Bank dubbed co-conspirator
December 5, 2008
By KAREN VELIE and DANIEL BLACKBURN
Estate Financial Inc. (EFI) creditor Ron Cooper said he plans to identify Heritage Oaks Bank as a co-conspirator with EFI principals Karen Guth and Joshua Yaguda in a lawsuit to be filed later this month.
Heritage Oaks Bank allegedly lent Guth approximately $20 million in unsecured loans. Following reports by this Web site that EFI was in serious financial distress, HOB placed liens on Guth and Yaguda’s Pasolivio ranch, their service stations, and a commercial property on Ninth Street in Paso Robles that once housed the failed lender.
“My theory is that Heritage Oaks Bank conspired with Karen [Guth] and Joshua [Yaguda] to encumber their assets and keep creditors from collecting on any judgments they may get against Karen and Joshua,” Cooper said.
Heritage Oaks Bank officials have declined to discuss specific loan arrangements and deny allegations of co-conspiracy.
“That’s not true,” said bank Senior Vice President William Raver.
Last month, Cooper’s daughter, Jodi Cooper, won a default judgment against Guth and Yaguda for more than $700,000 for management fees on a construction project Guth funded through EFI.
Guth, 65, and Yaguda, 40, were arrested October 16 by a multi-agency task force at their Pasolivo olive ranch. They face 26 fraud charges, and both remain in San Luis Obispo County Jail pending $5 million bail each.
Following the arrest, officials from the district attorney’s office informed investors they had seized assets of Guth and Yaguda, including the EFI building, the olive oil ranch, and their service stations, all under Heritage Oaks Bank loans.
“An investor could make the argument that the loans were made with unclean hands,” said Deputy Disrict Attorney Steve von Dohlen, explaining why authorities had seized assets already over-encumbered by Heritage Oaks Bank.
Guth disclosed in court during her bitter divorce from ex-EFI principle Charles Applebaum that she agreed to place the lien on her portion of Templeton Products (the service stations) following a request from Heritage Oaks Bank to secure an already funded personal loan, according to court documents.
The Guth court papers put the spotlight on a practice of many local banks; loaning millions of dollars to local hard money lenders without securing the debts with borrowers’ assets. As the sky began to fall, Guth used her service stations, also partially owned by Applebaum, to secure her Heritage Oaks Bank debts.
“Incredibly… she mortgaged both properties to the hilt,” Applebaum reported in sworn testimony. “By placing these liens against the service stations, the stations are now grossly over encumbered.”
Applebaum claims officials at Heritage Oaks Bank authorized the loaning of millions of dollars to his ex-wife on property he owns without his knowledge or consent.
“The transaction came as a complete shock to me as I was in direct communication with Heritage Oaks Bank,” Applebaum asserted in sworn testimony.
Banks have a fiduciary duty to report fraud. In the past, courts have found banks liable for damages due to their failure to report fraud.
“Given the benefit of the doubt that they didn’t know, with hundreds of thousands of dollars flowing through the bank, they should have had some oversight,” Cooper added.