Pasolivo: How much is the ranch really worth?
October 28, 2009
Karen Guth and Joshua Yaguda at an investor meeting in Avila Beach
Editor’s note: This is the second and final article in a series of stories examining how the development of Pasolivo olive ranch was funded through Estate Financial Inc. and how the San Luis Obispo County Superior Court-controlled asset is being managed by the wife of a convicted Ponzi scheme operator.
By KAREN VELIE
Shortly after the District Attorney’s office filed 26 felony charges of fraud against Estate Financial Inc. (EFI) principals Joshua Yaguda and Karen Guth, they froze the pair’s personal assets, and put Yaguda’s wife at the helm of the Pasolivo olive ranch.
Some investors and creditors, concerned with the credibility of those associated with the notorious team of lenders, question the level of prior involvement family members had in the pair’s misdeeds and whether Joeli Yaguda should be allowed to manage assets that may be sold to help pay back the more than $300 million owed to approximately 3,000 EFI investors.
After the arrest of Guth and Joshua Yaguda last October, Guth’s ex-husband and former EFI principal Charlie Applebaum was permitted to oversee the business dealings of two gas stations Applebaum owned in partnership with Guth.
However, CalCoastNews learned that Applebaum and Guth illegally used investor funds slated for EFI project construction to pay for construction and supplies at unrelated business ventures prior to their divorce in 2004.
After the divorce, Guth and Joshua Yaguda became the sole owners of the ranch with Yaguda’s wife overseeing the daily business operations.
In interviews with CalCoastNews, some investors said they are not happy that Joshua Yaguda’s wife is involved in the daily management of the Pasolivo olive ranch.
“We told the D.A. that we want her off the property,” said investor John Childers who, along with others, accuses Pasolivo of utilizing employees to perform domestic tasks not related to the olive ranch.
“There is nothing we can do to stop this,” Childers said.
Last March, Joeli Yaguda filed an application with the court to unfreeze the property and allow her to buy the ranch. She presented an appraisal, prepared by Colorado, based Nationwide Valuations, that values the olive oil business at $64,000.
But investors and Deputy Dist. Atty. Steve von Dohlen argue that the ranch is worth far beyond Joeli Yaguda’s appraisal-based offer.
“We know the business is worth significantly more than what it was valued at,” von Dohlen said.
The family’s attempt to hold onto the olive ranch has brought to the forefront questions about whether or not Joeli Yaguda is managing the olive ranch for the benefit of the investors or to promote her ability to buy the business.
In court documents submitted by the Yagudas’ attorney, Dyke Huish, Joeli Yaguda is referred to as an “innocent party.”
“While I have met, from time to time, investors in both EFI and the Fund, I have never promoted, offered for sale, sold, solicited, or otherwise advanced the business of EFI,” Joeli Yaguda said in a sworn declaration filed with the court in March
However, at an early 2008 Avila Beach investor meeting called to discuss the failure of EFI, Joeli Yaguda stood up in front of more than 200 investors and claimed she had been investing with EFI for years and that people should trust Guth and Joshua Yaguda to manage their monies.
She failed to inform the crowd that she was married to EFI principal Joshua Yaguda, witnesses at the meeting told CalCoastNews.
In addition to questions regarding Joeli Yaguda’s involvement in promoting EFI, numerous discrepancies appear in court documents that bring into question statements made by her about the actual value of the olive oil business, also known as Willow Creek LLC.
Last April, she requested the court recognize an undocumented 30 percent ownership she said she, Guth and her husband claimed she had in the ranch. In addition, Joeli Yaguda asked the court to deduct money she said the business owed her for expenses along with her husband’s ownership interest, and allow her to purchase the business for $18,000.
The asset value of the business includes furniture, supplies, leased equipment, and lease improvements with a total value of about $11,000, according to the appraisal.
Even though the appraisal is based on a limited set of assets, the accompanying purchase offer, which is based on the appraisal, includes additional assets such as more than 8,000 olive trees, tractors, and production facilities.
The appraisal states that the mill has no value.
Joeli Yaguda said in her declaration that the mill is worthless because it is “severely damaged” and that an estimated $200,000 was owed on its lease.
Clotil and Yves de Juuen, the owners of Olea Olive Oil Farm in Templeton, disagree with Joeli Yaguda’s allegations that the mill, with a purchase price of over $400,000, has no value.
“They owe $5,000 a month for another year and then the business owns the mill,” Yves de Juuen said. “We offered to buy Pasolivo for double the $64,000 she offered.”
Von Dohlen said the cost of repairing the mill was $25,000 and that most of the repairs have been completed.
In Joeli Yaguda’s declaration, she said that all loans to the olive ranch were made personally by Guth. She added that the ranch had no obligations to EFI at the time her husband and mother-in-law were arrested.
However, von Dohlen not only questioned her claim to ownership, but also pointed out that the purchase amount she was offering did not remedy a $100,000 debt the olive business owes EFI for monies paid to the ranch’s vendors from EFI bank accounts.
Another bone of contention is that Joeli Yaguda is overstating the number of people needed to run the olive oil business in an attempt to downgrade its value.
Clotil de Juuen said Olea farm’s tasting room traffic is similar to Pasolivo’s. However, they run their Templeton operation with just two employees while seven to 10 workers are currently employed at Pasolivo.
San Luis Obispo County Superior Court Judge Jac Crawford rejected Joeli Yaguda’s request to purchase the ranch earlier this year.
Meanwhile, Guth and Joshua Yaguda are slated to be sentenced Dec. 7.
Following their sentencing, the olive ranch will be sold to the highest bidder.
“We want the maximum amount of return on the sale,” von Dohlen said. “The amount offered by the defense is willfully inadequate.”
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