More state allegations heaped on EFI

July 1, 2008

The State Department of Real Estate (DRE) has filed accusations against hard money lender Estate Financial (EFI) of Paso Robles for eight causes of action that include “misrepresentations and false promises made to investors and acting fraudulently and dishonestly in making under-secured loans.”

The accusations were detailed Friday on the state agency’s Web site.

The State Department of Real Estate (DRE) has filed accusations against hard money lender Estate Financial (EFI) of Paso Robles for eight causes of action that include “misrepresentations and false promises made to investors and acting fraudulently and dishonestly in making under-secured loans.”

The accusations were detailed Friday on the state agency’s Web site.

EFI president Karen Guth holds a real estate license; her son and partner, Josh Yaguda, is a licensed real estate broker. The pair courted investors to fund construction loans allegedly secured by real estate. Approximately 3,000 Californians have invested approximately $350 million with EFI.

To encourage investors, Guth distributed an EFI brochure claiming investors would receive trust deeds filed in the county and title insurance. However, according to the DRE’s list of accusations, Guth and Yaguda failed to secure investors funds through deeds of trust on various loans even though they disbursed funds to construction accounts.

In addition, the DRE claims that officers of the troubled North County lender co-mingled funds, paying from one investment to fund another.

On July 12, 2007, EFI’s securities permit with the Department of Corporations (DOC) expired; EFI, however, continued to offer, sell, and issue securities for three months before renewing their license. On May 28, 2008, the DOC revoked EFI’s securities permit.

Prior to suspending or revoking a license, the DRE must first file allegations listing verified charges. The court then allows Guth and Yaguda 15 days to request a hearing, or they waive their right to be heard.

According to the DRE, EFI made unsecured loans; willfully disregarded or violated state real estate law; demonstrated negligence or incompetence in performing an act required to hold a state license; and engaged in other conduct… which constitutes fraud, dishonest dealing, or incompetence.


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Stefan

By: Anonymous on 7/5/08

New EFI story on Uncoverslo.com


http://www.uncoveredslo.com/?id=142&showEntry

By: Anonymous on 7/4/08

To Ron,


ask your lawyer to supply this special code. Alleviate the confusion and be done with it. Monday might not be unti Ron responds. Law offices are not open until then.

By: Anonymous on 7/4/08

I read all the exceptions, and the lawsuit filed by Mr. Frederickson isn't under ANY of the exceptions.


It would be so much easier for Ron just to tell us whihc exception his attorneys have assured him apply to this case. Otherwise, I am seeing AUTOMATIC STAY.


By: Anonymous on 7/4/08

As for laura paulson, I agree with x-employee. She took some college classes to get futher educated and there is no way she didn't know better. I wonder, ex-employee, what was the average pay that seemed so great to keep a girl like her working at EFI? What dollar amount was the trade off for her conscious?

By: Anonymous on 7/3/08

Under code 362, did you bother to read the ENTIRE b section. Did you happen to notice there are 28 exceptions to the rule. It starts off with this simple domestic, paternal stuff in (b)(2)(A) and then (i), (ii),(iii),(iv), (v) but you must sit down and read for a good long time ALL of the 28 codes of B. You only read the second one.

By: Anonymous on 7/3/08

Not so straight forward. I read it completely differently. See below. But why are we still belaboring this point.


"(f) Notwithstanding section 363 of this title, except to the extent that the court orders otherwise, and until an order for relief in the case, any business of the debtor may continue to operate, and the debtor may continue to use, acquire, or dispose of property as if an involuntary case concerning the debtor had not been commenced."


Stefan

By: Anonymous on 7/3/08

Ron filed under 303(b). A filing under 303(b) imposes an automatic stay; UNLESS AND EXCEPT for the commencement or continuation of civil action or proceeding for the following types of cases: establishment of paternity, modiciation of spousal support, child custody, dissolution of marriage, or domestic violence. The case Mr. Frederickson filed was not for any of those purposes; therefore the automatic stay applies. You ahve to read 303(b) and 326.


That's just teh way I read it. I found the code sections online on a bankruptcy site. Seems pretty straight forward to me.


By: Anonymous on 7/3/08

ex-employee


I remember when I was asking for you, I was told you are "no longer with us". I will not reveal your name to protect your privacy. Your inmation and help is extremely appriciative. Both Ron and I would love to meet you in private when we are in town. Please e-mail to Ron toet up a time andplace next Tuesaday. Again, all information is confidential.

By: Anonymous on 7/3/08

As an ex EFI Staff member i just have one thing to say about the last comment, at the time I was writing these checks I was told that the mortgage fund money could be moved from loan to loan, I was also told that a borrowerers loans if in the same development were basically all one loan, and until about 1 month before i was fired i really didnt know the extent of the lack of funds that were available, and of course i was never stupid enough to get my real estate license to where i could be held responsible, I do believe that Laura Paulsen, Shauna Bishop, and any other current employee who have been there over the last year shuld fry with the rest of them, and especially Shauna and Laura becaue they knew what they were doing and still are doing was illegal, but i do have to say one thing for Karen, she has paid these gals very well, and she paid me very well, but not to keep my silence, i was paid well for the work i was doing, and when i was fired i withdrew my investments fromt he mortgage fund and I did warn any person who was thinking about putting money with them that she was going down, so please dont kill the messenger, and threats and comments made like that make me weary of how involved i want to be, i have a job and really dont want to lose it or be blackballed from working in this county because of this EFI mess, so go easy on us ex employees who havent partaken in this Ponzi Scheme in the last 2 years

By: Anonymous on 7/3/08

wants to know . if insider is a dumbass and sobia is a WM lunatic ,what does that make anonymous? and what is gooofy ??????? tweet tweet.

By: Anonymous on 7/3/08

Everyone should report there experience of the EFI staff to the Powell, DRE and pertinent authorities. They have intentionally withheld information from the investors/creditors that could have assisted in protecting our interest. They also withheld public legal information so this entire scheme could go on.

By: Anonymous on 7/3/08

The report that Josh is claiming a stay while technically not correct may show he's ready to pack it in unlike his mother. I think he is glad to see the end and just wants to raise the white flag and surrender the fort. He's still young and with a few years to mend may still find a productive life. He's probably been secretly waiting for this day to arrive. Can you blame him?

By: Anonymous on 7/3/08

JULY 8TH MEETING


There are 6 seats left. If you want to come and ask questions about the Trustee process and/or BK, and want to know if you are a creditor, you should attend.


But you MUST make your reservation on estatebk@ymail.com. If you have already contacted us we have your name.


THE MEETING IS BY RESERVATION ONLY. It is not an open meeting.


Stefan

By: Anonymous on 7/3/08

to: I Always Dreamed Of Living There


Why all the hate? Obama Ain't gonna like this!

By: Anonymous on 7/3/08

The one thing that has not been speculated on is how criminal activity if any exists will effect this whole thing. Although bankruptcy if absolute in terms of civil maters any criminal misdoings trump the bankruptcy court. In other words if laws were broken criminal penalties follow including time and restitution.

By: Anonymous on 7/3/08

Ron Cooper took action to protect his best interest.


The rest of you north county retards did what you always do: Whine, complain, accuse, drink, drool, piss up the wall, rob, stab, gaze longingly at your sisters, and blame everyone and everything for your self-inflicted rancid lives.


By: Anonymous on 7/3/08

to Ron Cooper


Just because you allow people to know who you are, dosn't make you right or those who prefer to be anonymous, wrong. Please get off your high horse

By: Anonymous on 7/3/08

All of these attacks on Ron Cooper are missing the point. He didn’t have to ask anyone’s permission to force Karen Guth into bankruptcy. She is the one that violated her lending agreements allowing him recourse in court. He was in his rights under the law because of her actions. She is the one at fault and Ron protected himself and his family the best way he could, which is what any of us would do. The idea here is to protect our selves and salvage what is salvageable.


The point now isn’t to blame anyone or to speculate how enjoyable it will be to see Karen Guth placed in the state penitentiary for fraud and theft. The point now is to clean up the mess, figure out what is left and work towards returning any money to the investors in an equitable way.


The first step in that process, now Karen Guth is under observation from different legal entities, is to find out what the APN’s are on the mutual fund property. That is what Guth steadfastly refused countless times to reveal because once you have the APN’s you can go on line, whether the property is here or Lemoore or San Diego and find out who is on the deed and what the encumbrances are. It is also possible to see what title companies and county entities allowed Karen Guth and Joshua Yaguda free rein in stripping names off the deeds of trust and switching title to Karen and Joshua’s LLC’s.


I am willing to spend time tracing the history of the investments and finding out where the money went but I have yet to get the apn’s of the mortgage fund properties. This is an amazingly large, vastly convoluted ball of string that has to be untangled before any money starts flowing back to the people who invested in the first place.


I have written a letter to Mr. Powell and Judge Labarera asking for their help in releasing the APN’s to investors. I have written many E-mails and letters to Mel McColloch asking for this same information. Of course Mel never shared any information but now he or someone still working at Estate Financial may follow the operating agreement and provide that information. If anyone has the APN list or knows how to get it, please contact me at mjk122085@aol.com and let’s start looking for our assets. If that paper trail helps to properly hang Karen and Joshua (legally speaking of course) so much the better.

By: Anonymous on 7/2/08

tweetee bird


Goofy is a tweetee bird


Stefan

By: Anonymous on 7/2/08

TO Anonymous


WOW were you wrong this time. Thanks for misleading all of us.


(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay –

By: Anonymous on 7/2/08

On the recent Chapter 11 BK filing itself it states "Petitioners are eligible to file this petition persuant to 11 U.S.C.& 303(b)" According to this link on LawDog the stay in not in place.


http://www.lawdog.com/bkrcy/bkcp7e1.htm


Look at 11 U.S.C. Section 362 and read first paragraph. Then scroll down to section (b). Ron's group filed 303(b) and as this code states "does not operate as a stay"


And the answer about 'goofy' = anyone who doesn't believe Ron's right about the lack of stay!

By: Anonymous on 7/2/08

if mickey is a mouse and donald is a duck and pluto is a dog whats gooofy????????

By: Anonymous on 7/2/08

Sounds like either Joshua fighting or one last person still believing Ron is out to ruin the world. Now if Joshua wouldn't have contacted lawyers and made such a stink about it, then many lawyers from their own personal experience alone would believe the stay is in place. Thanks for bringing it to all our attention! Looks like Ron found the exception to the 'stay' rule when he filed. Good going Ron!

By: Anonymous on 7/2/08

Anonymous Get a life. I also checked and BK STAY is 100% right. You are dead wrong.

By: Anonymous on 7/2/08

To Anonymous and all: Yes, the stay most likely in NOT in place. Go to this link:


http://www.uscourts.gov/bankruptcycourts/bankrupt


"As with cases under other chapters of the Bankruptcy Code, a stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. 11 U.S.C. § 362(a). The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U.S.C. § 362(b)."


I'm assuming Ron filed under 362(b)


As in the game of cards "Go fish"

By: Anonymous on 7/2/08

Your welcome Joshua.


Erroneous information again. A stay is absolutely not automatic in an involuntary petition. Why don't you get your facts right by calling a BK attorney or the court clerk. And after you know what you are talking about, then send me a thank you.


I do not mind be criticized by someone but it would be helpful to all if they knew what they were talking about and also disclosed who they were.


Stefan

By: Anonymous on 7/2/08

THE STAY IS AUTOMATIC AND IN PLACE. THANKS FOR NOTHING RON.


An automatic stay is a statutory "order" which protects the debtor and property, and prohibits actions by creditors after the filing of a bankruptcy.


Characteristics of the Automatic Stay

It is immediate. A voluntary or involuntary bankruptcy filing, in and of itself, automatically halts all collection efforts against the debtor. No specific order by a judge is required. Relief for the debtor is invoked upon filing of the bankruptcy petition with the bankruptcy clerk.

It generally applies to everyone. All creditors (secured and unsecured), and even the IRS, are precluded from efforts to collect pre-petition debts. The stay does not, however, preclude a creditor from taking action against other entities, such as co-debtors, guarantors or insurers.

It must be taken seriously. Creditors are bound by the automatic stay even before they are aware of it. For so long as the stay is in effect, not even a telephone demand for payment should be made. Section 362(h) provides that an individual injured by any willful violation of a stay can recover actual damages, including court costs and attorney fees, and in some circumstances, even punitive damages.


By: Anonymous on 7/2/08

I do not have the bankruptcy code available to me-why don't you do what I suggested and call the court clerk or a BK attorney. That is your best source.

By: Anonymous on 7/2/08

An involuntary Chapter 11 WAS filed. No, in an involuntary a stay is not automatic. In a voluntary a stay is automatic. Our stay will not occur until the Judge has her first hearing.

By: Anonymous on 7/2/08

Is there a legal code that substantiates the lack of a stay in this situation. Ca you supply that code? Info on this blog can be erroneous and a code or link of some type leading to this information would help clarify this. Even lawyers are confused I hear.

By: Anonymous on 7/2/08

To BK

Was an involuntary bk filed? If it was, wouldn't the stay be automatic? Are you saying that the involuntary bk was NOT filed?

By: Anonymous on 7/2/08

To Huh:


Yes, if a stay was in place all actions in State Court would be stopped (stayed). But since there is no stay in place, all State court actions can proceed. When a stay is issued, it will be published on this website and in the SLO Tribune.


Hope that that answers your question.

By: Anonymous on 7/2/08

Amen to you, Alex. Again, what Cooper did was a smart move. It seems very evident that Karen would wait until the very last second to file a BK on herself – after the receiver. Cooper just save us time and money by beating Karen to her own plan. I'd imagine it caught her off guard. She probably didn't have all those papers in the fireplace yet. Too bad.

By: Anonymous on 7/2/08

To BK Stay


Can you respond to "Huh?" questions? thanks

By: Anonymous on 7/2/08

Following this story, it appears clear it has degraded into a personal grub match which is exactly what Guth wants it to become. Shouldn't we be joining around those who are willing to put their personal money and time where there mouth is!


My attorney has told me that as soon as the State Court Judge appointed a receiver Estate would file a voluntary Chapter 11 BK. and would as likely as not remain in control as a "debtor in possession." In the involuntary there is more likely that a Trustee will be appointed and he will have substantially more powers than a receiver.


Just sharing what my attorney has told me. Let's work together and not against each other


Stefan

By: Anonymous on 7/2/08

Did all of you forget? Karen is not going to be restructured in this Ch 11 because she has committed fraud. Karen won't be wiping out any creditors nor will she be in business again. Once her books are exposed (already happened) she will (and does) have allegations against her. EFI WILL NOT be restructured to emerge as a business again. What Cooper did was good as now Karen can no longer milk the cow for money as she has been so happily doing.


To blogger 'What?' What are you thinking? The trustee will be dealing with the creditors. The judge won't be wiping anyone out. My understanding the trustee will be handling this in a systematic manner. Do you really believe the judge or trustee will let Karen ever do business again? Ask questions if you don't know. Try to posts truths.

By: Anonymous on 7/2/08

TO WHAT???


Not surprising, but you have absolutely no idea what you are talking about.


If you want to send me your phone number or email address I will explain to you. My email is ron@cooperdevelopment.com.


By the way – the answer is that Cooper is on the side or ALL investors, creditors and builders.

By: Anonymous on 7/2/08

I also thought a chapter 11 was for the benefit of restructuring a business (Esate Financial) – how can this be good for the investors? Any legal people out there who can answer this?

By: Anonymous on 7/2/08

So, because of Cooper's BK filing, the judge can choose to wipe out creditors that she owes so that she can restructure the business and come out to do business again? Can this be true? Whose side is Cooper on?

By: Anonymous on 7/2/08

To BK Stay:

What are you saying? That lawsuits filed subsequent to Cooper's lawsuit are invalid? Please clarify your statements. Is is Josh who is telling you this or do you have personal knowledge?

By: Anonymous on 7/2/08

to Question on BK stay


Its just that. Once you file for Bankruptcy no new suits can be brought. Any existing judgements get listed as creditors and you can additionally list anyone you think may have reason to sue you so they are discharge in the bankruptcy and can not sue you later. I don't think they are officially in a Bankruptcy right now but Cooper has requested an involuntary BK that the court is considering. Whether EFI is taking unfair advantage of the situation at this point who can say. I'm sure a little misrepresentation at this point is childs play.


Stefan

By: Anonymous on 7/2/08


What is a BANKRUPTCY STAY? How does that effect law suits or does it? Why would Joshua lie and say there is one in effect?

By: Anonymous on 7/2/08

I couldn't help but notice at the June 17th meeting a man who was nearly hanging on Karen Guth's lawyer's sleeve. Part way through the meeting he announced himself as a CPA who has done work for Karen – I believe the yearly independent audits and possibly more. Was that Mark Seid? I didn't catch his name. Does anyone know the extent of the work he performed for Karen? Was it just yearly audits or did he work all year long on her books? Again, was that Mark Seid?

By: Anonymous on 7/2/08

IS THERE A BANKRUPTCY STAY IN PLACE? The simple answer is absolutely no!!!!!!!!


Want to verify this yourself.

1. Call the clerk at the BK Court in SB and ask. I did that.

2. Call any qualified BK attorney in SB. I did that too.

Joshua Yaguda has told every atorney who represents a Plaintiff that is suing Estate et al. that their case is stayed.

NO IT IS NOT.


ANOTHER ESTATE LIE.


By: Anonymous on 7/2/08

Fugitive hedge-fund swindler surrenders to Mass. authorities weeks after faking suicide

Prosecutors said he and two other men scammed investors into putting $450 million into the funds by announcing nonexistent profits and providing fake audits, and made millions in commissions on trades that lost money for the investors. The collapse of the funds prompted calls for stricter oversight.

Frank Dawson, public information officer for the U.S. Marshals Service in Boston, said Israel was talking to his mother on his cell phone when he surrendered. He said the marshals' service had been in contact for several days with Israel's mother in Illinois and as a result, the surrender was "more or less expected."

"Obviously, she probably had some kind of influence, which mothers usually do," Dawson said. "He knew they were getting close to him, so he probably did the right thing."

His girlfriend, Debra Ryan of Armonk, was arrested 10 days after his disappearance and charged with aiding and abetting his escape.

Ryan told authorities that on the day Israel was to surrender, she drove her car and he drove the RV to a rest area. Israel parked the RV there, and the two drove back to their home.

Ryan could face as many as 10 years in prison if convicted in the scheme to help Israel flee.

Already facing a length prison term for conspiracy and fraud, Israel was likely to be charged with failing to surrender to serve a federal sentence, authorities said.

In a separate development, federal prosecutors announced Wednesday that more than $115 million is available to pay back victims of the Bayou fraud. The money includes whatever was forfeited by Israel and his co-defendants as part of their sentences, plus interest. The total loss to investors was about $300 million.

Associated Press writers Mark Pratt and Denise Lavoie in Boston and Tom Hays and Jim Fitzgerald in New York contributed to this report.


Sounds familiar?


At least in this case investors are getting some money back. Who knows whats left with EFI when all dust settles?

By: Anonymous on 7/2/08

Anonymous says:


Investors – Remember who you should be aligning yourself with. Ron Cooper and company did nothing to help us out. They only hindered us and those that actually were doing the work to move things forward. Learn to talk to those people who are truly INVESTORS.


Yes, listen to all those who for all this time were sitting back whining complaining waiting for amiracle. Sit back and wait longer.

Ron and Co. did you a favor, you just can't grasp reality. Keep on talking.


Stefan

By: Anonymous on 7/2/08

Investors – Remember who you should be aligning yourself with. Ron Cooper and company did nothing to help us out. They only hindered us and those that actually were doing the work to move things forward. Learn to talk to those people who are truly INVESTORS.

By: Anonymous on 7/2/08

to Paso Guy


Wait for the economy to improve.

By: Anonymous on 7/2/08

Watch the Devil Wears Prada movie. The Ice lady Boss on that movie is nicer than Karen. The way Meryl Streeps character treats her employees is not as bad or as horrendous as how Karen treats her employees, builders and investors.


Most employees will not suffer any consequences of Karen and Josh's actions, Karen and Josh do not keep employees long. Most are fired for asking too many questions or quit because they were tired of the tirade they receive daily from Karen.


The employees that have stayed with Karen aren't smart enough to question their dealings or if they have they have been threatened, yelled at,cursed at or been told they will be fired or sued.


Real nice place to work for, Huh. She fired one guy a week or so before Christmas, He has little kids. Her timing was such that she wouldn't have to give him a Christmas bonus.

By: Anonymous on 7/2/08

to insider


Never argued that it was. BTW, what do you do when you're not blogging? Do you have a life?


Sincerely

By: Anonymous on 7/2/08

to Paso Guy


Thats no reason to leave the builders hanging by not fulfilling the obligation to fully fund the loan.

By: Anonymous on 7/2/08

All the hard money lenders operated the same way. Points paid on a new loan were always the backbone of the income generated for the lender. This is not news for anyone that undestands how they operate. The points made for the big saleries of the pribciples and the 1% they shaved on payments paid for staff and overhead

By: Anonymous on 7/2/08

The reason Paso has less pigeons than Atascadero is because of EFI and thier agressive marketing tactics.

By: Anonymous on 7/2/08

The reason Karen was always going after new builders was so she could take her piece of the action right off the top of each new loan. There is no other explanation. If she had not been so greedy and put new investor money into projects which had not been fully funded so that they could be completed and sold she would not have made as much money. Leona Helmsley to a friggin T.


Stefan

By: Anonymous on 7/2/08

my guess would have been homeless availability to facilitate feeding…it's true though, Paso has no pigeon problem

By: Anonymous on 7/2/08

to need to know


the cost of water.

By: Anonymous on 7/2/08

If the 15 days to request a hearing are buisness days they have to July 18th to request such hearing if calender days July 12th. This is based on the filing date of June 27th.

By: Anonymous on 7/2/08

Why does Atascadero have a pigeon problem and Paso doesn't?

By: Anonymous on 7/2/08

None of this, while important in the removal of current managment outlines the possible biggest problem that led to the demise of EFI. The practice of partial fundind of loans often left builders with existing loans unfunded and construction sitting incomplete, accruing interest while new investors were brought in and new loans were processed to again leave a partially funded loan. It would be interesting to see in the end how many builders went under with partially funded loans and no funds available for the contruction of thier projects. One would wonder why one would do this. Could it be that every time a new loan was writen EFI got thier loan origination fee off the top? If so placing new investors into the already established under contruction loans would bring no additional monthly income to EFI it would just fulfill thier obligation to borrower and investor.

By: Anonymous on 7/2/08

I Always Dreamed Of Living There says:


I just can't believe that more north county, inbred, herion taking, sister shagging, drunken stabbing, meth snorting, wife beating citizens are being taken to the cleaners and wrung out like a pair of filthy underwear by their very own neighbors.


Has anyone called the authorities?


DOC DER FBI SEC but forget about your local DA He must be busy chasing pot smellers andjay walkers.

By: Anonymous on 7/2/08

I just can't believe that more north county, inbred, herion taking, sister shagging, drunken stabbing, meth snorting, wife beating citizens are being taken to the cleaners and wrung out like a pair of filthy underwear by their very own neighbors.


Has anyone called the authorities?

By: Anonymous on 7/2/08

Nocheck would leave EFI's office without either Josh or Karen's approval. Office workers could not approve any payments. They all had to be cleared by either principal.

However, most of the workers were aware of the problems, butfailed to blow the whistle. That makes them responsible also.