Night Moves: EFI files fund Chapter 11

July 4, 2008

By KAREN VELIE and DANIEL BLACKBURN

Estate Financial Inc. (EFI) principals Karen Guth and Joshua Yaguda placed EFI’s Mortgage Fund LLC into voluntary Chapter 11 bankruptcy with a July 1 appearance in Santa Barbara’s Central District of California United States Bankruptcy Court. Their action puts the brakes on a state court-ordered evaluation.

During the past month, EFI officials have reportedly been spotted packing and moving boxes from their Paso Robles office at 806 9th Street, across from the city public safety building. Last Saturday, three days before Guth’s and Yaguda’s trip to the Santa Barbara courthouse and during dawn’s early hours, a black Mercedes and a dark Cadillac Escalade were parked on the street outside EFI’s private entrance while EFI personnel worked behind closed doors, an eyewitness said.

A state court injunction appears to prevent EFI officials from disposing of records; however, because of the federal bankruptcy, the state court’s authority may be moot.

The voluntary Chapter 11 also may imperil a Fresno attorney’s efforts to evaluate EFI’s fund.

“My job is to evaluate and investigate the books and records of the fund,” said independent evaluator Hanno Powell Friday. Powell was appointed by San Luis Obispo County Superior Court Judge Barry T. LaBarbera to evaluate EFI’s Mortgage Fund.

“The state court cannot order those books and records open to me while the fund is under federal jurisdiction,” Powell said.

Last month, a group of EFI’s Mortgage Fund investors filed a lawsuit and asked the courts to appoint a receiver in an attempt to protect their investments. In order for Powell to continue his investigation, the plaintiffs will have to file a motion in federal court asking permission to continue the state court action.

“We will know soon enough,” Powell said. “The bankruptcy judge has the right to grant permission.”

On June 25, creditors forced hard money lender EFI, the mortgages fund’s managing company, into Chapter 11 bankruptcy. Although the action gave the court immediate supervisory powers over EFI’s financial transactions, Guth and Yaguda were given 20 days to dispute the creditor’s claims.

However, in the case of the voluntary bankruptcy, the court requires Guth and Yaguda to file a list of the fund’s creditors, assets, and liabilities with the court within the next few weeks. At that time, the information becomes part of the public record.

Currently, 1,459 of the funds 1,460 loans are in default. Investors have placed $152 million into the fund, according to EFI’s web site.

One example of EFI’s eyebrow-raising fund management practices involves a 40-acre project on Ramada Drive in Templeton. Investors doled out $11.2 million in 2004 to fund the proposed mixed use development. According to EFI, in 2004, the projects had an appraised value of $19.1 million, a 58.6 percent loan to value ratio.

Although the project is fully funded — and more than two years have passed since the project was slated to be completed — Templeton Mixed Use Partnership LLC, the developer on the project, has not yet broken ground.

And current evaluations of the property, from EFI’s online accounting portfolio, assign the property an appraised value of $235,000, a 3,617 percent loan to value ratio.


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21 Comments

  1. ccn_debate says:

    Member Opinions:
    By: Anonymous on 8/27/08
    Roxanne says:

    I checked and it's true. Uncoveredslo.com's blog is highly searchable. Due to this, I'd like to post the below.

    If you are searching for information about Karen Guth, Joshua Yaguda, and Paso Olivo, you should read the statements below.

    Karen Guth and Joshua Yaguda have allegations against them supported by the Department of Real Estate and Dept of Corporations for defrauding investors in their other company Estate Financial, a hard money lender.

    The ongoing allegations which are being investigated by the FBI, DOC, DRE, DA include fraud, dishonest dealing, co-mingling funds, failure to secure loans, negligence, and more. Thoughts are Guth and Yaguda swindled over 2500 investors, many elderly, from their savings by misrepresenting their company. Guth and Yaguda misappropriate many funds in the 300 million plus investor-built portfolio and then walked away claiming bankruptcy. Yes, they flew away in their 'golden parachutes' with much money unaccounted for. Paso Olivo employees were paid by with Estate Financial checks. Karen and Joshua have willfully disregarded or violated state real estate law and investors have suffered immense losses due to their activity. Trustees are currently sorting out the mess. However, Karen and Joshua are free to roam. That is, until they are tried criminally in court. Most concur they will serve significant prison time, not for a mistake but for purposely breaking the law for their own personal financial gain. What a wonderful way to make money to do what Karen and Joshua love best – olives. Please learn more before you support their olive ranch! Please read the below link:

    http://www.uncoveredslo.com/?id=139&showEntry

    Key words: Paso Olivo Oil, Karen Guth, Willow Creek Olive Ranch Tasting Room, Paso Robles California, California Olive Oil News, California Olive Oil Council, LA County Fair Olive Oil Winners, Joeli Joshua Yaguda, 140-acre ranch, Olives101.com The Olive Oil Source, COOC Olive Oil, Nancy Ash, Charles Crohare, Paso Olivo Olive Oil, extra virgin olive oil, award-winning estate olive oil, Guth / Yaguda Family, criminals
    By: Anonymous on 7/18/08
    Desert Hot Springs funding investment by EFI goes south:
    http://www.desertvalleystar.com/villageshoppingct
    By: Anonymous on 7/18/08
    dont know the apn. here is one of your investments.
    http://www.desertvalleystar.com/villageshoppingct
    By: Anonymous on 7/9/08
    New article on UCSLO

    http://www.uncoveredslo.com/?id=145&showEntry
    By: Anonymous on 7/9/08
    How useless will this information be if Karen runs away with your money like another Paso lender did.

    Perhaps Tiffini doesn't know the trouble she will be in if she aids and abets a fellon.
    By: Anonymous on 7/9/08
    that useless info and $1.50 can get you a cup of coffee

    (0) 0 Total Votes - 0 up - 0 down
  2. ccn_debate says:

    By: Anonymous on 7/9/08
    Two of the people work for Atascadero Ventures, LLC which is a Delaware listed firm involved in developement, M. Shilling and Covey have been there employees the address in Avila is one of many addresses for several LLC's attached to Hertel Development and Investments now under a probe for wrong doing.
    By: Anonymous on 7/8/08
    No F. Reese is a current California real estate license holder according to the D.R.E……So, I suppose the new "guy in charge" is going to be doing…….something that doesn't require a real estate license…..because otherwise, he'd still be acting under the license holder's direction. According to the D.R.E. website, that would still be a gentleman by the name of Josh Y.
    These people are soooo smart. Hey, 30-90 days from now, the market's going to turn around, they're selling a few properties and everyones going to be just fine….
    Someone needs to wake me up…this is a dream.
    [Note to self:…..if you take people's money with paper, instead of a gun….you don't have to worry about a new room at the grey-bar hotel] …
    (Better idea yet….rob the 7-11 with your .38, then when the DA finally investigates, advise them that you've given the gun to your uncle "Fred"…..everythings fine…..they can't figure out what to do…No doubt, when the clerk handed the money to whomever was holding "Fred's" gun….it was just a risky investment).

    (0) 0 Total Votes - 0 up - 0 down
  3. ccn_debate says:

    By: Anonymous on 7/8/08
    When I called EFI this morning I was a told that Lupe no longer works at EFI.
    By: Anonymous on 7/8/08
    TO New CEO of EFI ?

    What are your loan #'s
    By: Anonymous on 7/8/08
    TO New CEO of EFI ?

    What is your loan #'s
    By: Anonymous on 7/8/08
    Sounds like they have figured out a way to maintain controll. Did anyone go to court today to see what was going on with Guth and Applebaum?
    By: Anonymous on 7/8/08
    As of ten forty this morning (Monday July 8,2008) everything was as usual at Estate Financial. I went into the office and ask the girl at the desk if I could have a list of the APN’s. She said she would have to check with the loan officer. Lupe came out and I repeated my request. Lupe went back in the back and came out a minute later. She told me, and I quote,” Joshua said the APN’s are not available for mortgage fund holders. If I want the APN’s on the mortgage fund property, have my attorney contact them.”

    Of course Joushua didn’t tell me that face to face. He remained in his office behind a wall and let the girls who worked for him be the bearers of bad news. I understand completely. What if an investor came into the office that had just gotten a doctors report that they had prostate cancer and only had a few months to live? What if that person had contemplated leaving his wife of forty years destitute because all of his retirement funds were in the hands of Joshoa Yaguda and Joshua wasn’t going to answer any of his silly questions. Joshua might come out from behind his desk and get the surprise of his arrogant, priveledged life. Much better to the girls take the heat and deflect the anger. Damn sight safer too. I am not saying that Joshua is a yellow coward, he is just careful with himself. What else is he paying those girls for if not to make his life easier?

    So, more of the same from Estate Financial. Joshua and Karen are still in charge. Actually, it was a little different. Instead of telling me that Estate Financial has recognized the need to share information with investors and they were working twenty four seven to get that information out, Joshua basically told me to F*%#@ Off.

    Of course I understand that too. If someone asked me where I buried the body of someone I had murdered, I doubt I would share that information. Just like Joshua and the APN’s there is absolutely no upside to giving out that information to the authorities, let alone some powerless investor who wants to know where his or her money went.

    By: Anonymous on 7/8/08
    So do EFI or EFI mortgage fund have any kind of license to do buisnes. Did these new management guys bring a DOC & DRE license. How can they do buisness in California without he proper licenses. Not that much should be done but bean counting. Again it would have been more valuble to let Hanno Powell finish his buisness but maybe this is just a good way to get back at you ingrates by putting in hand picked high priced managment that can continue to use whatever funds are left for saleries. How could Karen pick the fund manager without a vote of the partners?
    By: Anonymous on 7/8/08
    To Karen W.
    You took "private action" and got bought out? Now what king of private action would that be? Since the majority haven't been able to get Karen to return phone calls, I am a bit baffled as to how you were so successful in being made whole.

    (0) 0 Total Votes - 0 up - 0 down

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