DRE who I know for a fact is seriously considering revoking Joshua's license.


Quote: Please take note, the DOC has not taken any action to affect our broker's license, we are

still authorized to act under that license, and we believe that protecting the investors is

our first and foremost responsibility.


Are you ever to tell us the truth


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By: Anonymous on 6/12/08

To MJC and all investors:


When you say "but what about people like me, Ron."


I say Ron did everything right on his part. It's Karen you need to ask that question to. She's the one who has been fraudulant, not Ron. Take this question to the meeting on Tuesday!

By: Anonymous on 6/12/08

MJC says:


What about me? A question to be asked at the meeting she so eagerly arranged(LOL). Will she answer anything honestly? Hell no!!

Read her latest Information letter. So many misstatements.

She claims to concur with the DOC for the license revocation? What a joke!

She appealed it than realized no matter what she brings up for defense will constitute perjury. Thats Karen for you. Her back against the wall, so graciously let the DOC take her license.

By: Anonymous on 6/12/08

Ron Cooper says:


Amen Ron. Interestingly Karen's projects were not only fully funded, but were overfunded. Many builders funds were used for her own projects. Actually, what am I talkng about? The money never made it to her projects either. It went someplace else. Thats why she is so afraid to open her books refusing to show up and produce documents for the "court ordered deposition".


By: Anonymous on 6/12/08

As you well know I am very much in favor of a positive out come for you and your projects, but what about people like me, Ron?

By: Anonymous on 6/12/08

Just my two cents. But I don't think either the builders or investors need any defense.


They just to take action and get this mess out of Karen and Joshua's control NOW!!!!!!!!!!!!!


p.s. In case you didn't know, I can be reach at 818-225-1528 and ron@cooperdevelopment.com.

By: Anonymous on 6/11/08

MJC- You "might" be missing a very important point. The builders have a lot of their own money into each project. As stupid as Karen was, and she was, she never lent a builder 100% of the cost. So the builder -at the start – had to have a substantial amount of their money in their projects.


I for one am right now well over 2.5 million dollars in the hole. And that is not because of the economy, but because of Estate's fraudulent lending practices. Practices such as not establishing SEGREGATED BANK ACCOUNTS for my loans as called for in our loan documents.


Sooooo, when you ask if the investors are going to get their money back, I think for every dollar of income generated by a finished project, the new lender will get their money back first and then the builder and investors should get the balance of the money pro-rata.


I hope that that answers your question.


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