Heritage Oaks Bank files big foreclosures

January 17, 2009

By KAREN VELIE and DANIEL BLACKBURN

Heritage Oaks Bank has filed foreclosure notices against developer Kelly Gearhart’s Vista Del Hombre project, as well as Karen Guth and Joshua Yaguda’s Pasolivio Olive Ranch.

Bank officials did so despite a state move on all Guth-Yaguda assets. Following the Oct. 16 arrest of the Estate Financial Inc. (EFI) mother-son team, state officials filed a lis pendens on all properties owned by either suspect. (That’s a formal notice of pending action on a real property claim.)

The petition “seeks to preserve from transfer conveyance or encumbrance real property or any interest in real property which the people of the state of California believes belongs to or is in control of either defendant (Guth or Yaguda)…,” according to court records.

A multi-agency task force took the pair into custody at their Pasolivo ranch, and they remain in San Luis Obispo County Jail pending $5 million bail each, accused of 26 felonies.

Estate Financial Inc. (EFI) investors were not directly invested in the Pasolivio ranch, but that didn’t stop Guth from regularly paying employees and venders of her ranch with checks drawn from EFI accounts.

Deputy District Attorney Steve von Dohlen informed investors his office had seized the assets of Guth and Yaguda and said, “An investor could make the argument that the loans were made with unclean hands,” explaining why authorities had seized assets already over-encumbered by Heritage Oaks Bank.

Heritage Oaks Bank reportedly 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.

Also last month, Heritage Oaks Bank filed a notice of default against Kelly Gearhart regarding a $1.5 million loan obligation to the bank.

In January 2008, Gearhart secured the loan from Heritage Oaks Bank on his Vista del Hombre property — already over-encumbered by more than $27 million in loans through Hurst Financial Inc. The bank’s own appraisal shows the loan had been based on erroneous claims about Vista del Hombre’s value which the bank’s report states is worth approximately $4.3 million.

Shortly after receiving the bank loan, Gearhart stopped making interest payments to the hundreds of private investors, primarily seniors, who had already put millions into the project through Hurst Financial Inc. during 2005 and 2007. Those investors now hold approximately 8,000 percent beneficial interest in the planned development and are positioned above Heritage Oaks Bank in case of a default.