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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