Law reported closing in on EFI principals

July 20, 2008

By KAREN VELIE and DANIEL BLACKBURN

Local and federal law enforcement agencies are investigating Estate Financial Inc. (EFI) and a criminal case is said to be “moving forward” even as a battalion of interested parties scrap over control of the failing hard money lender in federal bankruptcy court.

Federal Secret Service agents, who had commenced a parallel probe into the Paso Robles’ company’s practices, apparently have decided to halt their examination of alleged fraudulent management of EFI. The Secret Services’ interest in the case stemmed from the agency’s charge to protect U.S. financial institutions.

“This case is being worked diligently by the Paso Robles Police Department, the FBI office in Santa Maria, and the San Luis Obispo District Attorney’s Office,” Secret Service agent Mike Parker wrote in an e-mail July 17 to an investor and builder he previously had interviewed. “It is my understanding the case is moving forward and any involvement on my part would only slow the progress.”

And in federal bankruptcy court, Judge Robin Riblet ruled EFI’s leaders’ proposed trustees were tainted and ordered new trustees brought in to manage EFI. In the interim, Freddie Reiss will oversee EFI and David Gould will oversee the mortgage fund.

Early last month, creditors forced EFI into involuntary Chapter 11 bankruptcy proceedings. About a week later, EFI owners Karen Guth and Joshua Yaguda voluntarily placed EFI mortgage fund into Chapter 11.

On July 16, U.S. Trustee Marjorie Erickson filed a motion to object to Reiss and Gould, Guth’s choice of trustees.

More than 3,000 investors have placed more than $300 million into EFI construction projects, creating a financial gold mine for future trustees. With much at stake, emotions ran high at the July 18 hearing. Gould and Reiss presented their experience and qualifications, but Judge Riblet determined prior contact with Guth had “poisoned” the pair.

Even before Guth announced in June to hundreds of investors at the Madonna Inn that she was “in for the long haul,” she had huddled with liquidating specialists Gould and Reiss at the suggestion of Lewis Landau, her attorney.

Judge Riblet noted Department of Real Estate allegations of fraud and mismanagement as a compelling reason to prohibit those “tainted” by Guth from having authority over EFI.

Judge Riblet also refused to permit a stay to allow San Luis Obispo County Superior Court Judge Barry T. LaBarbera appointed attorney Hanno Powell to finish his evaluation of EFI’s mortgage fund.

Investigations have provided information that Guth wrote checks for insurance payments, merchandise, and employees’ salaries for her Pasolivo Olive company from EFI accounts.


Loading...
Stefan

By: Anonymous on 7/25/08

Karen has no heart. And her son has been trained to be the same way. It's sad. Imagine living life without the joy of giving. Giving is much more rewarding than taking. Something Karen and Josh will never know. What shallow lives they must have led. So shallow that they kept on having to take, take, take in hopes of keeping themselves satisfied. I wonder if they learned anything through this OR if they are so hardened this concept can't even sink in.

By: Anonymous on 7/25/08

In addition to having my life savings at risk… I am sad that Karen and Josh thought so very little of us… those who trusted them to "invest" our $$$ for us…

I looked up the definition of a Ponzi scheme and this is what it said: "A fraudulent investing scam that promises high rates of return at little risk to investors. The scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors".

In addition E.F. took $$$ from me… during a period when their license was suspended…

This I am told… by the F.B.I. the D.R.E. and the office of the District Attorney of S.L.O. is called "fraud"…!

Yes… all three agencies have been in communication with me…

By: Anonymous on 7/25/08

Google Development Specialists Inc. for bio on Bradely Sharp.

By: Anonymous on 7/25/08

Do a Google search, put trustee after their name, it should give you information you can use.

By: Anonymous on 7/25/08

Where can we find a profile on Bradley Sharp? When will his and Thomas Jeremiassen's appointments be approved and when will they begin their investigations?

By: Anonymous on 7/25/08

http://www.lecg.com/files/FileControl/6fe5d8dd-be

By: Anonymous on 7/25/08

http://www.lecg.com/experts/profile.aspx?shortID=

By: Anonymous on 7/25/08

This is an exerpt from an email I just received from Marjorie Erickson.


"The court will sign the orders today appointing a trustee in each of the cases. Those trustees are Bradley Sharp and Thomas Jeremiassen."

By: Anonymous on 7/25/08

I have the foreclosure blog up and running. The site is informational only and all data is taken from the county recorder's office. Just click on my name for the link. You will find a familiar cast of characters in terms of debtors and lenders.

By: Anonymous on 7/24/08

To Bob,


I feel sure that the trustee, once fraud is found, will be stripping Karen of her assets before anyone can file a suit, wait for a default (reportedly she's good at that), then put a lien on her assets. The 'Asset Stripping Show' should be started or over by the time someone files suit today I'd think. Keep in mind the trustee will be doing this FOR the investors. No need to knock yourself out filing suit. But this is just conjecture. Give it a go if you so feel. You may be faster than the trustee.


Stefan

By: Anonymous on 7/24/08

And don't forget to file (record)a lis pendens against any/all properties in which Guth/Yaguda have an interest. That will lock up those properties so they cannot be sold or hypothecated.

By: Anonymous on 7/24/08

If I were owed money by Guth/Yaguda/EFI, I'd take the following action:


1) Do (or hire a competent third party to do) a thourough asset search on Guth and Yaguda.


2) Hire competent legal counsel and file suit against Guth/Yaguda while simultaneously petitioning the court to order and injunction barring Guth/Yaguda from selling, hypothecating, or otherwise deriving any benefit from any assets in their name(s).


3. Add additional plaintiffs to my action as time progresses.


That's how I'd start.

By: Anonymous on 7/24/08

According to Ron Cooper, it's going to be Ron Cooper

By: Anonymous on 7/24/08

Anyone know who the trustee is yet? I haven't heard who has been appointed!

By: Anonymous on 7/24/08

Do you people not know how to type or spell?

By: Anonymous on 7/24/08

Anonymous says:


WELL, THAT IS A CART OF BULLSHIT IF i EVER SAW ONE. tHERE ARE A LOT OF INVESTORS


Why would he share profit if any with you? Would you absob his losses if anywith him? Have you put up risk capital and time he had to do?

Of course not. No one expects you to do so because you were a TD investor with the first claim at the time of sale. If no profit left, you were still be getting your money.

Because Karen stole our money that is an other story. So keep things in proper perspactive.

By: Anonymous on 7/24/08

Calm Down. Focus your aggression on finding hard facts to put Karen and Josh away.

By: Anonymous on 7/24/08

WELL, THAT IS A CART OF BULLSHIT IF i EVER SAW ONE. tHERE ARE A LOT OF INVESTORS THAT ASKED AND DEMANDED INFORMATION ONLY TO TOLD AND BE PATIENT. THOSE SAME PEOPLE ATTENDED MEETINGS THAT HAD A LYNCH-MOB MENTALITY. THOSE EVENYS DO NOT MAKE RON COOPER A HERO, HE IS AN OPPERTUNIST! ASK RON ABOUT SHARING HIS TIDY PROFIT WHEN HE BUTS YOUR INVESTMENMT LOW AND SELLS HIGH. YOU WILL THEN SEE HIS TRUE CHARACTER

By: Anonymous on 7/24/08

Stan


Ron didn't make tis site his show. He provided information while some are questioning his motives. Lazy people never made a move in their own interest and attacking him for being pro-active. So far he was the most forthcoming and roviding valuable information on this site. Others are spewing brainless hatred exposing their ignorance.

Agree, keep it to the point


Stefan

By: Anonymous on 7/24/08

This bolg has become the "Ron Copper show".

Lets get back to why we come to this site.

We are here to share helpful information.

There are many other people working behind the scenes.

Could we start posting what will be of value to the investors and our recovery.

Remember many investors are wondering what the process is at this point.

I for one, am waiting to find out who the trustee will be and then how can we participate is getting the new team up and running with all the information we have been collecting for many months.

Could we please talk about something other than Ron Cooper

By: Anonymous on 7/24/08

When you invested the money for the FAT return, were you handing the mony over thinking; Maybe there are some builders who need money to build? Were you thinking Maybe I should just hand them my money for no charge? Not at all!! You wanted better return than the bank would give. You expected absolute security beleiving what Karen said; Its safer than stock, it can't get to zero. Did you invested for selfish or unselfish reason? Ask yourself an honest question! Maybe if you look in the mirror you'll see a lousy face even the mirror can't stand.

You wanted to get rich fast and it boomeranged. Not because it was to be, but because of FRAUD.

You haven't seen it coming until the interest checks stopped, than it was too late. Instead becoming proactive you placed your ignorant head in the sand waiting for a miracle.

Well, the miracle happened by Ron's filing the BC. You may not like it but so be it.

By: Anonymous on 7/24/08

Insider


You need to change your handle to "observer"…you don't know squat

By: Anonymous on 7/24/08

Why is it that you question Ron Cooper's motivation? Of course it is self serving! Would you have him standing at EFI's door and hand out full refund of your investment? For what? You would be demanding interest on it and suspecting him of somehow making a profit. There are so many idiots here its just incredibl!!

What has any one done to stop the bleeding? No one but Ron stepped forward and with the BC filing, at least he stopped it.

Bunch of ignorant selfish morons who still can't see the tree from the woods.

Most I pitty, many deserves the loss.

By: Anonymous on 7/24/08

Get the assets !


When FRAUD, EMBEZZLEMENT and other IRREGULARITIES proven through BC and any other means, all of her, Josh's assets will be returned to the either EFI or FUND.

Why doyou think she hired a high powered attorney? She maybe evil, but not naive.

By: Anonymous on 7/24/08

How can their so-called personal assets get pulled back into the BK cases? Is that a separate lawsuit? Do these BK cases have to be converted into liquidations before that can happen?

By: Anonymous on 7/24/08

Do you really think speculating on Ron Coopers motives are more important than casting the widest net possible to discover all of Karen, Josh and EFI and affililates assets are for possible redistribution. As for Cooper why shouldn't he attempt to recover anything he can in any way he can. As long as he was and has been forthright which no one has shown otherwise more power to him. If he wants to finish his project and there is a way to do it thats one less problem that needs to be solved.

By: Anonymous on 7/24/08

If Ron was doing this for some ulterior motive — wouldn't the trustee sniff that out? It seems that putting a company into BK creates a level field, except as between secured and unsecured creditors. The secured creditors will always have the edge. But what was Ron talking about when he said something about "his position" in the BK case? Is there a question about whether or not he will go forward?


Stefan

By: Anonymous on 7/24/08

As you say below 'it's an opportunity' I say: Again, the BK was coming anyway so why did he go through all the trouble. I agree with Anonymous. I think the man mostly likely loathed Karen and couldn't stand the idea of watching Karen screw over all the investors and builders. Perhaps, I know it may be hard to believe, but he may actually care for his fellow man and wanted to do something about it? Or he couldn't stand to be ruined by Karen the Crook, so he was going to get his revenge. All of the above perhaps?

By: Anonymous on 7/24/08

The losses that have occured through mismanagement can never be recovered. Don't kid yourself. Although those of you that don't want to believe it, never will. Thank god EFI is not raising funds to complete projects. They failed miserably at construction management the first, second, and third time and you would sign away your rights to let them try again? If they have loaned 1 mil. on a project where the land is only worth $200,000 and all the money is gone due to poor management no one can get you more than $200,000 for the land the only thing left. Building out the project changes nothing except you need to put more money in. If you think there is a fire sale going on you have the inside tract get to the sale, buy the property and sit on it untill the market returns. On top of that at this point many projects are worth less than the land because of the need to demo the existing structures that are now so deteriated that removal is the only reasonable solution. As to Ron Cooper if his assertions are true and his status as a creditor stands he can do no better than any other creditor and that at best will be pennies on the dollar. He has no rights to any property or the right to aquire it in any other way than anybody else.

By: Anonymous on 7/24/08

Personally, I think Ron BKed on Karen because he didn't like her. why would he after all she has put him through? I only wish Ron did this to her sooner. Nothing like ruining Karen's perfect plan!

By: Anonymous on 7/24/08

"So again, the idea of Ron doing this BK for 'deals' doesn't make sense."


May not make sense, but it is an opertunity, no deneying that.


Ia he an investor? Anyone out there know the answer to that?

By: Anonymous on 7/24/08

Okay all of you, again looking for Ron's motivation. Ron is one man. That's it, one guy! His own project, the one Karen ruined, is HUGE. Do you people really feel once Ron goes back to work on that, that he'll even have time to take on new projects? He's going to be consumed by his own project. I can only speculate that if his project goes on the auction block, he'll be there to pick it up. But perhaps, they'll let him complete it without selling it first. And besides, do you folks think he'll be wanting to complete projects in Sacramento or Modesto or Sanger or X? That's a little far away from home, ya think? While the trustees are trying to figure out status of the projects, Ron's offered to help in that area. Good! We need someone with his expertise.


If any of you think Ron BKed for his own benefit, think again. It was apparent to anyone that Karen was going to BK. Many of you saw the red in the EFM Fund. Doesn't take a rocket scientist to figure the end was near. He could have very well sat back and just let the BK happen and then went sniffing around for peanuts in properties. So again, the idea of Ron doing this BK for 'deals' doesn't make sense.

By: Anonymous on 7/24/08

"What is Cooper's motivation for helping any of us?"


Excellent question.


There is money to be made when the projects sell for peanuts

By: Anonymous on 7/24/08

Could you be Ron Cooper?


What is Cooper's motivation for helping any of us?


It's a salvage operation. I think the trustee is obligated to do the best possible job, however that is accomplished. He/she won't just do the quickest thing.


Stefan

By: Anonymous on 7/24/08

Now that I have yot attention, consider this : we have gone from the fying pan into the fire. Hate K/J if you will, I certainly did, but their way out was better than what we are left with. The court will not allow this situation to go on for long..a fire sale is comimg so we can get our crumbs and go back ro licking our wounds.


Insider…your statement sounds studid, even coming from you. Do you think that the recievers were not going to have to raise capital to finish the projects? In either case money was gonns be needed to finish building.


I wanted an optimum return on investment and that won't happen unless the projects are finished. You think I'm wrong about Cooper? Does he even have any invesment in the pool? do you for that reason?

By: Anonymous on 7/24/08

Anonymous


Karen was raising money. Are you kidding me. If Karen could raise money the borrowers could of gotten thier draws and the projects would be finished. Who in the hell would lend Karen money to complete projects that had fallen into default over the inability to get them done in the first place. Don't you get it. I thought she ran out of Kool Aid. Guess I'm wrong. Have another sip Anonymous.

By: Anonymous on 7/24/08

Sure, Karen and Josh were working to get the best return for us. Is this person freaking nuts? I can only believe that whoever wrote this is benefitting from a relationship with Karen – are you possibly the listing agent on some EF properties, or a contractor who expects to get the job of finishing the unfinished projects that we have already paid through the nose for? If you are neither, you must be a relative – there is no other explanation.

By: Anonymous on 7/24/08

The Estate Financial building on 9th Street is owned by Charles and Karen. The APN # is 009-154-026. You can access the Assessor bill

on the County Web Site. Value of this property is $1,705,728.00

By: Anonymous on 7/24/08

FCor all you investors that think the demise of Karen and Josh is a good thing, consider this:


Karen and Josh both were working towards raising money to finish projects to sell and net an optimum amount to return ot us, the investors.


The court doesn't care about what we get back. The people they will put in place, will sell what is ready, half-ready and undevelopded land to the highest bidder. It will yield the lowest return to you and me.


Ron Cooper will be their to pay the lowest dollar…count on it..he is a developer, not a guardian angel

By: Anonymous on 7/24/08

To insider


I put $20 buck down on fraud being found a year after the Fund with implemented. Honest people don't suddenly become criminals. They fantasize about it for a long time and then form a plan. I believe the Fund was a part of the plan. Time will tell!

By: Anonymous on 7/23/08

Could it be that the practices of EFI are not as recent as everyone thinks but go back to the beginning of time. It will be interesting to see how far back the trustee links any misdeeds he or she finds.


Stefan

By: Anonymous on 7/23/08

Bob Lee – do you know what counties she and charlie own property? Are you sure about Charlie still being a part of these since they are divorced and have been for some time? Investors need would like to know! thank you ahead of time!

By: Anonymous on 7/23/08

Any one who still flirting with the idea that Karen Guth was here to stay for the benefit of the investors, should think again.


Last week she sent out an e-mail for support at the Bankruptcy Court for her and Josh’s continued involvement of EFI and EFMF. She handpicked a dissolution manager for EFI after Cooper and other creditors filed Involuntary Bankruptcy against EFI.


She and Joshua resigned to avoid hard questions at the Debtors examinations that way.


She hired a defense attorney to evade authority’s ongoing criminal investigations.


She filed Voluntary Bankruptcy on the Mortgage Fund despite her claim to be here for the long haul.


In the Bankruptcy list of creditors, she claimed over $3,000,000.00 owed to her by the Mortgage Fund that makes her a (bonafide) creditor.


Ask yourself; what is she claiming that for? Good care and Management of the Fund?


Many of the LLCs she and Joshua set up were used to take money out. Read the DOC and DRE complaints.


Initial investigation indicates (embezzlement) paying personal expenses, payroll to her Ranch at Pasolive, business expenses paid to not related businesses owned by her.


Large number of Investors still in the dark (kept that way by Karen’s smooth letters) still doesn’t know the extent of EFI and EFMF problems.

By: Anonymous on 7/23/08

Karen Guth and Charles Applebaum jointly own a number of properties outside SLO County from which they collect many thousands of $$ rent every month. Y'all need to do a thorough asset search on them.


Mark Seid would have records and workpapers to back up the tax returns he did for Karen and her companies. Those records would include check registers and bank deposits, which will tell the story. Follow the money.

By: Anonymous on 7/23/08

To Ron Cooper


Please add me to your email list. I am working on behalf of my father who is an investor in the fund and in individual investments in EFI. My email is gloomis283@aol.com


Thanks

By: Anonymous on 7/23/08

Take Guths property says:


Can investors go after teh numberous LLCs that Karen has created to take investors


In due time, yes


Stefan

By: Anonymous on 7/23/08

Can investors go after teh numberous LLCs that Karen has created to take investors monney? For instance, doens't one of her LLCs own that motel or bed and breakfast place next to the pier in Cayucos? She owns at least 2 gas stations in the North County under her LLCs. She must have bought other property for her and Josh under other LLCs. She and her partner Al Domico owns a coffee shop in Cayucos. I don't know if she or a LLC owns the olie farm and office in PR. She must have contracts with other companies to sell her olive oil. She has vehicles we should be able to take. Investigators need to start looking around the whole state. I bet she has apartment buildings and more houses and comercial properties too. If she hasn't taken all of the equity out of these properties we should be able to recover something.

By: Anonymous on 7/23/08

Got this e-mail


TO ALL INTERESTED PARTIES:

>

> We have come a long long way since John and Colleen Childers contacted me approximately 6 months ago. At that time it was clear to us that Karen Guth and Joshua Yaguda were mismanaging our assets, were lying about the reality of the situation, and were hiding their heads so deep in the sand as to make matters all that more destructive.

>

> But they are gone now. It took a while but we prevailed. And so now what?

>

> I want to bring you up to date regarding the current activities being taken by the Bankruptcy Court and its officials.

>

> o Today the United States Trustee, Marjorie Erickson, an employee of the Justice Department of the United States Trustee’s Office is interviewing potential Trustees. I submitted several names to her. She also has a large panel of experienced attorneys and accountants available to her to choose from.

>

> o Two Trustees are needed, one for each bankruptcy case (EFI and EFMF, LLC).

>

> o Hopefully, these people will be selected today, and their names sent to Washington, DC for final approval. If we get lucky, I may be able to email each of you the names and email addresses for these trustees by tomorrow evening.

>

> o The Trustees will select attorneys to represent them. Then engagement contracts for these attorneys will be submitted to Judge Riblett (The SB BK Judge) for approval. In the meantime, the Trustees will take control of the company’s operating books and records and begin to sort out this mess. Obviously they will use the information already acquired by Hanno Powell, Fred Reiss, and David Gould. But remember, these Trustees are selected so that they are completely independent and will have no prior connection to Estate Financial and/or its owners.

>

> After the Trustees are selected, and their names are known to me, I will contact each of them and offer our support. Many of you have unique stories to report, and I think that is very important in the process. So, when the time is right, I would encourage you to tell your stories to the Trustees. The more insight the Trustees obtain, and the sooner they obtain knowledge, the better chance of a financial recovery for all.

>

> We have already submitted names to Ms. Erickson about our thoughts regarding committees to be sanctioned by her, so that these committees can engage their own attorneys who will be paid from the liquidation of Estate Financial. These committees will be the check and balance regarding actions the trustees may propose.

>

> No doubt it is a complicated process. Until the Trustee appointments are known to us, we cannot do anything but remain united and wait. Though my connection to Estate Financial probably does not permit me to be a member of any committee (currently an undecided issue), please be assured that I will remain an active participant in the struggle to help everyone regain as much of their financial and physical assets as possible. In that regard, please feel free to call me or email me whenever you have any questions.

>

> In the meantime, be patient. You will hear from me shortly.

>

> Best to everyone.

> Ron Cooper

>

>


Stefan

By: Anonymous on 7/23/08

Blog?-


Click on his/her name for the blog link.

By: Anonymous on 7/23/08

To Caring Son


I believe that all state court actions are on hold due to the federal bankruptcy filings. The new trustees who will be appointed should be able to answer your questions but we don't know when they will be appointed. But to be safe, you may want to email the US Federal Bankruptcy Trustte at marjorie.erickson@USdoj.gov If she can't advise you, perhaps she can refer you to someone who can. I am appalled that Karen Guth sought out so many of the elderly, who are some of the most vulnerable, to invest in her company. Good luck.

By: Anonymous on 7/23/08

What is the website of the Central Coast Foreclosure Blog?

By: Anonymous on 7/23/08

Is there anything left of Karen? Do the investors have any hope to regain some of their losses by way of her personal assets? Her ranch must have some equity but how much? What about her Cayucos home? What else does she have that the investors can hope for? Anything?


Stefan

By: Anonymous on 7/23/08

I would also like to know more about 21st Century & Alan Little – they seem to have left quite a mess as well.


Just because you run away, doesn't mean you aren't going to get caught to face the judicial system.


On a side note, the Central Coast Foreclosure Blog should be starting up over the weekend. It will just be a site that lists default notices that may be newsworthy. It will be more of a resource than an actual discussion blog. Please give me any feedback as it is my first attempt at blogging.

By: Anonymous on 7/23/08

caring son says:


Question for Anonymous


I am trying to get up to speed on this mess as my 88 year old father got way too deep into EFI investments. My father was named as an investor defendant in the Colsolidated Properties lawsuit. Can you explain what this means or give me a contact name to further research it?


Thanks


By: Anonymous on 7/23/08

Laura Paulson:

"You know you'll be subpoenaed to answer questions UNDER OATH." Let's see what a criminal Laura really is. Does she support Karen or spill the beans? Anyone who can use a computer or write isn't as stupid as she may claim to be. She never left but stayed until the end. Proof that she's 'one of them.' She knew – let's be real! A Karen protege! She needs to serve prison time now! I am a firm believer this girl is bad news! Off to prison she must go!

By: Anonymous on 7/23/08

Laura Paulsen's name has been removed from EFI's salesperson list on the Department of Real Estate Site – Karen Guth appears as the last man standing. Get ready for your court appearance, Laura. You know you'll be subpoenaed to answer questions UNDER OATH.

By: Anonymous on 7/23/08

Anonymous says:


I not really sure why the Linda Kennedy/21st Century Mortgage fiasco with Alan Little


Linda Kennedy is gone, no horse to beat.

By: Anonymous on 7/23/08

I not really sure why the Linda Kennedy/21st Century Mortgage fiasco with Alan Little Custom Homes and its braintrust Ed Palmer (who served two years in Federal Prison for mortgage fraud) is flying below the radar.


Their ads were ubiquitous on KVEC. Is the FBI conducting an investigation on these businesses?


Karen and Dan – lets get a 21st Century Mortgage thread going!

By: Anonymous on 7/22/08

I can only speculate but Mark Seid is in a sh@# load of trouble!

By: Anonymous on 7/22/08

Mark Seid is also Linda Kennedy's accountant.