Picking at bones of EFI: Lawyers wrangling

March 19, 2009


During the latest battle over assets of failed Estate Financial Inc. (EFI) , attorneys for trustees, former co-owner Charlie Applebaum, Joshua Yaguda’s wife, and Heritage Oaks bank argued their clients alleged claims at an asset hearing on Friday.

San Luis Obispo Deputy District Attorney Steve von Dohlen objected to Joeli Yaguda’s request that the court recognize an undocumented ownership she claims to have in the Willow Creek Olive Ranch. Currently, Mrs. Yaguda manages the operation under the watchful eye of the district attorney’s office. Von Dohlen noted that “Mrs. Yaguda has done a good job managing the property.”

Nevertheless, von Dohlen questioned Mrs. Yaguda’s request that the court discount the fair market value of the business by 30 percent because of an alleged verbal agreement Karen Guth, Joshua Yaguda, and Mrs. Yaguda made a few years ago. In addition, the price she is offering, $64,000, does not remedy a $100,000 debt the olive oil business reportedly owes to EFI for debts paid to the ranch’s vendors from EFI bank accounts.

“Are you lifting your pants up?” investor John Bell asked von Dohlen. “It is getting a little deep.”

An attorney representing trustees, Dave Juhnke of Sinsheimer, Juhnke, Lebens and McIvor argued that the San Luis Obispo County courtroom was not the place to discuss assets. He also asked the court to preserve the equity in the group’s assets for the victims of EFI.

Guth’s attorney, Steven Smith, noted that the trustees are looking to pocket 80 percent of monies collected through the bankruptcy court to cover their fees.

“The bankruptcy trustees’ task is to pay off creditors, not investors. They are the biggest and first creditors,” Smith said. “They will pay themselves first for they are entitled to fees.”

Smith questioned the trustees’ failure to pay rent while occupying Guth, Yaguda, and Applebaum’s Ninth Street office building. He noted that the trustees had no right to object to the sale of the office building regardless of the probable guilt of Guth and Yaguda.

“If they are innocent and I don’t think they are…,” Smith added.

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. They are scheduled for arraignment May 15.

Attorneys for Heritage Oaks Bank and Applebaum questioned the court’s authority to determine the allocation of assets and argued that monies received through the sale of properties owned by the mother and son duo not end up in investors’ pockets.

“On the Ninth Street property, we join in the banks position that no proceeds go to investors through this court,” Applebaum’s attorney Gregory Abel said. “I believe the same is true for the gas stations, no money should go to benefit victims.”

San Luis Obispo County Superior Court Judge Jac Crawford said he needs time to research the claims and that he will follow up by issuing rulings regarding Mrs. Yaguda’s request to purchase the oil business, the trustees claim to the assets, Applebaum’s request to sell the businesses and collect his portion of monies, and Heritage Oaks Bank’s alleged rights to Guth and Yaguda’s assets ahead of investors due to an outstanding loan of more than $5 million.

Crawford and attorneys battling for monies voiced concerns over the banks request to collect on a lien made to secure a previously unsecured line of credit doled out during a time when crimes were being committed. These funds allowed EFI appear healthy during a time of financial hardship.

“Everyone in the world is objecting to the bank getting paid,” lamented bank attorney and Vice President William Raver. “There will be a $1.8 million shortfall to the bank which more than covers the questionable advance.”




  1. ccn_debate says:

    Member Opinions:
    By: starvingmexican on 4/24/09
    Are there Mexican Nationals licensed to practice law in California? ,……………………

    Si Senor and I work very cheap
    By: George on 4/23/09
    Time out for troll.see ya in a week.
    By: DeepBlueSLO on 4/22/09

    Please email me info you have on the Feds inquiry into Ed Palmer, Alan Little, Carolyn Vickers, or Linda Kennedy.

    I don't expect the very persistent Kurt Berger to drop the Palmer blogging case, even though he is deceased – and I don't know what the legal hurdles are for that.

    By: shingh on 4/22/09
    There is also a Hearing in Santa Barbara as well on RW Hertel and his failure to appear at his Bankruptcy Hearings. Another hearing in Paso Superior Court on the Palmer case on blogging since he (Palmer) died last week this should all be most revealing, especially now that Feds are involved.
    By: Nameless on 4/21/09

    There will be a hearing in Santa Barbara tomorrow. One of the item is the FEES to the Professionls. There is more than that on the agenda, so the FEE request is just a sideline. I'd like to know how much each of these hearings cost to the Estate.
    By: SMOKEY on 4/21/09
    Did everyone invested within the Estate Financial Mortgage Fund receive a K-1 Statement de-valueing their Investment by 95%? My list of investors within the Mortgage Fund is 25 pages long, and contains 1628 names, some of which are listed more than once with the amount of their investment in shares listed beside their names. I received the list from EFI just days before they closed their doors.
    By: Nameless on 4/21/09

    I take no offense at all. This is a good forum to vent anger for anyone. Much better than a fist or a gunfight on the street.

    Justice shall prevail.

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  2. ccn_debate says:

    By: JorgeEstrada on 4/21/09
    I'm done with my agitation because it is obvious that too many honest people have been injured beyond anger, sorry Nameless.

    I have a very strong sense that justice will prevail, not as a dish served cold…
    By: Nameless on 4/21/09

    I wish I had a better response than "Innocent until proven guilty". Thats what the constitution provides. I am not in argument with anyone if the Mother-Son duo are guilty or not. I am broke because of them and have plenty evidence of their crminal activity. However, if we have the Mexican justice system, we would have the same mess on our hands as Mexico. At least we have a chance, but Mexico will not.

    I still don't approve public hanging prior to conviction. Than, a little scaling and some additional torture should be in order. Of course all if it's within the law.

    As to the $950.00 per hr Legal Fee, not all attorney charge that. The professionals and other "lesser" expensive ones, actually start less than $200.00 per hr. Of course, to get less than $200.00 per hr. you must be able to type and pour coffe.
    By: JorgeEstrada on 4/21/09
    Nameless–$950 per hour for legal representation? Let's get real, not innocent until proven guilty, proven broke is the reality.

    Are there Mexican Nationals licensed to practice law in California? Maybe NAFTA would be an affordable option to require in this case? This is not to infer someone losing their head, the idea is to employ enconomics that will allow the case to end before the money does.
    By: Nameless on 4/21/09
    I just love this rock throwing mud slinging crowd. Instead of focusing on trivial things, why not think logically about the Pasolivo business. If the bank foreclose on the Ranch, they will have every right to let Mrs. Yaguda to stay on the Property. There is nothing any one can do about it now or at that time. Besides, if the Victims want to see some proceed out of this mess, than let Mrs. Yaguda buy the business. Its money for distribution. If she can get the $64,000.00 from friends and relatives all the better. The $100,000 note will be questioned regardless so why waste energy on it.

    I think Smith referred to EFI as the guilty party. Of course they are, and should be treated as such. he referred to EFI failure to pay the rent for the six months EFI (Trutees) used the offices. In any case, the Trustees will ignore creditors and investors because they can. So far, Karen and Josh were raping all of us, and what's left will be pocketed by the professionals.

    Even today, some naive still think that all these Lawyers and the Trustees just want to help us! Give us a break with all the help!. To January 31, 09, their fee request was $4,500,000 and growing. If they are so eager to help, how come they have the audacity to charge up to $950.00 per hour. In case you missed it, do the math.

    Smith also mentioned that the Trustees job is to make sure Creditors get paid and before that, the Attorneys will collect. So, if you still in line to get some of the money back, go get a job. With the Guth/Yaguda assets, don't spend it yet!

    Their attorneys made a request for funds. Until they enter a plea or admit guilt, they have the right to ask. Remember, they are innocent until proven guilty. That means, the Judge may allow the Attorneys to get paid from their own assets. If not, send a few checks to the County for their defense. They will be entitled for a public defender at taxpayers expense. In any case, don't let "REVENGE" blind any one. Its an unwise way to g

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  3. ccn_debate says:

    By: nosedatruth on 4/20/09
    I attended the hearing, since I was downtown at the time and just a little curious. I can't believe the level of mis-quoting, mis-information and mis-understanding in this piece. A 7th grader could have reported it more accurately!
    By: Riley on 4/20/09
    Ah grasshopper, or William Shakes…whomever you mean to be…read, absorb and listen, otherwise you 'hear' only what you want to hear. The Dark Side's posse – now which side would that be? All those in favor of giving even more money to attorneys, raise your hands!
    By: Riley-Smiley on 4/20/09
    Victim hysteria? Political ambitions?

    Methinks I hear the Dark Side's posse speaking. What thinks you?
    By: Newsome on 4/20/09
    Excellent headline.
    By: Riley on 4/20/09
    This has already snowballed beyond reality. The poor reporting, the victim hysteria and the political ambitions of some will prevent the wrongs that have been done from being made right. Whether you are standing waiting to go in the court room mouthing off for 'the other side' to hear you (satisfying what exactly? your ego or bank account?) or you are relaying poor information, you are running with scissors, and you remember what your mother told you.

    Demand accountability from EVERYONE involved and behave with some dignity, whatever 'side' you are on…
    By: JorgeEstrada on 4/20/09
    Boy that was a long joke! How about the short version: stretching a penny to invent copper wire…
    By: Howabouttruth on 4/20/09
    What absolutely sleazy reporting this is. when Smith made the comment about "If they are innocent and I don’t think they are…,” He was referring to the trustees, Not Guth and Yaguda. If you are going to report on this topic, show up on time and take notes. And then refer to them when writing your piece.

    Your reporting always reads like Garrison Keillor's Guy Noir, but much much worse.

    By: Jim on 4/20/09
    It seems to me… that if Guth and Yaguda had not stolen money from the investors at Estate Financial… there would be no need for trustees…

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