EFI ‘s Guth, Yaguda arrested on multiple fraud charges
October 16, 2008
By KAREN VELIE and DANIEL BLACKBURN
Beleaguered Estate Financial Inc. (EFI) principals Karen Guth and her son Joshua Yaguda were arrested Thursday morning on 26 felony charges.
A parade of a dozen San Luis Obispo County Sheriff, District Attorney, and state vehicles roared into the Pasolivo Olive grounds at 10:15 a.m. armed with arrest and search warrants.
Before they were handcuffed and taken away, Guth and Yaguda could be seen talking to investigators near a large barn on their property.
Investigators on the scene had no comment for reporters. Guth and Yaguda were taken into custody by a joint task force including agents from the state departments of Corporations and Real Estate and the FBI. They have been under investigation by numerous local, state and federal agencies for months following the failing of their company and the complaints of literally hundreds of alleged victims.
The pair was to be booked into San Luis Obispo County Jail and reportedly will spend three days incarcerated before arraignment. Authorities are seeking bail of $5 million for each, and the passports of both have been confiscated. A “source of bail” motion has been filed to allow time for authorities to ascertain that funds used for bail are not “tainted.”
A white collar crime enhancement has also been charged, which places their personal belongings, property, vehicles and other items under court jurisdiction.
Reporters waiting at the location were approached by Yaguda about an hour before the arrival of the arrest team.
Yaguda screamed and threatened violence, and then ripped a press credential off the shirt of one reporter. Deputies later returned the credential to the reporter.
Earlier in the morning, a reporter witnessed the arrival of two disposal trucks, which were loaded with boxes from the Pasolivo barn before departing.
The EFI fraud primarily targeted seniors. In cases where clients didn’t possess sufficient assets to qualify for the risky investment, sources claim EFI principals approved the transactions, nonetheless.
“Jan,” a computer technician who thought she and her husband would fare well and enjoy their retirement, now faces a loss of most or all of the more than $250,000 the pair invested with EFI. Jan has gone back to work as a sales clerk for minimum wage. Her husband, a retired artist, is searching for work.
“My husband is 81,” Jan said. “Today he is going to interview to wash dishes. He will probably wash dishes the rest of his life. It was everything we had. It is devastating for people.”
Enticed by the promise of generous returns on property-secured investments, approximately 3,400 investors have entrusted their nest eggs with EFI. In July, EFI’s portfolio contained more than $317 million in monies owed to investors. Of that, only $21,000 remained unencumbered as of a few months ago.
Hard money loans are based on the value of the underlying asset rather than borrowers’ credit rating. It works if the lender finances no more than 60 to 70 percent of the project and makes payments to contractors as the work progresses. EFI principals Karen Guth and her son Joshua Yaguda failed to follow through on these promises, which led to the Department of Real Estate stating that many of EFI’s practices were fraudulent.
Tags:, arrest, Estate Financial, fbi, fraud, paso robles