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 Karen Guth and her son and partner, Joshua Yaguda, EFI’s two principals, resigned early this week and have been replaced by new managers.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

Inline Feedbacks
View all comments

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.

By: Anonymous on 7/20/08

Ron Coooper.

It is very admirable what you are doing to help all of these Investors. I mean, all of the time you are putting into this endevor. Not to mention using, what I am sure adds up to enormous amounts of YOUR OWN MONEY.

The emotional and financial costs to your family must be, well I don't know, EXHAUSTING, for some members of your family maybe even DEVASTATING!

You must be very proud of the fact that you are not only acting in your best interests but also knowing that you want to try to make sure every decision you make is in the best interests of these Investors. These People that are trying to find out where their money is, trying to recover as much of whatever they invested as possible. This seems like an awesome burden, especially when not to long ago you probably did not even know most of, or for that matter maybe any of these Investors.

I am sure that you can probably imagine the devastation created in one's life when they have invested there entire savings, into an investment only to find out that the group of people they invested with did not hold up their end of the agreement, and then even refused to return your investment money, AS WAS AGREED TO BY A CERTAIN DATE WITH INTEREST IF THE PROJECT WAS NOT COMPLETED BY THAT DATE. Furthermore, can you imagine how traumatic it would be if the Investor was then threatened with restraining orders and legal action just for trying to contact the people that had his money in an attempt to try get his money back. Being told never to contact them again except by email and then all email requests were ignored, NOT EVEN ACKNOWLEDGED IN ANY WAY WHAT SO EVER.

Well Ron, again I just wanted to say how great it is that you are doing all of this for these people. You must feel great every morning when you look in the mirror and know that you are someone that always strives to do the right thing, Right?

I just have one more question Ron, DO YOU KNOW WHEN I AM GOING TO GET MY MONEY BACK? It's really important Ron, I really need it.

Thanks Ron.

By: Anonymous on 7/19/08

TO Anonymous:

No thank you for thanking me. At least someone has some manners.

By: Anonymous on 7/19/08

TO Jean:

Wish you knew what you were talking about. There was NO COOPER NOMINEE. Consequently there was no COOPER NOMINEE to be rejected. Why don't you spend some of your own money and time and how up at court and find out first hand what is happening. Truth be told. Obviously not by you.

By: Anonymous on 7/19/08

So things are moving along. The trustee will take over everything. Right? I mean y'all are being a little cyptic. The management nominees of the owners have been rejected by the Court, right? Or was it just that a trustee will be appointed? Cooper's nominee was not accepted? Is it possible that EFI, Inc. will not oppose the petition? Wow, there are so many possibilities. Does anyone have any first-hand knowledge of what happened at the hearing? Is this where the story ends? Will the BK process just kick-in? Anyone have any idea how long that will take? No more uncovered articles?

Oh well, back to my knitting.

By: Anonymous on 7/19/08

I heard 4 or 5 investors and Ron Cooper where at the BK Friday.

By: Anonymous on 7/19/08

to Anonymous

Approx. how many investors were there and how many spoke?

By: Anonymous on 7/19/08

Thank you to the investors and Ron Cooper for standing up at the BK court to state their opposition regarding the appointment of Reiss and Gould. We all have them to thank! Gould and Reiss's lawyers had favor by the judge on Friday until these individuals spoke! Without their attendance and concern, a truly independent trustee may not have been placed! THANK YOU!

By: Anonymous on 7/18/08

So, a trustee will be appointed. There will be a complete review of everything. A plan will be proposed for reorganization, or the case will be converted, or dismissed. That's about the range of possibilities… Does anybody know what happened? I suppose we'll read about it tomorrow.

By: Anonymous on 7/18/08


where do you get your information–Karen and Josh are still in the office. i know you're just as anxious as all of us to get rid of K&J,but there still there.

By: Anonymous on 7/18/08

John: It took 5 months to get Karen and Josh out because when they told us they weren't going anywhere, lots of people clapped and cheered. And so they didn't go anywhere.

But a few understood the havoc Karen and Josh were creating, stealing our money, lying to us about anything and everything. And those few people stood up for thousands of us, stuck their neck out and put their money where their mouth was.

Perhaps it's time for us to stand up, use our real names on these blogs, stop hiding behind the bushes, and, if asked, put up whatever money we need to, as a group, to be sure we get back whatever Josh and Karen has stolen from us.

THE NEXT TO FALL HAS TO BE THE OLIVE OIL COMPANY. We all paid for that company. it belongs to all of us. Let us take it back.

By: Anonymous on 7/18/08

What happened?

By: Anonymous on 7/18/08

Karen and her son are now out of the offices, It took us only 5 months…

By: Anonymous on 7/18/08


Issues to contemplate for all who don’t think this site done nothing more than chatter at night by a handful of posters.

EFI (Karen) solicited money from investors with the promise of higher return with the safety of the First Trust Deeds on properties.

EFI assured investors that these investments are safer than stocks because they can’t loose value for being First TD and managed by EFI with 20 years experience.

EFI made loans to borrowers for construction normally not longer than 18 months to 2 years.

EFI collected upfront fees for their services while booking the spread of 2 to 3 points on the borrowed money.

EFI made loans booking fees knowing the funds were not available in a segregated account.

EFI collected additional money from investors assuring them of their safety, knowing the reality was different.

EFI made interest payments to those who demanded while rolling over for others, showing their investment on paper compounding at 10% interest.

Many investors received no payments only statements had to pay taxes on phantom income.

EFI accumulated long list of non-performing loans as result of their inability to fund them timely and properly, causing tremendous damage to borrowers.

EFI’s failure to perform on their contract caused and will cause liability to EFI and its investors.

EFI made payments until September of 2007 with new investors money, not from loan pay offs that is clearly a Ponzi scheme in the eyes of the law.

EFI continued charging the FUND fees for its services on artificially high fund value.

EFI claimed all along that the National Market and Credit market melt down caused its problem, but they are “navigating the ship” and in for the long haul.

EFI met with attorneys for strategy and to prepare BC filing in April, meeting with Gould and others on May 8th, 2008. June 17 th Karen still insisting to be in charge and working hard for the investors.

EFI lost their licenses by the DOC and DRE while claiming to actually working with the agencies to have their licenses revoked.

EFI was “TRUMPED’ by the creditors “INVOLUNTARY” Chapter 11 filing on June 25th.

EFI filed “VOLUNTARY” Chapter 11 BC on June 1st 2008 while installing their own handpicked team for EFI trying to dodge intense scrutiny by the BC court and trustee.

So any one please tell me, where and when Karen Guth and Joshua Yaguada worked the best interest of the investors or borrowers.

Also, show me their honesty in their handling of this entire fiasco throughout the past 8 months and before?

The list can go on with all of their partnerships that were nothing less than a vehicle to divert money to their own enrichments or cover up the lack of “FIDUCIARY RESPONSIBILITY”.

If this is not a PONZI SCHEME, than what is?

By: Anonymous on 7/18/08

My jaw dropped. You guessed my age. You must be Clair Voyant. I actually felt threatened for a moment. Can she see through this computer ??? Oh no, I forgot to turn off the camera!!!

Reality Check — it's only a blog on a very little-known website out of the central coast. The five or six people who keep writing are way beyond getting their feelings hurt. As for tapping into the latest news here — you'd be better served elsewhere.

And, what is most insulting — I never buy produce at TJ's — yuck !

By: Anonymous on 7/18/08

I think someone like Jean actually serves a purpose. Her attitude that its just business as usual gets totally under the skin of those who have put thier trust and money behind these individuals. It makes my blood boil to read her comments as it does others. This is a good thing. I also hope many attend the BK meeting today so the judge can look apon the faces of the types of individuals who were harmed in this and the likelyhood of them never having the time in life left to make a recovery from this type of financial disaster.

By: Anonymous on 7/18/08

I'm not interested in a 'healthy debate" with people who are uninformed and not actually involved. If you are intersted in silly and unproductive chatter, there is no lack of stupid blogs for your entertainment.

By: Anonymous on 7/18/08

To Jean – What you don't appear to know is Karen Guth was making loans when she didn't have the money to back it up. But, boy, were those fees she received up front tasty and all hers, not the investors! In my opinion, SHE'S A CROOK! She had to have the funds available to these borrowers in segregated accounts. But she didn't resulting in irrepairable damage to all involved! It appears her intent was to make herself rich and 'who cares about the investors.'

By: Anonymous on 7/18/08


In fairness to Jean and every one else. Many postings are inaccurate on this site and its undersatndable. Others are accurate but shorth of full facts. Yet more comments are reserved for legal reasons. Anyone with a desire to post to raise questions will stimulate a healthy debate. If we all agreed on everything, there would be no need for this site. We could just keep on reading EFI's side of the story while sinking deeper in abyss.

So my massage to Jean and other; Keep posting raise questions and every one disagree with her dig deeper.

By: Anonymous on 7/18/08

To Jean,

I want to be kind Jean, but your comments on the blog are not the least bit helpful. You are really quite uninformed and are taking up space which wastes the time of us who want to access actual information that might be of help. Please don't keep wasting our time.

By: Anonymous on 7/18/08

Jean is no doubt a 55 year old retired boomer/divorcee who has no life outside of her computer. Her idea of taking "risk" is chosing a too ripe banna cluster while shopping at Trader Joes.

By: Anonymous on 7/18/08

You do not know anything about it when you say "I can see how EFI simply grew to be too big, and the managers simply couldn't control it. Still, I think many have a good point in saying that they should have stopped marketing when things were turning sour.

Estate Financial has known they have a problem since 2004/05. They also know exactly where all the money went

By: Anonymous on 7/18/08

Dean Gray:

Interesting read. Looks like the crooked public servants got pocket money instead of bond money. Good and bad–maybe the streets and lights will be put in, at city expense, and if a new buyer comes in we could get more of our investment back. We need this project finished so the houses, behind the shopping center, can also be completed.

By: Anonymous on 7/18/08

Nice guess, but not true. Me, no Charlie.

I'm just an "outsider" looking in — and, to tell you the truth I'm one of those people who really feels sorry for those who invested in the real estate financing industry. I suppose that's why I sound like I'm a wet blanket — dousing the flames here, so that people don't go rioting in the streets — it doesn't do any good. There's a process and things need to go through the process – and it will take time and hopefully people will get as much of their money back as possible. I think people should take note of the fact that most who are involved in the financial industries are not crooks — though many may be incompetent. I can see how EFI simply grew to be too big, and the managers simply couldn't control it. Still, I think many have a good point in saying that they should have stopped marketing when things were turning sour. Does that happen very often in the real world? Do business people turn customers away? Oh, you don't want to invest with us…

Well, I suppose I should be in Santa Barbara today, if I wanted to attach faces to the names — but I just can't get away. I trust that UncoveredSLO will have a reporter on the scene, and we'll soon learn all the scoop.

Things will get better.

By: Anonymous on 7/18/08

Desert Hot Springs investment funding by EFI goes south:


By: Anonymous on 7/18/08

They must have gotten rid of a bunch of thier staff. I went to the DRE site today and where there was previously about 5 salespeople listed they only have two now. Karen and a Laura Paulson. All others have been removed. Josh is still listed as the licensed broker for EFI

By: Anonymous on 7/18/08

Maybe Jean is Charlie. Kind of a TransGender blogger. Lives far away, Not an Investor, Not a borrower. Hmmmm?

By: Anonymous on 7/18/08

THE SMELL OF FISH: There's a BIG difference between FRESH fish and OLD, tired fish. In my opinion, EFI is OLD, SPOILED, ROTTEN fish. EFI didn't go "out of date" last fall when the interest payments stopped. They were spoiling then. Still, Karen and her wonderful progeny were bleating, "Fresh fish for sale! Fresh fish!" Disgusting. Let the courts and all of the "helpful" attorneys decide.

By: Anonymous on 7/18/08


It's your money. You make the call.


By: Anonymous on 7/18/08

To: Get Serious. Why don't YOU get serious? In my opinion, even if 1,000+ people show up, the case is already well-represented. I attended the June 16th hearing in Judge LaBarbera's court. The hearing, scheduled for 1:30 p.m. didn't happen until about 3 p.m. It lasted about 5 minutes and there was no comment from the public. So, I will not be driving Santa Barbara on the off-chance that the court will actually have a hearing (and not postpone it) and that it will take the time to hear 1,000 people. Tell me, am I wrong?

By: Anonymous on 7/18/08


No …don't really ever want to do an "over and under" with you. I'm still not convinced your name doesn't rhyme with "Yosh" or "Rarin". Either way….not interested.

Really don't want to have anything to do with you if truth be told.

Maybe you need to attend a few more bankruptcy hearings….lots of ordinary folks at the podium…..( why is it that you need to keep discouraging the concept? Must be for reasons unknown to me…)

Here's a great idea….let's suggest that someone who disagrees with you might be a reporter for uncovered slo…oh, sorry, you already thought of that.

When you suggest you've never seen a bankruptcy court become a public forum……..is that because you're soooooo familiar with the forum? Or is that just something you're guessing about? (gotcha!)

Give it up. Jean's a joke.

Bad part is…….not funny.


By: Anonymous on 7/18/08

Beware of Jean she's from the dark side.

By: Anonymous on 7/18/08

Insider ? I have a question. I see that you are making comments on several of the other articles on UncoveredSLO — which makes me wonder — are you one of the authors stirring the pot? Dan, or Karen perhaps?

By: Anonymous on 7/18/08



By: Anonymous on 7/18/08

Oh Serious — smelling fish. Hmmm. I know, you're not being paranoid, if people really are out to get you.

So, how many regular Joes are going to get to speak their minds at this hearing? Can you guess? Wanna do an over and under with me? I will guess that no more than five people will speak, (not counting the judge and his clerk) and they will all be attorneys. No? By all means drive down to SB and join in. I've never seen a BK courtroom become a public forum. Generally Federal Judges aren't the most jovial types. Best of luck.


By: Anonymous on 7/18/08

JEAN: You're sooooooo far off base I can't believe it. You give us legal advice, talk as if you know about BK procedures, and mis-lead those of us who are forced to rely on this blog for good information.

Do us all a favor. Get off line Jean

By: Anonymous on 7/18/08

I think Jean might be Karen, Josh or someone whos working for them. Just read all her posts. They are all telling you how to think and what to do. All of which are favorable to K & J. To hell with any other plans you have this is the one meeting you must attend. Don't leave this to others. Get down there and express your opinion. I guarentee K & J will make sure they are presented in the best possible light. This Jean has way too much to say for someone who has nothing at stake wouldn't you say?

By: Anonymous on 7/17/08

Jean's wrong.

Any individual creditor can address the court as an individual, and express their opinion (or the facts that they are aware of)without an attorney, in a bankruptcy court. If you're willing to stand up at the podium and speak your mind to the judge….you can do it….and now you have the opportunity…..It's not a "mob" issue…it's a public hearing and you don't need a lawyer.

So "Jean", it makes me wonder. The alternatives you're suggesting require people to employ lawyers they can't afford…versus the opportunity to legally express their concerns.

Why would you suggest that people are best served by these tactics?

Some might suggest the smell of fish….(but then again…you're soooooo far removed…..right…??) Why use the name "Jean"…remove yourself a step further, and why not start using another name….how about…"Karen"?)


By: Anonymous on 7/17/08

That's right, Jean. It's not practical for 1,000 + people to show up at any of these hearings. That's what's so disgusting, that Karen and Josh have always known how difficult it would be for all of the small investors to organize in a situation such as this. Thank goodness for the large investors who have the resources (and comprehension) to do something about it.

By: Anonymous on 7/17/08

Slow down.

If a mob shows up for that hearing — it's very unlikely anyone will be allowed to speak except the attorneys. It's not a city counsel meeting. It's a court proceeding. And unhappy people, left holding the bag, are old hat at the BK Court. Your best avenue for recourse — through the creditor's meeting, and presentation of alternative plans for reorganization. A trustee will be appointed, and the managers — will likely remain the same. Court's just don't willy-nilly replace managers because some people desire it. It's gonna take a while. Let the lawyers handle it — that's what they're paid for.

By: Anonymous on 7/17/08

I agree, that Karen and Josh should have fessed up 18 months ago (or more). The results of the liquidation would have been MUCH more favorable for everyone. In my opinion, any possible prison sentences could have already started and the release dates would be that much sooner.

By: Anonymous on 7/17/08

Get Serious says:

Battle Royale…..Karen and company's last stand. Friday July 18, 10:00 a.m. in the

With all the posting, activities, How many investors botheredto show up at the BC court to voice their opinion? For so long, only thing most have done is whine and cry. it back and waiting for the Heavenly Manna to drop from the sky.

Just keep it up while some one else scoops up all the eft overs.

By: Anonymous on 7/17/08

Battle Royale…..Karen and company's last stand. Friday July 18, 10:00 a.m. in the bankruptcy court. Will the bankruptcy court appoint smiling Fred and D.G. to run the Chapter 11's? Or, will the U.S. Trustee convince the court to choose a trustee not hand-picked by the current owners of EF?

If you are an investor, and you're not there……WHAT ARE YOU THINKING? After all, it's only your money on the line………………….


By: Anonymous on 7/17/08

Insider and Paso Guy – Would two please kiss and make up? You two would probably be best friends if you met. Meet on a blind date, and exchange numbers. You are too much alike to not know each other. This way you two can email each other your differences and leave us to read what's really important. Now kissy wissy, you two and mend your differences!

By: Anonymous on 7/17/08

AA — See below — one of the loyal bloggers said they saw one – and a black Mercedes — which was probably one of the lawyer's cars.

All my knowledge of what's going on comes from UncoveredSLO and other news sources, and the blogger on here. I have no eye in the sky. Wish I did.

By: Anonymous on 7/17/08

Damn good thing I didn't go all in, still going to hurt though.

By: Anonymous on 7/17/08

If there will be over 20% paid to investors after the dust settles, consider it to be overly optimistic.

Do the math. Three Bell Vinery, $7,000,000.00 = $1,000,000.00 current market value, Pismo, Templeton Mix Use; %11,000,000.00 = $1,000,000.00 if that. All the others? To soften everyone up a little, get ready to face the "NEW FINANCIAL ORDER" of SLO county. There ain't no money.

By: Anonymous on 7/17/08

To Jean

If you do not live anywhere near SLO or PR how do you know there was a Black Escalade out front.

By: Anonymous on 7/17/08


If I read thru your bullshit, what your saying is that you expect someting less than 40%. That could mean $0, worst case senario. Ok, at least you have an opinion. The others here are too sick of heart to speculate?

By: Anonymous on 7/17/08

Fessed Up? You mean like — all your investments are not secured by trust deeds… Or the market is going south fast and nobody will be paying money back, or… "I don't know what I'm doing!"

How exactly does one confess to misfeasance?

Confession is good for the soul. I'm just wondering, who will confess that market conditions have played a role in all the misery being felt across the country. Oooppps, I wasn't supposed to use the "market" excuse.


Does anyone know who owns the black Escalade that seen — in the early hours… ??? Was it Dan Blackburns???