EFI ‘s Guth, Yaguda arrested on multiple fraud charges

October 16, 2008
Karen Guth rides from Pasolivo in the back seat of a sheriff's car.

Karen Guth rides from Pasolivo in the back seat of a sheriff's car.


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.

Joshua Yaguda of EFI is taken into custody.

Joshua Yaguda of EFI is taken into custody.

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

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By: Stacy on 10/22/08

The property of Pasolivo is around 131 Acres. Karen's house is just under 6000 Square Feet. At Josh's house a 2 story garage was added on, plus a pool. Whether they paid out of their pockets is up for grabs.Interesting though that they did this during the time Estate Financial was having problems. This is public record. PMT2006-02614 and PMT2007-00024

By: Observer on 10/20/08


I don't know why this disturbs me so, but it does. I wasn't going to say anything more, but I still smell a rat, and I can't quite figure out what it might be.

I live in the area and drove by the place mid-day, mid-week (last week, in fact.) Is the house that Guth or Yaguda live in the little white cottage I see from the road? Across from what I assume is "the large brown barn?" If so, this is hardly some palatial mansion that some multi-millionaire sheisters would choose to live in. It looked (from a distance) like it might be a candidate for demolition…or at least an extreme makeover. I saw a plain SUV (maybe from the early-mid 2000's) parked in front. No exotic sports cars or Hummers.

Frankly, the law certainly appears to have been broken in this whole debacle, I guess there's no doubt about that. EVERYONE involved knows that Guth and her son were going to have to face charges. If they were inclined to flee, wouldn't they have already done so? Why the dramatic scene (regarding their arrest) where the press was allowed/encouraged (obviously tipped in advance to the arrest[is this legal?]) to be on hand and get photos for the media? (this smells REALLY fishy to me.)

Why a 5 million dollar bail for the two who have made no effort (that I know of) at flight? I'll go out on a limb and guess that whomever lives in that house doesn't have 5 million bucks to cough up for bail.

This whole ordeal just doesn't pass the "sniff-test" as I see it.

Of course, I'll have the usual contingent of neanderthal bloggers who will curse me w/o addressing the substance of my post, but in this forum – sadly – that is to be expected.

We'll all get to watch and see, I guess.

Sincere best wishes to those involved (thankfully I'm not)


By: Observer on 10/20/08


Thanks for the rare bit of levelheaded thought amidst the almost violent "mob-mentality" postings we commonly see here.

One of these – by "Harlow" – practically indicts the "Yaguda children"…who are, if I'm not mistaken, like in first grade (or so.) Yea, putting them out on the street will certainly put a big smile on "Harlow's" puss, but it does nothing to help the situation.

Your point makes sense…why shut down an operation (the olive oil company) which adds value to the property? Sounds like many are reacting SO emotionally that they're acting against their own best interest. Sad, really.

By: isntgreedgood on 10/20/08

Thank you, Irish1.

By: Newsome on 10/20/08


Well thought out comments.

Regarding Ms. Yaguda's role, I wonder whether she could be charged with receiving stolen property???

By: irish1 on 10/20/08

When people engage in criminal behavior they should be punished; that's what our justice system provides. In many cases, restitution is one facet of that punishment. However, it is not the public's job to save people from themselves. I am not so hard hearted that I don't feel for "Jan" and her 81 year old husband who invested their entire nest egg with EFI. However, they must have been at least in their late 60's when they invested. Been around the block a few times so to speak. It's foolish especially at retirement age to invest any money, let alone one's life savings, in subprime loans. This is the time for highly liquid cash equivalents and diversification. Reminds me of the JoJoba

farms of the early 90s. What are people thinking?

It also seems as if Guth and Yaguda knew they were going to be arrested. They clearly knew about the investigation as it had been ongoing for several months. They filed for bankruptcy in July, which turned over the company to court-appointed trustees. There was a stakeout by you all, of which they were aware, waiting for law enforcement to show up. I don't think they thought you were waiting for an olive oil tasting. I think they were co-operating to avoid some threat of vigilante justice by angry investors. Their behavior over the last several months hardly suggests a flight risk. If I were some pyramid scheme criminal, I think I would have fled at the first sign someone was on to me.

The Pasolivo brand of olive oil is one of the country's, if not the world's, best. Just look at the list of independent awards and accolades it has received to verify. That brand has largely been built by Yaguda's wife, a very talented marketer and wonderful person. The Tribune reported that no further arrests are expected, so you can't paint her with the same brush. As yet there is no proof that Pasolivo's assets can be traced to EFI as the source of funding. Assuming that does happen, why would you want to do anything but build the assets of Pasolivo in hopes of getting your best possible source of restitution? If it were me, I'd keep the affairs of EFI and Pasolivo completely separate in the public eye so that I might at least recover cents on the dollar one day assuming there is no other source of recovery. Disparaging it hurts only you, and of course, Mrs. Yaguda and her children, whose only crime at this point is being related.

By: Nameless on 10/19/08


You are right to a point. Guth and Yaguda had no regard to their victims (investors and borrowers)about their financial well beings, their children's education their retirenment money, their professional reputation etc. Now my question to you: Who gives a rat a…s about them and their family? Maybe its time to taste their own medicine!!