STAKEOUT CONFIDENTIAL: Seeing Guth and Yaguda in handcuffs

October 19, 2008

By THE EDITORS

Law enforcement plans to grab Estate Financial Inc.’s principals some time Thursday raced through the investor community like rumors of rain during a drought.

So we knew what was going to happen, we knew who, why, and where. But exactly when? That piece of information was missing.

Karen Guth, 65, and her 40-year-old son, Joshua Yaguda, president and vice president of the failed Paso Robles lending firm Estate Financial Inc. (EFI), were to be taken into custody at their Pasolivo Olive Co. ranch Thursday. They would be charged with 26 counts of fraud-related crimes. Bail would be set at $5 million each, and passports would be confiscated.

Also, Guth and Yaguda would be detained for at least three days in County Jail while authorities ascertain bond funds are not “tainted.”

CalCoastNews has reported on the collapse of EFI since the first of the year, noting in numerous articles the hard money lender’s suspicious practices and transactions; their apparent systematic looting of investors’ accounts; and the heart-breaking personal accounts of the fleeced. With a rough draft of the arrest already written, we planned to own the story.

Initially, The Tribune stoutly supported EFI, a long-term advertiser, suggesting EFI’s troubles were due to a downturn in the economic market. At the same time, UncoveredSLO was detailing a litany of what appeared to be massive financial deceptions.

While the Vineyard Drive neighborhood was still cloaked in darkness, co-editor Karen Velie, armed with two cameras, coffee, and blankets, started her stakeout of the Pasolivo ranch. As law enforcement typically arrest suspects during the very early hours to diminish their capacity to resist, it was entirely possible that the pending action might take place at any time.

On a strip of a public right-of-way, Velie parked her red Hyundai on the shoulder of Vineyard Drive and began her watch.

At 5:30 a.m., Guth drove slowly past the ranch in her Mercedes, turned around, drove back, and then entered the long, curving driveway through a swinging iron gate. For the next hour, there was a flurry of activity in one of two buildings visible from the street, a large brown barn. Guth appeared to be loading Dumpsters and moving articles to and from her vehicle’s trunk. A large refuse trucks arrived at 7:25 a.m., entered the ranch, and removed a load from outside the barn. At 7:45, a second truck repeated the activities of the first truck.

Shortly thereafter, Velie’s well-rested associate, Dan Blackburn, joined a disheveled and bored reporter.

Minutes dragged by like hours. The reporters’ conversation drifted, then centered on their primary reason for being there: the thousands of Estate Financial victims who could not be. If allegations prove to be true, Guth and Yaguda had robbed so many people — of their money, hope, and their very future — that their arrest was a moment of considerable significance. It would not happen in a vacuum.

During their wait, the reporters talked about the Atascadero-based Meals on Wheels program. The non-profit provides nutritious food for needy seniors in Atascadero and Templeton, and because of investments with EFI and Hurst Financial, the agency is financially strapped. The non-profit agency, attracted by the promise of high-earned interest, invested its entire nest egg of about $300,000 with the lenders. Meals on Wheels, like many others, is no longer receiving interest. Officials investigating the lenders’ fraudulent activities fear investors’ returns will be pennies on the dollar.

Now, said Citizens United President Dale Willis, officials of Meals on Wheels have had to cut down on food portions, and for many, this is their only meal of the day.

During their wait, the reporters talked about the dozens of men and women near or in retirement who shared their stories of fiscal trauma and helplessness, and who had worried for months about plundered investments.

And they talked about the cavalier manner in which these people’s hard-earned dollars had been stripped from them by stealth and without, apparently, a second thought about the human wreckage being left behind.

About 8:30 a.m., Guth’s daughter-in-law rode a golf cart to the end of the Pasolivo driveway and walked along the street to the reporters’ vehicle. She pleasantly asked what the reporters were doing. Blackburn said, “We’re waiting for friends.”

Apparently satisfied, she departed.

Then, a half hour later, Velie said, “Oh, oh. Here comes Josh,” as she rolled her window up and locked her door.

“He’s smiling,” Blackburn said as he rolled his window down.

Yaguda took the long walk down the drive and onto the street as he approached from the rear of Blackburn’s silver truck.

“What are you doing here?” Yaguda asked.

“Just waiting.” Blackburn replied.

“You’re on private property,” Yaguda responded.

“No, we’re not. But we’ll move across the street if you want,” Blackburn said.

Suddenly, Yaguda’s demeanor changed, and he screamed, “I said get the f–k outta here!” He grabbed Blackburn’s shirt, and pumped his fist repeatedly toward Blackburn’s face while repeating his demand. Yaguda then stopped, looked at a press credential on Blackburn’s collar, and sneered, “You’re Dan Blackburn, that UncoveredSLO reporter.”

He then reached his fisted hand into the vehicle, and ripped Blackburn’s press credential away.

“I’m calling the sheriff,” Yaguda said.

“Don’t bother,” Blackburn said. “They’re already on their way.” Velie later would report that Blackburn spoke softly and was smiling.

Yaguda reacted visibly, and then walked away, still holding the sheriff-issued press pass and shouting obscenities.

Velie said, “Look at my hands, they are shaking. Oh rats, I have a camera, but no picture.”

Half an hour later, a sheriff’s deputy showed up, having been summoned, incredibly, by Yaguda. While sitting in his car prior to heading up the driveway, dispatch asked him to detain Guth and Yaguda. A second deputy arrived, and the pair interviewed the reporters, Guth, and Yaguda.

While these discussions were ongoing, the cavalry arrived, approximately a dozen nondescript vehicles stuffed with sheriff’s deputies, state agents, district attorney investigators and federal authorities sped down Vineyard Drive bumper to bumper and turned down the long driveway leading into Guth’s Pasolivo ranch. Dozens of law enforcement officials, armed with an arrest and search warrant, swarmed onto the grounds. It was 10:15 a.m.

Pasolivo employees who had already arrived for work were sent home. A deputy was assigned to secure the gate.

For the next two and a half hours, officials interviewed Guth and Yaguda inside a small house visible from the road.

At noon, Blackburn left to file CalCoastNews’ story, having obtained pertinent information about the arrests even before the district attorney distributed an official press release.

At about 12:30 p.m., a Mercedes drove up to the Pasolivo scene, and a daily newspaper reporter and photographer joined the watch.

At 1:00 p.m., officers placed a handcuffed Guth into the back seat of a sheriff’s car. Then, around 1:10, deputies and agents emerged from the white and gray farmhouse with Yaguda, also in cuffs. Agents placed the pair side-by-side in the back seat of a sheriff’s squad car for transport to San Luis Obispo County Jail.

Sources claim Guth and Yaguda purchased numerous firearms just days prior to their arrest.

The long, painful ordeal being felt by countless victims of what may be this county’s biggest swindle ever had reached a new plateau. One chapter of the devastating saga of Estate Financial was nearing its end.

Now, it is investors who must take up the watch, as the ever-widening and increasingly complex financial debacle created by Guth and Yaguda is straightened out. For those who have been damaged by mother and son, the long, dark night is just beginning.

Tags:, Arrest, Estate Financial