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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By: Anonymous on 7/8/08

Paso Guy, You may get a chance to figure out who Karyn W. is once the bankruptcy records are made public. They should have to disclose everyone who got paid off towards the end and if they don't the investors should attend the bankruptcy hearing and request it from the judge.

By: Anonymous on 7/8/08

One guy who was paid off is Mel McColloch – the consultant Karen hired in September, the same time that she bought him out of the Mortgage Fund, the same time the Mortgage Fund stopped paying investors. Documents signed and notarized in September, 2007, recorded in December. Check for yourselves. I doubt if she bought out her new employee with cents on the dollars either.

By: Anonymous on 7/8/08

Ding Dong the Witch is dead and her little dog too!

By: Anonymous on 7/8/08

Gosh Karen W…..I guess your just smarter and better than the rest of us pilgrims. Why don't you tell us who you nare so we can find you and pay homage?

By: Anonymous on 7/8/08

to Ollie


I may be wrong but the way I understand it any transactions done in preparation of a bankruptcy are illegal and may be undone. It may be some people should give priority to thier criminal defence tactics at this point. You know who you are.

By: Anonymous on 7/8/08

Insider, i suspect they got out as a few did promised they would not file suit and expose the scheme too soon if they accepted pennies on the dollar and kept silent, i was told about 10+ people were inside her private circle some included some VIP's so they took what they could got out. Monies went to other unk LLC's to cover the paper trail.

By: Anonymous on 7/8/08

I agree support UCSLO, we would not know so much if not for them, I checked and found the many posting from months ago warning us of the BK coming. I too learned she was investing in untraceable Gold Bullion and the concealment of monies in other LLC's and Accounts in Oxnard and Ventura. I hope now someone will open a Criminal Investigation into all of this.

By: Anonymous on 7/8/08

to Karyn W.


How did you get out? They wouldn't let anyone out the way I understand it.

By: Anonymous on 7/8/08

Good story on the BK, however it appears someone was not listening too well. We were all informed many months ago by posting by Cindy and Gloria and others that they were going to go BK. We who took private action came out OK, remember we were informed they were moving assets into Gold Coins and Bullion and hard cash. So those who got the inner information got out and at least got .75 on the dollar you all should have listened ? Plus the moving of monies into other LLC's and Businesses NOT affiliated with her enterprise, sorry you all did NOT listen. Many of us did and are out with some $$

By: Anonymous on 7/7/08

Mr. Reese is the new CEO of EFI, Inc. The agreement reached between Reese and Guth/Yahuda is that he has total free reign to run the company with no interfearance from her. She cannot vote her stock, fire him, or in anyway interfear with him.

By: Anonymous on 7/7/08

At this point I project a return of maybe 35 cents on the dollar, with the pros getting the same to manage us out of the abyss

By: Anonymous on 7/7/08

The David Gould, Esq. who is the Fund Dissolution Manager is a senior member of the California State Bar, License No. 37947, and he is a member of the Business Law Section.


By: Anonymous on 7/7/08

Another B 311-04


I tried to address some of your concerns on April 17 th.

I will be in town tomorrow and if you identify yourelf, I'll try to answer.

I will not accuse you up front for dishonesty knowing your and all of our frustration.

I'll be a gentleman.

By: Anonymous on 7/7/08

To AA says:


A lot of transactions on the County Clerk Recorder website for Estate et al.

http://services.sloclerkrecorder.org/officials/se


July 7th, 2008 at 12:52 PM


I checked–under what heading did you find current activity?

By: Anonymous on 7/7/08

To Jill and Other Respondents:

I'll be patient. Would appreciate whoever goes to let us all know what the results of the meeting was all about. Sticking together is our main goal. I'll trust once I get answers.

Thanks

By: Anonymous on 7/7/08

From Estate's BK Attorneys

By: Anonymous on 7/7/08

A lot of transactions on the County Clerk Recorder website for Estate et al.

http://services.sloclerkrecorder.org/officials/se

By: Anonymous on 7/7/08

To N.M.

Where did you get your info?


NEW MANAGEMENT says:


Mr. Gould is the new manager if the Fund. He is acting as a liquidating manager.


Mr. Freddy Reese is being suggested as the liquidating manager for EFI. I do not think that has been finalized yet.


Mr. Lewis Landau (a BK Attorney) represents the fund in their BK filing.


Mr. William Bell is going to represent EFI in the BK filed against them by various creditors.


The motion Mr. Sousa filed in conjunction with Mr. Fredrickson and his clients is now moot – due to the funds BK filing. Mr. Hanno Powell is stopped in his tracks not by th involuntary BK filed by some creditors but by the Fund BK filed by Guth.


July 7th, 2008 at 12:05 PM


By: Anonymous on 7/7/08

In Steve's defense, I know him and some of his situation. He is to be trusted and is a good man. Why all the conspiracy theories anyway? When a trustee is placed they have to abide by the law. All creditors/investors will be respected in that manner. There is no room for favorism and foul play. Relax.

By: Anonymous on 7/7/08

I'm would assume at this point the greatest concern is to protect personal assets and the potential of criminal charges which may be one in the same.

By: Anonymous on 7/7/08

To Investor in Olivehain: Perhaps Steve G. isn't responding because he has a case against EFI. Because of this legal status he is most likely not to answer detailed questions. Your lawyer wouldn't let you blog details of your case now would he/she – porvided you had one, right? Think about this. Chances are he has to be as quiet as possible. Find another way to contact him.

By: Anonymous on 7/7/08

During a law suit, you are told not to talk publicly by your attorney.


I for one will wait till the meeting on the 8th before jumping to a conclusion.


I think many investors and developers have been damaged by Karen. Lets stick together.

By: Anonymous on 7/7/08

I am another investor in STEVE GARDALITY's projects. he is not to be trusted. I noticed questions put to him here but no answer. If any of you go to the Tuesday night meeting with Cooper and Gardality, ask Steve why he doesn't answer any questions and about his questionable ethics.

By: Anonymous on 7/7/08

NEW MANAGEMENT


Who made these decesions? Nothing is in place yet other than Karen's hand picked temporary manager.

By: Anonymous on 7/7/08

The involuntary Bk filed against EFI was served on Friday the 27th of June. EFI has 20 CALENDAR days in which to respond – which means until July 17th.

By: Anonymous on 7/7/08

Mr. Gould is the new manager if the Fund. He is acting as a liquidating manager.


Mr. Freddy Reese is being suggested as the liquidating manager for EFI. I do not think that has been finalized yet.


Mr. Lewis Landau (a BK Attorney) represents the fund in their BK filing.


Mr. William Bell is going to represent EFI in the BK filed against them by various creditors.


The motion Mr. Sousa filed in conjunction with Mr. Fredrickson and his clients is now moot – due to the funds BK filing. Mr. Hanno Powell is stopped in his tracks not by th involuntary BK filed by some creditors but by the Fund BK filed by Guth.


By: Anonymous on 7/7/08


To STEVE Garality:

Yesterday, I asked you a few simple questions, i wanted to see if you were trustworthy and to make up my mind as well as other investors as to your plight with EFI. i now realize and i hope other investors realize that you aren't an upfront honest contractor. not answering these questions puts you in the same dishonest catagory as karen and josh. you cannot be believed or trusted.

I'll ask you again:

how much will it take to finish that house (B311-04)?

is there still an illegal structure on the property?

what condition is the property in?

why are you still living in our investment?

these aren't criticisms, these are NEED TO KNOW matters.

how much $ would it take to finish?

what would be an AS IS sale price?


By: Anonymous on 7/7/08

BEBE Says


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 7/7/08

Trish is no longer there? Laura on vacation? Hmmmmm, sounds like both are worried. Hopefully one or both narked and quit. Time will tell.

By: Anonymous on 7/7/08

Ron and Steve were completely unknown to each other until approximately 4 months ago when this EFI situation came to light.


There is no business relationship between us. We just find ourselves in the same boat and many other builders who borrowed from estate.

By: Anonymous on 7/7/08

I just called EFI office and spoke with Linda who told me she is a temporary receiptionist replacing Trish who is no longer there. It seems that Laura is "on vacation" but Josh is in the office and Karen is expected. Call and see.

By: Anonymous on 7/7/08

insider says:


What is the relationship between Steve Gardality and Ron Cooper. Were they partners on the same deal? It seems thier names come up together all the time.


My relation with Ron Cooper is the same as investors relations with other investors.

Accidental partnership in victimhood.


By: Anonymous on 7/7/08

I have read little of what has been posted, but have this question:


Karen & Josh are no longer fund managers, but do they still control EFI? What about the 1st TDs that are not part of the fund? Who is running that show? Since all 1st TDs intertwine with the fund, how are decisions going to me made for liquidation?

By: Anonymous on 7/7/08

to Alex


They are probably off trying to find a job it's the only way to save the ranch. They have thier personal assets to look after now. After all you surely don't expect them to continue to worry about your problems do you?

By: Anonymous on 7/7/08

What is the relationship between Steve Gardality and Ron Cooper. Were they partners on the same deal? It seems thier names come up together all the time.

By: Anonymous on 7/7/08

WOW! Karen and Josh promised us they were not going anywhere. Their attorney assured us that they did not do anything wrong. Karen and Josh continued time after time to tell us that we should stick by them as they were the people most qualified to help work this through and get us the biggest return on our investment.


People applauded them while a few voices try to make it clear to us how wrong Karen and Josh were and that we needed to replace them. It has taken several months to see the light – but there it is people – shinning brightly. Karen and Josh have left us hanging in the wind while they run off to do whatever/wherever. Time to applaud them again.


By: Anonymous on 7/7/08

David Gould is not the attorney who filed the BK. Lewis Landau is the attorney who filed the BK. Believe it or not, Karen & Josh ARE OUT OF THE BUILDING.


I only can wonder who is running EFI.

By: Anonymous on 7/7/08

David Gould may only be the attorney who filed the bankrkupcy for Karen and Josh. It's hard to believe that those two egotists would be able to step aside unless they were handcuffed and taken away kicking and screaming.

By: Anonymous on 7/7/08

The Labor Department reports an ever so slight up-tick in legal services jobs; but law firm layoffs haven't stopped.


Now what is wrong with this picture?

By: Anonymous on 7/7/08

To Insider

Is there any way to view the BK filing on-line?


By: Anonymous on 7/7/08

It appears David Gould is a bankruptcy attorney. That much makes sense. Whether he has receivership experience is unclear. He might just be the funds bankrupcy attorney who made the filing.

By: Anonymous on 7/7/08

Make sure OpenDocument is a part of the link below.

By: Anonymous on 7/7/08

Here's more infomation on a link for David Gould from a .gov site (cut and paste for your sanity)


http://www.cacd.uscourts.gov/cacd/AttySetPan.nsf/

By: Anonymous on 7/7/08

Try this link, it is free!

http://kepler.ss.ca.gov/list.html

It might help some of you find out a little more.

By: Anonymous on 7/6/08

what are david gould's qualifications?

By: Anonymous on 7/6/08

TO:NO WAY


Her plan will not succeed if you, and others, support the investors who are going to ask the BK court to appoint a Trustee.


But if you sit bak and do nothing she is likely to succeed.

By: Anonymous on 7/6/08

He is an attorney (a BK attorney) in Calabasas, CA. He is NOT a political consultant. That is a completely different David Gould

By: Anonymous on 7/6/08

To New Manager

Where can we find the BK filing that appoints David Gould? I did a people search and found a David Gould in Calabassas but not at that address and can't find a David Gould corporation. What do you mean his address is listed the same as the Mortgage Fund? Do you mean on 9th St in Paso Robles?

By: Anonymous on 7/6/08

Anonymous says:


David Gould company in Los Angeles does "Political reporting and consulting". How could


Could't be any worst than with Karen. He'll be off the gravy train soon.

By: Anonymous on 7/6/08

David Gould company in Los Angeles does "Political reporting and consulting". How could Karen get away with having someone with that experience appointed? Does the judge have to approve her choice? You can bet that if she picks him, Karen will be looking over his shoulder and telling him what to do. Geez, can this mess get any more bizarre? And who will this guy be working for? Karen or the investors?

By: Anonymous on 7/6/08

I for one do not want a Karen Guth hand picked manager. This appears to be a ploy to put someone in charge she can control. Will her plan succeed?


By: Anonymous on 7/6/08

David Gould, a Professional corporation whose address is te same as EF Mortgage Fund, LLC is the new manager of the fund. That was effective June 30, 2008.


THIS IS NOT A RUMOR – see EFI Fund LLC BK filing.


Mr. Gould's address is 23801 Calabasas, Rd. Suite 20, Calabasas, CA 91302.


By: Anonymous on 7/6/08

Dude. Hussein is Obama's middle name. His real middle name. Big F'n deal. It is just a name. Smith, Jones, they are just names. And why in hell are we even discussing this crap here? A little off topic, doncha think?

By: Anonymous on 7/6/08

What the….? says:


David – Are you a terrorist?


Is he a terrorist? I don't know. But he did say this on another blog:


"Saints do not go into politics. No politician will be a saint until we are all saints."


"The time has come for Barack Hussein Obama."


"Go Obama!"


signed:

David "Hussein" Ciaffardini

By: Anonymous on 7/6/08

Where the "F" has New Times been these last five months????? Are you kidding me??? They couldn't be bothered with this kind of reporting. If Velie and Blackburn were still writing for New Times, their articles would still be spiked by Bob "Our Advertisers Always Come First" Rucker.

By: Anonymous on 7/6/08

Apparently there is a Superior Court hearing in Court Room D4. Karen Guth vs Charles Applebaum. Case #FL030331. Reason to Show Cause. Anyone know what this means? Sorry about that, the date is July 8.

By: Anonymous on 7/6/08

Apparently there is a Superior Court hearing in Court Room D4. Karen Guth vs Charles Applebaum. Case #FL030331. Reason to Show Cause. Anyone know what this means?


By: Anonymous on 7/6/08

New Times has a picture and article about EFI's Rockview Close investment off of Broad in SLO. This is one of EFI's stalled investments. good going New Times. Karen and Dan are getting more help finally.

By: Anonymous on 7/6/08

Anonymous says:


Identity thieves are scum! Sue for his house, sue for his car. His new identity: "Light Hearted but Lost Everything!" Not a bad headline either.


I agree! why not just shoot them. Anyone who hides behind such a name "Anonymous".

By: Anonymous on 7/6/08

Identity thieves are scum! Sue for his house, sue for his car. His new identity: "Light Hearted but Lost Everything!" Not a bad headline either.

By: Anonymous on 7/6/08

Sue the bastard! Why not? Make some money AND bring more attention to UncoveredSLO! That's what I call "win-win"!

By: Anonymous on 7/6/08

To Jill:

is this site costly?

By: Anonymous on 7/6/08

to steve gardality:

o.k. that's a start. now how hard would it be to answer the questions asked. investors want answers, you have answers. i can't see the difficulty here, can you?

By: Anonymous on 7/6/08

Below some are trying to figure out who owns what company and their address. Go to http://www.knowx.com There is no other website like it. It will tell you who owns what LLC and so very much more. For example, a couple months ago, I typed in under the 'owner and officer' option and found Karen Guth has 33 operations. This is secretary of state information that is otherwise so hard to get. There is a cost to it, but it's well worth it. Picking one of the subscription packages is the best. It's a private investigators dream come true. It's my understanding that the state sells this information to this website or at least gets a percentage. In the good old days you would have to go to the Secretary of States office to gather this info. Not anymore. To know all that this site can supply for you go to

http://www.knowx.com/statmnts/priceinfo.jsp

Scroll down and look at all the option i.e. real estate records, liens, lawsuits, judgments, fictitious business names, reverse address look up, executive affiliate reports, background check, marriage records, and the list goes on.


And, no, I'm not a sales person for this. I just think it's cool and so many of you have questions that can be answered by this site.

By: Anonymous on 7/6/08

To read it and weep;

You left out some of the best parts. FIFTH CAUSE OF ACTION – LOAN #775-03

On approximately March 31, 2004, respondents Guth and Yaguda solicited investors to fund a $915,000 loan, identified as loan #775-03, representing to the contributing investors that said funds would be used to build a project known as Lot 3 Elwood Fee Goleta, California. In addition to the $915,000 respondents collected from investors to fund loan #775-03, respondents added to that amount $355,668 WHICH THEY TOOK FROM ALREADY FUNDED LOANS, including Loans 4005-05, 539-04, 571-05, 775-03, 778-03, 779-08, 101,06 and 102-06, without the knowldege or consent of any of the beneficiaries of any of said loans. Of the total amount allocated to loan 775-03 by respondents, which was $1,270,718, respondens disbursed $776,072 TO OTHER LOANS IN THE SUBDIVISION, which disbursements were not secured by deeds of trust, including loans 238-02, 289-02, 240-02, 241-02, 773-03, 774-03, 152-02, 153-02, 154-02,200-02, 201-02, 777-03 and 776-03 without the knowledge or consent of any of the beneficiaries of any of said loans. After disbursing $776,072 for the loans identified above, only $494,645 of the loan funds were used for loan 775-03. …and therefore acted FRAUDULENTLY AND DISHONESTLY in arranging loan 775-03.


By: Anonymous on 7/6/08

to legal beagle:

get a life–sue the bloggers–that will take care of these light hearted additions. if you're a real legal beagle get us our investments back instead of complaining about- nothing.

By: Anonymous on 7/6/08

investor in olivehain


Obviously you were given information that is not correct.


You were likely not told that this house was in escrow in 2004 to be completed in 2004. That is only one item.

By: Anonymous on 7/6/08

To Karen's Team (those of you who are benefiting from your support – those of you who have be paid off, or are benefiting from your relationship to EFI) –

Dig a little deeper. Look at the "comment" section – 6/27/08: H-2276FR. Call the DRE at 916 277-0906 on Monday and ask them what they have based their accusations on. Among the many are: "respondents routinely used funds from the mortgage pool to fund projects without obtaining security for the investors, and advanced funds on construction loans that were not secured by deeds of trust." "Failed to keep accurate separate records for each beneficiary or transaction." "Respondents failed to provide deeds of trust for any of the loans described in Paragraph 16, contrary to their representations…" "Respondents made unsecured loans from the Pool, including the following loans based on misrepresentations and false promises in said circular and therefore acted FRAUDULENTLY AND DISHONESTLY in making the unsecured loans." "Respondents failed to provide deeds of trust on the fractionalized loans and/or advances from the Pool and individual investors…" "Respondents made unsecured fractionalized loans and advances from the Pool and individual investors based on misrepresentations and false promises…and therefore acted FRAUDULENTLY AND DISHONESTLY in making the loans." Shall I go on? The ONLY people who would be supporting Karen Guth at this time are benefiting or intend to benefit from that relationship. You should be ashamed of yourselves.

By: Anonymous on 7/6/08

Malicious? I don't care who wrote it, but I think what it says is pretty cool. Trippy, but cool. What's the big deal?

By: Anonymous on 7/6/08

As I understand it, people can now be sued for using other people's identities to make malicious postings on websites. It is possible to get a court order and track down the computer where the postings come from. Then you take the identity thief to court, or, if you're in a hurry, you take the law into your own hands.

By: Anonymous on 7/6/08

how did you bloggies know it was me?

signed,

d.c.

By: Anonymous on 7/6/08

I know David. He did not post that. It is some joker with some weird obsession is cutting and pasting from other sites and making a mockery of you all and this site. That posting won't be here by tomorrow.

Some people need to get a life.