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of Paso Robles can no longer solicit nor accept investor money because the troubled lender’s state permit to do so has been revoked.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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Stefan

By: Anonymous on 6/14/08

There is lots of “HOT-AIR” floating on this site for sure. Isn’t it better this way than some disgruntled investor/borrower takes matters into their own hands? I am sure many felt that way on and off until some logic creped into our brain.


This forum allowed many of us to vent frustration and let off some steam. Everyone should give themselves a big applause and send a donation to UncoverdSLO for creating a proper forum.


According to Karen Guth, we are just bunch of complainers with no clue about the real world. Remember, she stated that the entire problem started with the real estate market turn down? In that case, why so many of projects were not completed when the loans were issued some back in 2000 or 2003? Markets were going up fast at that time. So her argument is stating it kindly; “MISLEADING”.


Karen blames us for the difficulties that came upon EFI and her operation


“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”.


DOC revoked her license was just a fluke because many of us made a complaint and been whining to the authorities. She was to defend it vigorously, but when the inevitable happened, it was her idea.


If it was not for this site, she would be happily destroying documents transferring tittles leveraging assets with HERITAGE OAKS BANK and others willing to do so, taking cash out in the process claiming it is rightfully hers. Read the following coming directly from her PR firm.


“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."


Fredrickson made arrangement for investors meeting and Karen so masterfully hijacked it. I don’t blame her for it and as many should attend as possible.


Stefan

By: Anonymous on 6/14/08

To Insider:


Seems obvious to me they are fighting so hard so they don't have to reveal their fraud! They're trying to stay out of prison! And, you are right, they are collecting money along the way.


Karen/Joshua, if you are reading this, could you please just leave town. It would be so much easier on all of us!

By: Anonymous on 6/14/08

to License


If there are no assets and no money left why is EFI fighting so hard to stay in charge and not allow investors a look at the books. In other words what are they fighting so hard for if there is nothing there?

By: Anonymous on 6/14/08

To License: You make some good points. Please write me at fullyfunded93401@yahoo.com I'd like to ask you some questions. Thanks ahead of time.

By: Anonymous on 6/13/08

OK EFI supporters if Karen has the best interests of all in mind why doesn't she voluntarily allow the books opened and an agreed apon new management team?

By: Anonymous on 6/13/08

To License:


WRONG. I have found (in CA alone) 7 Hard Money Lender cases where Receivers/Trustees were appointed, and after the proper handling of the assets, the investors got anywhere between 40 cents to 70 cents on the dollar.


I strongly suggest you blog facts and not fiction.


Replace Karen and you're on your way to some sort of reasonable recovery. Do it your way and and we all might just as give up now.


By: Anonymous on 6/13/08

Once the license is pulled, the company will probably file for bankruptcy which will tie up everything for 2 more years or so. The bankruptcy will result in no tangible assets remaining and dissolution of the entire process. Investors will be left with worthless shares which they can use to offset any capital gains they received on other assets. Ask the Enron investors how much they recovered for their shares. The one common theme on this blog is that most of the more aggressive posts yelling "Go get 'em" have no idea whatsoever as to anything they are talking about. When you are confronted with facts or actual knowledge, you claim everyone is an EFI supporter. I don't believe anyone supports EFI. But I can't get over how much smoke is being blown up the chimneys of the people who may have actually lost money here.

By: Anonymous on 6/13/08

Who will run EFI once the DRE pulls their license? Someone competent who will be appointed by the courts and charged with the responsibility to do the best for the investors.

By: Anonymous on 6/13/08

By the way you have a much better chance with the Chumash they run a fair game.

By: Anonymous on 6/13/08

Tell me EFI supporters how will and who will run the company when the DRE pulls your license? Answer that.


Stefan

By: Anonymous on 6/13/08

EFI lovers you are really reaching now. You can smell the desperation in your comments. You know a final reciever will be paid through the assets of Estate. No one in the fund will be required to pay because as limited partners they are only at risk for thier initial investment. What your worry is is once a reciever is appointed the truth will be discovered and instead of you getting paid the reciever will be with money that would of otherwise been absorbed by you and your crew.

By: Anonymous on 6/13/08

You are right Insider, its Karen/Josh or whomever you want it to be. As to vial, I think its vial you are pumping laughing gas into the heads of maybe some folks who did lose a lot of money. That's fairly vial in my mind. You should go hand around Chumash to tell the losers who walk out of there how they can hire attorney's and spend whatever money they have left chasing money which is long gone given their own failure to manage their lives. Obviously, you are a supporter of welfare state mentality.

By: Anonymous on 6/13/08

The Court doesn't pay for the Receiver. The litigants pay. They also have to post a bond. Maybe that's why Frederickson can only attract 6 investors of the thousands who invested. Doesn't sound like any of you mad bloggers signed up.

By: Anonymous on 6/13/08

to think and anonymous


Who are you to tell people not to blog. Your vial comments only lead one to think that you are Karen or Josh. Who else could be so unempathetic of these peoples losses. Stupid? Yes for trusting Karen. Greedy? Isn't everyone? Thier trust of Karen and thier desire to make money does not justify the fraud that separated them from thier hard earned money. Getting what they can back and punnishing the perps. may be some consolation and bring some level of closure to this thing. So if somebody should quit blogging its YOU! A-hole.

By: Anonymous on 6/13/08

If you think a receiver is expensive, the legal papers how that Karen took 2.6 Million dollars for fees in teh last two years! And that appears to be fees to manage loans that she made to herself (34 Million Dollars worth) and never made a payment on.


And your worried about what a court appointed receiver is going to cost?


I agree with Mike, we have to know what's going on.


By: Anonymous on 6/13/08

Be faithful, the CIA almost has an address for a 6 foot seven inch guy walking around with a dialysis machine attached to him in the mountains of Afghanistan. It should take much more time for them to complete their investigation. They just need a little more time.


Stefan

By: Anonymous on 6/13/08

Homeless may very well be one of the many borrowers Karen left destitute. She not only sells them a loan but requires much collateral perhaps all they had. And then she fails to fulfill the loan and forecloses. Don't think that homeless person was greedy. He/she was probably ruined.

By: Anonymous on 6/13/08

For those of you that got Karen's letter today talking about the meeting on Monday…DON'T BE FOOLED. She had VERY LITTLE SUPPORT. The folks that showed up were all for getting her out.

By: Anonymous on 6/13/08

Do you folks really believe Guth has some of warehouse somewhere where there are gold bars or bags filled with cash sitting in a vault? The money is gone. All that is left are some half built construction projects which have depreciated 60% or more in the last 12 months given the economy. Given this is described as a Ponzi scheme, that meand the deeds of trust some of you might have a small interest in, assuming you can actually trace the fund proceeds, are potentially liable to the contractors who are still owed sums for improving the property. This was the case 20 years ago in San Diego where Gary Naiman did the same thing and crumbled in the recession of the early 90s. Stop blogging and go find some gainful employment to try to earn back the $$ you over invested in a risky investment as you have crapped out!

By: Anonymous on 6/13/08

homeless;


I would submit that you lost your home because you were both stupid and greedy. No right-thinking person puts all their assets at risk in a Hard-Money investment.

By: Anonymous on 6/13/08

Facts:

1)DOC revoked their permit after finding that Karen was in violation of her own operating agreement and the law.

2)DRE has an open investigation.

3)DA's office has an open investigation.

4)Karen has not provided an audited financial statement for 2007 which she was required by law to do by 3/31/2008 despite numerous requests by investors.

5) Karen HAS DEFAULTED ON $21,000,000 WORTH OF LOANS MADE TO HER OWN LLC’S MADE WITH OUR FUND INVESTMENTS!!!!! SOME OF THESE LOANS MATURED AS FAR BACK AS 2003!!!

6) Karen refuses to answer questions or explain “What did you do with the $172,000,000 that we trusted you with? What did you do with the $21,000,000 that went missing from the Fund between November 2007 and May 2008? What liens and lawsuits are pending on the properties? What is the total amount of unpaid taxes on the properties?


Please, People, we are entitled to this information. If Karen has reason to fear an inspection of the books, that is reason enough for the court to appoint a receiver. If she has nothing to hide, she has nothing to fear – the receiver will report back to the court that all is well and she can carry on as before with her reputation intact. But she fears being found out because that would mean the end of her privileged lifestyle, the end of her perceived standing in the community, and most of all her olive ranch.

By: Anonymous on 6/13/08

i've lost my home because of efi. i'm going to the ex parte hearing. monday, superior court, s.l.o., dept. 2 at 1:30. she can't get any local atty to believe her lies so she has to crawl/slink out to costa mesa. remember, the ex. charlie applebaum got his 2.8 mil, what have we gotten?

By: Anonymous on 6/13/08

For those selling the DRE short, I spoke with the investigator this week… they are still going over the audits… give them time.


Oh! and how many of you critics of the DRE and the DOC filed your complaint forms? Any of you? Perhaps a little more input would have helped them do their job.


As for the cost of the receiver… EFI charged $3,700.64 per day for the years 2004-2006 to managing the fund… I guess Karen and company are a bargain, right? I think the extra amount that Karen said a receiver would cost will be worth it, at least the receiver will be accountable to the judge and will be looking for where the money actually is rather than hiding it.


Stefan

By: Anonymous on 6/13/08

dre will pull there r.e. license when you all learn stuff that no one has mentioned here at all. i'm for the receiver. check your check book and add up how much you all have spent to take k & j down. according to mondays tribune buzz article–has anyone noticed that CENTENNIAL LIVE STOCK is one of roger fredrickson's clients. i looked up there efi investments. fund and individual loan commitments are VERRY VERY VERY BIG. karen must have slapped these guys a little to hard.

By: Anonymous on 6/13/08

To Karen Guth: who the hell do you think you are, you got alot of nerve posting blogs on this site ripping individuals apart, you have stolen peoples hard earned money and could care less that they cant pay their bills, buy their medications, eat, and some are even losing their homes. What kind of evil witch are you, oh yeah i know what kind of evil witch you are, and i know what you did, i worked for you, i know for a fact you used money that people invested in certain properties for your own properties to finish them, i know you broke every rule you were bound to follow under the DRE and DOC, i sure hope someone is screen printing these blogs posted by her, sure might help with getting the DRE to act and the DA to act by her cocky attitude and flat out disrespect towards all the people who made her millions. You are the definition of BITCH, and you will get yours, and as an ex employee i will do everything in my power to make sure you lose your ranch, your freedom, your dog, your car, and your reputation will be know throughout california as a crook, with no conscious of the fact you stole the money from hard working people who trusted you. you disgust me, and so does your idiotic son who has never had the backbone to tell you how youve ruined not only his life but the life of your grandchildren, oh yeah that right you could care less about anything other than getting your greedy hands on every dime you can regardless if that means put an elderly couple on the streets with nothing. You are pathetic

By: Anonymous on 6/13/08

to Reciever?


And did the DOC come up with nada?

By: Anonymous on 6/13/08

Any action taken on behalf of Mortgage Fund clients of the law firm will benefit all Fund investors. Be grateful that someone else is footing your bill and take advantage of it.

By: Anonymous on 6/13/08

EFI has you all so worried about pennys for attorneys while she's emptying the vault and has been for years. Just keep listening to her cronies. Every post warning of the cost of attorneys and recievers is most likely from them. What if you would have put a stop to this 2 years ago or even 1 year ago how much more would there have been to recover? Do you think its getting better? The DRE is not there to get your money back thier job is to pull thier license and when they do EFI can no longer manage the properties. End of story. They have somehow put themselves in ownership of over 20% of the fund which means you need over two-thirds of the remaining investors to take over. You need this reciever now!

By: Anonymous on 6/13/08

To anonymous


172,000,000/10,000=17,200x.58=$9976 or approx. 10k for attorney.

By: Anonymous on 6/13/08

I'm under the impression any receiver is being paid from the Fund's funds. Does anyone know for a fact that a 'limited' receiver actually charges the clients of Fredrickson's only??? Anyone know the difference between a limited receiver and a regular receiver?


Stefan

By: Anonymous on 6/13/08

Yeah! At least the Receiver can spend $300 an hour or more looking over 10,000 – 50,000 documents and then send the 6 investors a bill for $50,000 and a conclusion that all the $ is gone. Given the DRE has spent 4 months at it thus far and has come up with nada, how long do you think a "receiver" will spend sucking every last cent out of it?

By: Anonymous on 6/13/08

At least if they are working all weekend they can continue to pay themselves overtime for all the work they are doing "to save the business." Hope that wasn't your $

By: Anonymous on 6/13/08

paso guy:

the 51% plan won't work because 70% of the investors don't have a clue or want to get involved–thus–karen wins again with her dog and pony show. once the UNBIASED, out of the county,(this is an important point) limited receiver goes in and pulls out all the hidden goodies–karen will be out of everything. she has stolen and loaned herself so much money. be positive for monday.

By: Anonymous on 6/13/08

I say go to the meeting, sit down and watch for the entertainment value. Bring your video cameras. This woman will lie, lie, lie and our video tapes will be priceless in court when Karen and Joshua are scrambling to stay out of jail!

By: Anonymous on 6/13/08

insider says:


to not impressed


Well if the investment in the fund was 172,000,000 and it cost 10,000 to get something hapening that would be 58 cents for every $10,000 of invested cash. Sounds pretty good to me. Who's side are you on Josh.


Can someone please show me the formula used to come up with that number.

By: Anonymous on 6/13/08

Contractors Are Deserving


I am sick and tired of all these losers caling my office for payments. I have work to do like meeting with my attorney(s)PR firm(s) and of course I must have my social life too. BTW leave my puppy alone!! he knows nothing he jaust takes orders from me. He has kids and they need lot of money for their life style. Ha Ha Ha!! You can't get me!!

By: Anonymous on 6/13/08

This receiver, if appointed, will only be in charge of the Fund, and if I'm right, will be there for a limited time. Then he will report back to the judge with his findings. This should determine whether Karen stays as Fund manager or leaves permanently. What about Estate Financial Inc? The receiver was only for the Fund, not EFI. These really are two seperate entities. Who's going to make a move for EFI? I see Monday's possible receiver positioning as just the beginning. FTD people will have to shake the cage, too.


Also, do any of you see Karen working so openly next week with a receiver? I don't. She's probably tried to cook the books beyond belief to fool the receier somewhat. My guess is documents have long been destroyed.


This is just the start of a heavy heated battle that may have many turns and twist. Hold on to your seats!


By the way, wouldn't doubt to see Karen and Joshua working all weekend long at the office. It'll be worth driving by and peaking in the windows. LOL!

By: Anonymous on 6/13/08

I know of contractors who brought this wrongdoing to the Paso PD last Summer and still have not received any results. You watch way too much CSI if you think the PD or the DA in this County is sophisticated enough to handle this sort of investigation.


Stefan

By: Anonymous on 6/13/08

Contractors Are Deserving


who cares about those slimy group? They just want money like everyone else. All the investors builders contractors jsut suck it up!!! I've got mine so now go get a life. Ha Ha Ha

By: Anonymous on 6/13/08

I know of contractors who brought this wrongdoing to the Paso PD last Summer and still have not received any results. You watch way too much CSI if you think the PD or the DA in this County is sophisticated enough to handle this sort of investigation.

By: Anonymous on 6/13/08

Do any of you actually care about the local contractors who got screwed by Guth and her companies? They had construction contracts for payment for work they performed on her projects and haven't been paid. Where is all the whining for the contractors? I guarantee the contractors did not have 10 paragraphs of cautionary language in their investor prosectus indicating they were in vesting in a nonguaranteed, high risk investment. It's interesting to note how these groups of investors have no problem in trying to take over the projects without paying the contractors for the improvements made to the properties. What makes them any different from Karen or Linda Kennedy?

By: Anonymous on 6/13/08

Not Impressed


To some degree you are right. On the other hand, having acces to documents is essential to prove fraud. If this is the only way to get what the Plaintiff needs to proceed with a more serious complaint it is well worth it. Unfortunately, Karen knows that stalling delaying will afford her more time while frustrates everyone else. Slowly though she is being cooked. Remember the DOC has limited capility in any action. The DA should have been on this for some time, but they are busy, so conviniantly.

By: Anonymous on 6/13/08

to:pushing forward


Not Really, the purpose of the tuesday meet is to garnesh support to fire Karen & Josh as fund managers..to do that 51% of the "money power" has to sday yes. On the other hand, a lilited recievership would leave Karen & Josh in place and the court appointed recievers working with them side by side. The purpose of the lilinted recievership is to release data/docs that so fall has been withheld, even sfter written and reasonable request

By: Anonymous on 6/13/08

Do any of you wonder why after 3-4 months of the DRE having in its possession all of EFI's documents they can't seem to put together a case against their active operation and only moved to stop new investments, which was in essence a lot of nothing as EFI isn't collecting any new investors anyway? P.S. The attorney only represents those who pay his bill. His looking at documents after his 6 clients have paid him $15000 to get the opportunity, and another to $25,000 to hire a forensic accountant, will surely do you no good unless you are one of the six clients.

By: Anonymous on 6/13/08

paso guy:

tuesday's meeting is mute if monday's ex parte hearing gets a limited receivership approval, wouldn't you think?

By: Anonymous on 6/13/08

to not impressed


Well if the investment in the fund was 172,000,000 and it cost 10,000 to get something hapening that would be 58 cents for every $10,000 of invested cash. Sounds pretty good to me. Who's side are you on Josh.

By: Anonymous on 6/13/08

I don't see it that way. I think that the big meeting tuesday will untimately result in a "no" vote when asked if new managers be assigned the fund. With that in mind, a limited recievership should help to release docs that hide the bad news, if there is any. If it is bad and the investors can see for themselves that a "replacement vote" is warranted, then it was well woth the money. specially if it's not mine. (shot at levity)


Stefan

By: Anonymous on 6/13/08

not impressed:

what are you doing to help the investors———i'd say from your response—nothing!

By: Anonymous on 6/13/08

If you read the papers carefully, not much is being asked for and very little will occur even if "successful". I am sure that this hearing was worth the $10,000 or so in legal fees just to maybe get a look at some documents. Representing all of six "investors" is not very strong in light of all the free advertising given by this website and the Tribune. This isn't really a "receiveship" as described. Great, so you get the chance to spend $15,000 to look at documents confirming your $ is gone! Sounds like another good investment for EFI customers!

By: Anonymous on 6/13/08

According to the Complaint filed, Fredricson's office asking for a LIMITED receivership.

They are asking for documents investors should have for a long time. The judge will be hard pressed not to grant their request.

Karen is hiding documents that will implicate her in many wrong doings. That is the main reason she is fighting to keep information away from investors. She has many reason to be afraid.

By: Anonymous on 6/13/08

I have been informed that the decision has been

postponed until Monday at 1:30 P.M.

it will again be held in Department 2 of the Superior Court in SLO, Judge La Barbera

By: Anonymous on 6/13/08

Yes, I know. It was too short of notice to make it down there. Not sure what good it would have done, Roger filed a great complaint doc with the court on Wednesday.


http://media.sanluisobispo.com/smedia/2008/06/12/

By: Anonymous on 6/13/08

I wonder what happened, the suspense is killing me

By: Anonymous on 6/13/08

Thanks Mike!


Thank you Roger and his clients!


According to today's Tribune Biz Buzz article…


http://www.sanluisobispo.com/business/story/38663


"…Karen Guth, Estate Financial’s president, said the law firm is circumventing the process of a pending investor vote that would decide if she and her son, firm Vice President Josh Yaguda, should be replaced as fund managers…"


This is just more spin from EFI.


The law firm is not "circumventing" the membership vote.


There can not be any vote on Tuesday because NO PROXY BALLOTS have been mailed out to the membership!


It is Karen and company that is circumventing the membership vote.


We don't need no stinking vote anyway, because it is going into recievership sooner or later.


I hope and pray that the judge decides to take this suite on and that he moves forward in favor of placing a receiver over EFI now.


Stefan

By: Anonymous on 6/13/08


Dear Judge LaBarbera, June 13, 08


There are two kinds of investors in the Estate Financial Mortgage Fund. One is the investors who have gone to Estate Financial and ask Karen Guth specific questions. The other type of investor is the ones who have never ask Karen Guth any specific questions requiring documentation. If you are willing to listen to what Karen has to say and accept it without question, then she will talk to you. If you ask Karen a question she is uncomfortable with, such as how much money does the mortgage fund owe on back taxes or what are the assessment parcel numbers on the property that the Estate Mortgage Fund has for collateral on their loans, then Karen announces that this meeting is over and shows you the door. This is what happened to me in a meeting I had with her.


Even if I don’t get any money back, even if the lawyers and receivers and forensic accountants burn through any remaining money, I don’t want to go to my grave wondering what happened. I want to know where the one hundred and seventy million dollars that Karen Guth accepted from hard working people went. I initially wanted to believe in Karen in the worst way. Who wants to confront the loss of savings that it took you your entire life to put together? I would rather believe this grandmotherly woman in her stylish outfits sitting behind the desk in her new building, telling me it was all going to be OK. Why would a woman who was already blessed with a lot of financial assets to start with act in a way that would ruin her name and negatively affect her grandchildren? There wasn’t any overt reason, which was why she was so believable.


Karen has already shared some really awful news with investors.

1) She tells investors that she has lost over twenty million dollars of their money (everybody would be happy with a twenty million dollar loss but by the most conservative estimate it is five times that much).

2) She tells investors that she is being sued by multiple people for many different reasons and that the investors remaining assets are subject to attachment from these lawsuits.

3) She tells investors that the Department of Corporations has stopped her from ever taking in any more investor money, but words it like maybe the whole intervention and action has been her idea.


While Karen Guth isn’t afraid to tell investors this terrible news and while she claims she is working twenty four seven to answer investor questions, she picks and chooses her questions and stonewalls the question that would lead to an actual understanding of the true financial situation with Estate Financial. Is all the money gone? Oh no, not all of it, Karen says. OK, what are the APNs on property held by investors? She can’t say. How much is owed by the Mortage Fund in back taxes? Can’t say. How much did Estate Financail pay out last month in lawyer’s fees, public relations work, internet site maintainence, salaries, and other involved overhead? She can’t say. What is the total dollar amount of investor money Karen has loaned to herself? She can’t say. If some loans became mature years ago, how is it that investors were still able to receive interest payments? She can’t say.


Until control is taken away from Karen, no one is ever going to find out what happened. Karen is never going to be able to come up with money to finish the projects because she has no credibility left. There is a reason investors don’t go back and ask Karen for a meeting. After I was tossed out of a meeting with Karen Guth at Estate Financial for asking about the APN’s, I am not going to go back and be humiliated by asking for anything else. Until there is an accounting, Karen continues to hold all of the cards. Any sort of take over is going to be confusing, expensive and time consuming but anyone who thinks Karen Guth is going to be forth coming with answers is seriously mistaken. Letting investors know what happened to their money is not in her interest. I have been asking these questions in person and in writing for over a year and have gotten nothing.

You can have these questions answered by placing a temporary receiver at Estate Financial and I sincerely hope you will do so.


Respectfully yours,


Mike Knecht

Estate Financial Mortgage Fund Investor P 2235