Update: EFI’s bankruptcy expectations

June 29, 2008

By KAREN VELIE

Estate Financial Inc. (EFI) will remain in bankruptcy for at least the next few months and at the same time independent evaluator Hanno Powell will continue his audit, the Fresno attorney said earlier this week.

A “complete evaluation” of EFI’s books was ordered during a June 16 San Luis Obispo Superior Court hearing. During that hearing, a group of investors requested the court appoint a receiver to oversee the company’s $170 million mortgage fund. A week later, the Department of Corporations, on behalf of the people of California, joined the plaintiffs in their request.

In an unrelated action, a group of creditors forced EFI into Chapter 11 bankruptcy proceedings in a Santa Barbara’s Central District of California United States Bankruptcy Court June 25. According to Powell, the bankruptcy proceeding would normally have canceled his evaluation, but he said this is not the case with EFI.

Under Chapter 11 bankruptcy, the court supervises the restructuring of the company and its debts, some of which can be partially or completely dismissed. Traditionally, the company comes out on top, followed by creditors, and then investors.

However, all creditors have a right to be heard by the court and receive fair and equitable treatment. As to EFI’s bankruptcy, investors may end up as creditors. EFI’s owners Karen Guth and Joshua Yaguda, if found responsible for the fund’s financial decline, may not fare well in the court proceedings.

“As the facts bear out, many investors may end up as creditors,” Powell said.

Two of the plaintiffs listed on the bankruptcy petition, James and Kathleen Scott, started as investors. However, the couple claims that because EFI failed to list them on the deed of trust on one loan and failed to pay them their proceeds on the sale of another, they are now creditors.

“No one can evaluate the effect on creditors until bankruptcy schedules listing all assets, liabilities, and creditors are filed with the court,” Powell added. “Because it is an involuntary bankruptcy, the schedule will probably take several months. I don’t know if anyone can give an accurate assessment of how this will affect the investors.”

Tags:, bankruptcy, EFI, Estate Financial, guth, paso robles, yaguda


Loading...
Stefan

By: Anonymous on 3/22/08

FYI Why don't you just caqll me and ask me about the meeting that i did not have with Estate Financial on Tuesday or give your number out so we could talk to you.

805/610-6331

By: Anonymous on 3/22/08

DEWDOG: any info. at dataquick on the doya partners property that efc created a new llc on? B558-04

By: Anonymous on 3/22/08

DEWDOG: any info. at dataquick on the doya partners property that efc created a new llc on?

By: Anonymous on 3/22/08

any info. on the LLC., that was just created by EF on investment B311-04?

By: Anonymous on 3/22/08

where is john/colleen childers.

what happened at the meeting with karen guth thursday?

By: Anonymous on 3/22/08

Hi Arlene, my name is John and i have the Damartin loan also in Bermuda dunes. you may call me 805/610-6331 or email me at bluesky41144/@yahoo.com

By: Anonymous on 3/21/08

Arlene, and others. You may have noticed your email address does not show up here unless you put it in the body of your message. Those who want any personal feedback will have to do that. The add-a-comment dialog box clearly points out your email will not be displayed automatically.

By: Anonymous on 3/21/08

I am invested in DAMartin project in Bermuda Dunes. Anyone else out there? Please contact me by email. I would also like to be included in future meetings,emails, etc. Thanks much.

By: Anonymous on 3/21/08

whereismymoney


If the APN for your investment is 049-104-019 DataQuick shows 2 loans made on the property on 1-16-2008. $306,750 for a construction loan and an aditional $50,000 for "unknown" reasons. You may want to check your paperwork and determine where your money was directed towards. Also go by and see if there is a house on the lot and determine if it is completed or not. There are several homes that are not completed.

By: Anonymous on 3/21/08

More internet sites

Ca Dept of Corporation search:

http://kepler.sos.ca.gov/list.html

By: Anonymous on 3/21/08

whereismymoney

If the APN for your investment is 049-104-019 DataQuick shows 2 loans made on the property on 1-16-2008. $306,750 for a construction loan and an aditional $50,000 for "unknown" reasons. You may want to check your paperwork and determine where your money was directed towards. Also go by and see if there is a house on the lot and determine if it is completed or not. There are several homes that are not completed.


Stefan

By: Anonymous on 3/22/08

FYI Why don't you just caqll me and ask me about the meeting that i did not have with Estate Financial on Tuesday or give your number out so we could talk to you.

805/610-6331

By: Anonymous on 3/22/08

DEWDOG: any info. at dataquick on the doya partners property that efc created a new llc on? B558-04

By: Anonymous on 3/22/08

DEWDOG: any info. at dataquick on the doya partners property that efc created a new llc on?

By: Anonymous on 3/22/08

any info. on the LLC., that was just created by EF on investment B311-04?

By: Anonymous on 3/22/08

where is john/colleen childers.

what happened at the meeting with karen guth thursday?

By: Anonymous on 3/22/08

Hi Arlene, my name is John and i have the Damartin loan also in Bermuda dunes. you may call me 805/610-6331 or email me at bluesky41144/@yahoo.com

By: Anonymous on 3/21/08

Arlene, and others. You may have noticed your email address does not show up here unless you put it in the body of your message. Those who want any personal feedback will have to do that. The add-a-comment dialog box clearly points out your email will not be displayed automatically.

By: Anonymous on 3/21/08

I am invested in DAMartin project in Bermuda Dunes. Anyone else out there? Please contact me by email. I would also like to be included in future meetings,emails, etc. Thanks much.

By: Anonymous on 3/21/08

whereismymoney


If the APN for your investment is 049-104-019 DataQuick shows 2 loans made on the property on 1-16-2008. $306,750 for a construction loan and an aditional $50,000 for "unknown" reasons. You may want to check your paperwork and determine where your money was directed towards. Also go by and see if there is a house on the lot and determine if it is completed or not. There are several homes that are not completed.

By: Anonymous on 3/21/08

More internet sites

Ca Dept of Corporation search:

http://kepler.sos.ca.gov/list.html

By: Anonymous on 3/21/08

whereismymoney

If the APN for your investment is 049-104-019 DataQuick shows 2 loans made on the property on 1-16-2008. $306,750 for a construction loan and an aditional $50,000 for "unknown" reasons. You may want to check your paperwork and determine where your money was directed towards. Also go by and see if there is a house on the lot and determine if it is completed or not. There are several homes that are not completed.


Stefan

By: Anonymous on 3/21/08

INVESTOR at ESTATE FINANCIAL?


Do you want to find out more information regarding documents filed with our Clerk Recorder’s office?

http://services.sloclerkrecorder.org/officials/se

* In Grantor/Grantee Type in your name first to get familiar. Then type Estate Financial, Karen Guth, Signature Homes. Under document type, try assignment of deeds and other stuff.


Do you want to find out more information regarding Foreclosures?

https://www.fidelityslo.com

* Second item over, Foreclosures (Notice of Defaults), This site is arranged by week

If you are familiar with the search, type in Estate or the street name of the project.


THERE IS A WEALTH OF INFORMATION AT YOUR FINGERTIPS

By: Anonymous on 3/21/08

dewdog,

I am an investor(loser)on Oak Grove Doya/Atascadero project lot #19.

Estate Financial has told me in writing that they are doing a deed in lieu of on this property and getting the new outside financing to finish the project.

Your blog says there is already new financing in place as of January 2008?

Can you give me specifics?

By: Anonymous on 3/21/08

Could that be the fearless leader? Josh

By: Anonymous on 3/21/08

Industry guy is giving good advice. Each project has to have ALL of the investors agree on what action is going to be taken and have 1 representative for their cause. If there are a large number of investors this could be difficult to impossible as everyone is probably being affected differently and may want to take a different approach to solving the problem. The main concern of everyone now should be to gain control of your investment and recover as much as possible. Every project should have some equity that is salvageable. Leave the threats and lawsuits until later and go after your $$$$$.

By: Anonymous on 3/21/08

Everybody that is thinking that it would be better to take this company down, becareful what you ask for. EFI is in a much better position to solve your problems than you are. They need help and time, not lawsuits and 3000 investors calling them everyday. I have watched 21st groups fail time after time to solve their problems and all they do create more turmoil. They put the wrong people in charge of their groups and waste time and money. The groups in almost every situation can not agree and fracture. There is not enough quailified people to guild these groups through the resolution process, and even if there were, nobody wants to pay them for their time and efforts. The mob mentality has to be avoided.

I truley believe that if this group put as much effort into helping EFI solve their problems rather than creating them, they would realize a much better return on their money and get it back sooner. Again, becareful what you ask for.

By: Anonymous on 3/21/08

dewbog, your right on..please give me a call.

610/6331


Stefan

By: Anonymous on 3/21/08

INVESTOR at ESTATE FINANCIAL?


Do you want to find out more information regarding documents filed with our Clerk Recorder’s office?

http://services.sloclerkrecorder.org/officials/se

* In Grantor/Grantee Type in your name first to get familiar. Then type Estate Financial, Karen Guth, Signature Homes. Under document type, try assignment of deeds and other stuff.


Do you want to find out more information regarding Foreclosures?

https://www.fidelityslo.com

* Second item over, Foreclosures (Notice of Defaults), This site is arranged by week

If you are familiar with the search, type in Estate or the street name of the project.


THERE IS A WEALTH OF INFORMATION AT YOUR FINGERTIPS

By: Anonymous on 3/21/08

dewdog,

I am an investor(loser)on Oak Grove Doya/Atascadero project lot #19.

Estate Financial has told me in writing that they are doing a deed in lieu of on this property and getting the new outside financing to finish the project.

Your blog says there is already new financing in place as of January 2008?

Can you give me specifics?

By: Anonymous on 3/21/08

Could that be the fearless leader? Josh

By: Anonymous on 3/21/08

Industry guy is giving good advice. Each project has to have ALL of the investors agree on what action is going to be taken and have 1 representative for their cause. If there are a large number of investors this could be difficult to impossible as everyone is probably being affected differently and may want to take a different approach to solving the problem. The main concern of everyone now should be to gain control of your investment and recover as much as possible. Every project should have some equity that is salvageable. Leave the threats and lawsuits until later and go after your $$$$$.

By: Anonymous on 3/21/08

Everybody that is thinking that it would be better to take this company down, becareful what you ask for. EFI is in a much better position to solve your problems than you are. They need help and time, not lawsuits and 3000 investors calling them everyday. I have watched 21st groups fail time after time to solve their problems and all they do create more turmoil. They put the wrong people in charge of their groups and waste time and money. The groups in almost every situation can not agree and fracture. There is not enough quailified people to guild these groups through the resolution process, and even if there were, nobody wants to pay them for their time and efforts. The mob mentality has to be avoided.

I truley believe that if this group put as much effort into helping EFI solve their problems rather than creating them, they would realize a much better return on their money and get it back sooner. Again, becareful what you ask for.

By: Anonymous on 3/21/08

dewbog, your right on..please give me a call.

610/6331


Stefan

By: Anonymous on 3/21/08

INVESTOR at ESTATE FINANCIAL?


Do you want to find out more information regarding documents filed with our Clerk Recorder’s office?

http://services.sloclerkrecorder.org/officials/se

* In Grantor/Grantee Type in your name first to get familiar. Then type Estate Financial, Karen Guth, Signature Homes. Under document type, try assignment of deeds and other stuff.


Do you want to find out more information regarding Foreclosures?

https://www.fidelityslo.com

* Second item over, Foreclosures (Notice of Defaults), This site is arranged by week

If you are familiar with the search, type in Estate or the street name of the project.


THERE IS A WEALTH OF INFORMATION AT YOUR FINGERTIPS

By: Anonymous on 3/21/08

dewdog,

I am an investor(loser)on Oak Grove Doya/Atascadero project lot #19.

Estate Financial has told me in writing that they are doing a deed in lieu of on this property and getting the new outside financing to finish the project.

Your blog says there is already new financing in place as of January 2008?

Can you give me specifics?

By: Anonymous on 3/21/08

Could that be the fearless leader? Josh

By: Anonymous on 3/21/08

Industry guy is giving good advice. Each project has to have ALL of the investors agree on what action is going to be taken and have 1 representative for their cause. If there are a large number of investors this could be difficult to impossible as everyone is probably being affected differently and may want to take a different approach to solving the problem. The main concern of everyone now should be to gain control of your investment and recover as much as possible. Every project should have some equity that is salvageable. Leave the threats and lawsuits until later and go after your $$$$$.

By: Anonymous on 3/21/08

Everybody that is thinking that it would be better to take this company down, becareful what you ask for. EFI is in a much better position to solve your problems than you are. They need help and time, not lawsuits and 3000 investors calling them everyday. I have watched 21st groups fail time after time to solve their problems and all they do create more turmoil. They put the wrong people in charge of their groups and waste time and money. The groups in almost every situation can not agree and fracture. There is not enough quailified people to guild these groups through the resolution process, and even if there were, nobody wants to pay them for their time and efforts. The mob mentality has to be avoided.

I truley believe that if this group put as much effort into helping EFI solve their problems rather than creating them, they would realize a much better return on their money and get it back sooner. Again, becareful what you ask for.

By: Anonymous on 3/21/08

dewbog, your right on..please give me a call.

610/6331


Stefan

By: Anonymous on 3/21/08

Ron

I'll give you a call. My credential are equal to yours

although with an additional 5 years experience, primarily in the North County. I have advised many clients regarding these hard money loans and have save my clients from many of the pitfalls that many are suffering now. These are only my opinions and for the most part are the facts of what is going on. This is my 3rd exposure to a "down market." Let me just say that the other 2 didn't even come close to this one. The bottom line is there have been too many homes built, bad loans made, short sales, foreclosures, hard maoney frauds which all lead up to where we are. People are losing their jobs, cost of living is going up and it has become very difficult to get a home loan. Most of the market for buyers has been used up and many will be loosing their homes. The economy is going into the the pits. Sorry for the bad news but that is what it is.

I think it boils down to whether you want to lose a little bit of money now or much more later on because there is no quick fix to this one.

By: Anonymous on 3/20/08

dewdog: I'm surprised you are giving us all this advice and are hiding behind a blog name. I've got 25 years in the real estate development business and adamantly disagree with most of the conclusions you have draw in your many many comments.

Most importantly I'd like to know who is giving me advice. So how about contacting me by phone or email so we can talk directly. Regards, Ron Cooper

By: Anonymous on 3/20/08

Hofie-

Each case needs to be addressed on its own merit. An example would be if a project was funded for $500k and it's completed. It then needs to be priced a market value, let's say $400k. In that case the investors have lost 20% of their initial investment. But depending on how much you have earned on interest payments the loss may not be that bad. If the property is kept in the developers name he will probably not sell it for this amount and there may be mechanical and or tax liens that would have to be paid. Also EF may still be drawing their management fee. If you foreclose, EF is out of it, the mechanical liens may disappear and the problem is now under your control.

If the project is not complete but has been fully funded why would anyone poor more money into it. Example would be if the project was fully funded, let's say $500k again, and it's going to take $100k to finish it, your in it $600k and still can only sell it for $400k. Now the loss is 33%.

If you do finish the house and rent it out you will have ongoing insurance, tax and maintenance costs. There will probably be a flood of these projects that will be rentals which will consequently lower the income from rentals. My estimate for a recovery is 2-3 years to see daylight and maybe 5 years for recovery. The house will still be worth $400k although you have supplemented someones rental cost, lost the use of your money and have gained nothing but be put in a position of trying to sell a 5 year ols house that has been a rental. I would recommend trying to get rid of it as soon as you can and rid yourself of the problem and reduce your licks to a minimum.

By: Anonymous on 3/20/08

Dewdog:

Many of EF's developments have not been completed. If EF is not in the picture the investors will need to hire an attorney and foreclose, and will end up with properties that have not been completed with fees for foreclosure, attorneys, taxes, management, etc.. I have been told that EF is moving ahead with foreclosures and plans to form LLC's so that funds can be generated to complete developments with no additional investor cost. After homes have been completed they can be rented or leased until a time when the properties can be sold. In either case the return of principal to investors is long term. Investors will need to determine if EF's LLC's are right for them.

By: Anonymous on 3/20/08

EFI misreprented itself to builders not only to investors. EFI charged interest on nonexisting funds.

I hope there will be another meeting next week, so I can attend. EFI has several lawsuit filed against including Joshua Yaguda and Karen Guth individually. EFI's problem is bigger than most individual can see it at this time. FRAUD FRAUD FRAUD


Stefan

By: Anonymous on 3/20/08

Ms. Guth/Mr. Yaguda:

We trusted you when we invested with Estate Financial. Now, all we are asking for the name of all investors in the projects we are invested in. WHY WON'T YOU GIVE THEM TO US?????

By: Anonymous on 3/20/08

to JB:


the payment was a mortgage fund payment, not an individual TD

By: Anonymous on 3/20/08

HOFIE

You have 2 things going on here, one being YOUR investment and the other is the actions that EF have done. My priority would be to attend to my investment. I would suggest the following:

1.Do a physical inspection where your money is invested and ascertain if the money was actually spent as it was represented to be spent.

2.Obtain a preliminary title report and determine who the other investors are. The report will also show any liens that may be against thr property.

3.If the project that you invested in appears to be completed I would attempt to gather the other investors together and foreclose on the property and get it into your names.

4.Come to terms that you are probably going to lose some money. But if the property is back in your names you can determine if you want to sell it at a "give away" price in todays market and regain some of your investment. If you have been getting interest payments in the past along with whatever you gain from a sell your loss may be minimal.

THESE ARE ONLY SUGGESTIONS. I WOULD RECOMMEND THAT YOU OBTAIN THE SERVICES OF A GOOD REAL ESTATE ATTORNEY.

As far as the actions against EF it looks like that could possibly be a class action suit.

Good Luck

By: Anonymous on 3/20/08

Three Bells,LLC a California Limited Liability Company, is in DEFAULT,FORECLOSURE AS OF 12/12/07 FOR $6199,929.07. not just the 3,665,720.00 that Signature Homes,LLC By Al D Amico and Third Press Partners,LLC BY Karen Guth, The BORROWERS,took out. SO where has the extra money $2,534,209 gone to????

The word on the vine!!! is that Big Al and Karen Guth have used that money on personal gains.


By: Anonymous on 3/19/08

Ladies and gentlemen. There's a storm brewing. We need to keep up with it and lead it to Estate's front door. I want to have a follow up meeting next week. We can probably expect three to four hundred people.


Who can help me arrange this – place, advertising, etc. please email me ron@cooperdevelopment.com or call (818) 225-1528 ASAP. Thanks

By: Anonymous on 3/19/08

Anyone wishing a copy of the November 5,2007 letter I received from R. Rodewald, EF's attorney, advising me that I faced "significant legal liability" if I contacted other investors and questioned the viability of Estate Financial please contact me at mjk122085@aol.com

By: Anonymous on 3/19/08

Investors: Be aware properties aren't being insured. Injured people can sue you individually. Property taxes aren't being paid. Is Estate waiting for tax sale to wipe us out.

By: Anonymous on 3/19/08

Hoffie: Estate's LLC plan is probably the worst concieved plan possible. Estate can borrow against your interest and take "discretionary" fees. Then, if and when the project gets built out, the lender and Estate get paid first, and you get the left overs. If there are any. Estate didn't mange your money properly the first time – what makes you want to let them borrow money and miss-manage it again. There are other solutions. If you want to talk about them call me at 818-225-1528 or email me at ron@cooperdevelopment.com


Stefan

By: Anonymous on 3/19/08

DEWDOG:

If you know a way to get my investment returned now I would like to know about it. It appears to me that EF's plan to formulate LLC's and then generate funds to complete projects is a viable approach. What is your plan?

By: Anonymous on 3/19/08

three bells B193-06 project.

any info. on the wine permit that's going to expire in a few months?

By: Anonymous on 3/19/08

are there statutes of limitations on these properties?

By: Anonymous on 3/19/08

HOFIE

If you are now not getting paid and there is no money now where do you think it will be coming from. In my opinion, 30 yrs. experience and this being the 3rd time around with something like this, the real estate market is just at the beginning of its fall. I don't think there is going to be anyone chasing "bad money" with "good Money."

Take the bull by the horns and go after what is left of your investment if there is anything.Your dealing with some real slick operators.

By: Anonymous on 3/19/08

john childers is meeting with karen thursday.

By: Anonymous on 3/19/08

paso guy–$192. payment, what loan number?

By: Anonymous on 3/19/08

We, the investors of Estate Financial, need to be careful. Are we in a better position having attorneys put EF out of business OR having EF working to resolve porblems with our investments? EF has informed me that they have a plan for resolution of each of my investments.

By: Anonymous on 3/19/08

Please ammend the foreclosure firm Don Vaughn owns to ALL AMERICAN FORECLOSURE SERVICE of San Luis Obispo; not American Foreclosure as in my previous message.

By: Anonymous on 3/19/08

I'm a Fund investor in Estate Financial. Please keep me in the loop on all activity surrounding Estate Financial.

By: Anonymous on 3/19/08

Anyone who has money invested at EF that is marked for Doya Partners in Atascadero may want to check their paperwork. Most of the homes were "financed" on 1-16-08 by EF. This appears to be a recent transaction per DataQuick which could be in conflict with what is currently happening. Information only.

By: Anonymous on 3/19/08

re: conflicts of interest.


Any investors encountering problems with DON VAUGHN owner of COUNTRY FINANCIAL INC. in Paso? Same DON VAUGHN that introduced himself as a consultant for Estate Financial at Mondays EF meeting. He also failed to disclose that he owns American Foreclosure in SLO.

Interesting that Mr. Vaughn spoke on behalf of EF when Mr. Vaughn has his own share of problems in communicating with investors and the mishandling of a note that Country Financial services for us.

Anyone else have Country Financial Problems ?

Is Uncoveredslo.com aware of and investigating ???


Stefan

By: Anonymous on 3/19/08

What a mess for the workers and contractors. I hope all those who have lost money get it back and if fraud is present then those responsible do some serious time.

I urge all concerned parties to hang tough and fight for their rights. Organize around Ron or others to combine your energy. An email list for bulletins would be very helpful.

For those who invest in other firms you might ask those firms for some assurance they are not acting like EF in their affairs. I'm doing that and will post the results here.

By: Anonymous on 3/18/08

where is my money. I am the person who organized and spoke at Monday's meeting. I could use your help as everybody at the meeting wants to get the information too. Please email me at ron@cooperdevelopment.com or call at 818-225-1528 at your earliest opportunity. WE NEED YOUR HELP. Thanks.

By: Anonymous on 3/18/08

I have 11 loans with Estate

Financial and they are not providing me with the information I need. I want to organize the other investors so we can take control and action to save our investments. Estate Financial continues to collect their monthly fees for doing nothing on our behalf. They have taken money and used it on their own property development.

They will not file notice of defaults because they will be

foreclosing on their own property! Too many conflict of interest issues for me to accept.

Lets organize.

By: Anonymous on 3/18/08

Anonymous

If your name is not on the Title you probably have a problem figuring out where your money went.

If you put your money in a "pool fund" it may be a little more difficult to trace. Any paperwork that you have recieved from EF should have identified what project your money went to. The property should be identified by an address or an APN (assessor parcel number). If you have one let me know.

By: Anonymous on 3/18/08

The prelim for the mortgage pool reflects the recorded document number for the assignments of deed trust. Go the the SLO Clerk Recorders site and enter the doc number. You should get names.

By: Anonymous on 3/18/08

And if a prelim Title report does not include the names of all EF investors, what then?

By: Anonymous on 3/18/08

Preliminary Title reports on properties should itemize the investors with EF. Each investor should be listed with a dollar amount invested and the corresponding percentage of their investment in the property.


1 2 3