EFI investors, creditors planning participation

July 9, 2008


Investors, builders, and creditors misled by Paso Robles hard money lender Estate Financial Inc. (EFI) are forming a pair of “advisory” committees to participate in an upcoming series of bankruptcy hearings and related actions promising to be both complex and convoluted.

Meeting privately Tuesday at the Carlton Hotel in Atascadero, 53 people financially entwined with the sinking financial institution laid plans for keeping abreast of, and contributing to, future federal court proceedings.

Chapter 11 bankruptcy filings – one voluntary, one not – have stopped the once successful EFI in its tracks. Karen Guth and her son and partner, Joshua Yaguda, EFI’s two principals, resigned early this week and have been replaced by new managers.

“You have now been heard,” developer Ron Cooper told the assembly, attempting to reassure those in attendance that their views would be articulated, and their presence felt, as the pair of bankruptcies wind through the courts.

Cooper organized a group which pushed the Estate corporation into involuntary bankruptcy in late June. Guth and Yagunda followed that action by voluntarily placing the EFI Mortgage Fund LLC under Chapter 11 reorganization protection last week.

Guth and Yaguda “did the smart thing” by resigning from EFI: “They gave up. They really had no options,” said Cooper.

Cooper said he expects three to six months to pass “before we all have a clearer picture of what happened and where our money went.” He told the crowd, “I borrowed from a crook, you invested with a crook. And we all know what happens then.”

EFI’s new chief executive is M. Freddie Reiss, said to be an expert in restructuring companies. Bankruptcy attorney David Gould of Calabasas will be the mortgage fund’s new manager.

The investor-builder-creditor committees — one monitoring the fund bankruptcy and the other the corporation – will each have five to 10 members and each will have legal standing during all upcoming proceedings.

Tags:, EFI, Estate Financial



  1. ccn_debate says:

    Member Opinions:
    By: Anonymous on 7/31/08
    So, let me get this straight. Lew Landau was the attorney for the principals of Estate Financial, the same people who are accused of fraud/misconduct/crimes. Lew Landau brings David Gould into the picture to orchestrate a voluntary BK filing so Gould can be appointed trustee and so (both Landau/Gould) can feed at the troth as Estate Equity assets are sold at firesale, at huge losses. The judge is made aware of the relationships involved and kicks Gould and his best friend from FTI out of the picture. Instead of going away as he was asked to do, Gould decides to reach out to the senior creditors (fellow investors with a lot of cash in the game) to spearhead formation of an equity committee. Gould uses whatever influence he has to get the court to agree to the appointment of an equity committee (which happened today I'm told) so that he and Landau can be co-counsel for equity. Do I have this right? Lew Landau and Gould who may have been Counsel for the people who perpetrated the alleged crimes, et cetera…these same attorneys may end up becoming lead Counsel for the soon to be Court Appointed Equity Committee?

    By: Anonymous on 7/23/08
    Who appointed you ? Everyone is entitled to their opinion. Even you.
    By: Anonymous on 7/22/08
    Jean (and those like you) – your latest blog only shows that you do not have an understanding of the BK filings. It is not for us to educate you, it is for you to educate yourself. I suggest you start by going to the courthouse and requesting copies of all the filed documents in the bankruptcy proceeding and read them. And if you still don't understand what is going on, get a professional opinion.

    No one here has the time or inclination to spoonfeed you information about Karen, Josh, EFI or the Fund. Part of responsible blogging is to have an informed position before you start.

    For the rest of us we are trying to uncover more relevant information and you are nothing more than an unappreciated distraction.
    By: Anonymous on 7/21/08
    Investors close to the 9th Street Paso Robles EFI building, I hear there is a security guard outside the building. Check it out Paso investors.

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  2. ccn_debate says:

    By: Anonymous on 7/21/08
    I am merely reading uncoveredslo, and know a little bit about how businesses operate. But I have interjected myself enough. I suppose I was slightly appalled at seeing all the mudslinging directed (not just at Guth or Yaguda) but at everyone — including people who had the nerve to question the authority of other bloggers. Sheesh. This is still America, right?

    Anyway, I'm done. I realize that many people have been injured in all that has transpired. I only hope that people stop inflicting pain on each other by attacking each other. I read Ed's comment on the other article. He seems like a level-headed guy. I'll be watching to see who attacks him first ! Also, I'm wondering whether uncoveredslo has its own bloggers spicing things up from time to time.

    By: Anonymous on 7/21/08
    Jean is a very interesting blogger….she claims to not be involved in EF in any shape of form, yet she also exhibits much knowledge of the history of EF as well as how events transpire through court proceedings….For someone not connected to EF in anyway, shape or form, she also seems to be spending an inordinate amount of time posting in these blogs….This is definitely either Karen or someone strongly connected to Karen. Go away, Jean, before someone lands a house on you.
    By: Anonymous on 7/20/08
    New article posted about EFI:

    By: Anonymous on 7/20/08
    You have admitted you are not an investor and have not financial interest in whatever happens at EFI. I would like to suggest that you go elsewhere for your entertainment. You know nothing and you offer nothing. Pick up a gossip magazine or your knitting and leave us alone.
    By: Anonymous on 7/20/08
    So, Cooper made no nomination? That's logical, since the Court would not be likely to accept it. However, I must admit — the chatter here seems to have the two BK cases confused. K/J resigned as managers of th fund, right? But did they resign their positions with EFI, Inc.? I mean K and Charlie are the owners of EFI, Inc., right? So, Cooper — a lender who had his property foreclosed on (?), files an involuntary petition against the corporation — not the fund. And he does this why? To get his money back? If he indeed has a breach of contract claim against EFI, Inc., then how does he become a creditor ? — I know there are other creditors who have joined with him in filing the petition — but I have to question how Cooper has standing in Court — but I admit, I can't really get the full picture from reading UncoveredSLO or the comments of the bloggers here. And I'm sure if these are not good questions, you'll let me know (some of you in more childish ways than others). But let me suggest this as a simple explantion to some of the people who wonder why K/J are in the offices still. K is an OWNER of EFI, Inc., not merely a manager (of the EFI Fund).

    Now, is there anybody who has any NEW information.

    Hold the insults.

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