Business

Friday, Jul. 03, 2009

Biz Buzz: Judge orders $120,000 in legal fees to Guth’s defense frozen

Money was given to her lawyer two weeks before her arrest and must be proved to be used for civil and not criminal legal matters

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San Luis Obispo Superior Court Judge Jac Crawford has ordered that $120,000 given to the defense of Estate Financial former President Karen Guth be frozen, along with her other personal assets, until the defense can prove the money did not come from ill-gotten gains or that it was used to benefit victims of alleged fraud.

The ruling is based on a California law that is intended to preserve funds to provide restitution to victims of fraud, said criminal defense expert and attorney Harold Mesick.

In effect, the ruling also limits Guth’s ability to pay her attorney, Steve Smith, who has worked for at least eight months in pretrial discovery and hearings on her behalf, and may leave her little recourse but to use a public defender instead, say attorneys familiar with the case.

Guth and her son, Joshua Yaguda, have been in County Jail since October 2008. They have pleaded not guilty to multiple felony charges involving the alleged defrauding of potentially thousands of their investors in their $340 million lending company.

Estate Financial — which pooled investors’ money to make high-risk, high-interest loans to fund commercial and residential real estate development — is now bankrupt, and all its loans have gone in default.

Upon their arrest, all of the personal assets of Guth and Yaguda were frozen by the court and placed in safe keeping for possible restitution of their investors’ losses.

The court later learned Guth had given her attorney $120,000 two weeks prior to her arrest, according to recent filings.

According to Crawford’s most recent ruling, the defense will have to prove that the money, if spent, went toward civil and not criminal legal matters.

And if it was used in civil matters, Smith must show that his actions actually benefitted Guth’s purported victims, and not his client, the ruling states.

Because the judge is denying the use of the $120,000 to pay for Guth’s criminal — and perhaps even civil defense — it is very possible the defendants might not have any money available to move forward through the preliminary and trial phases of the case, said Roger Frederickson, special counsel to the Chapter 11 bankruptcy trustees for Estate Financial.

If Smith is not willing to work for free by taking this as a pro bono case, a public defender might have to take over, Frederickson added.

Smith’s accounting of what happened to Guth’s $120,000, as requested by Crawford, is due by Friday prior to the Estate Financial pre-preliminary hearing set for July 14 in San Luis Obispo, said Steve von Dohlen, the deputy district attorney prosecuting the case.

The preliminary hearing is scheduled for August 20, when the prosecution will lay out the basic evidence for its fraud allegations and request that the case go to trial, he added.

— Melanie Cleveland

Loper new director of NICU, pediatrics

Registered nurse Donna Lee Loper was recently named as director of the neonatal intensive-care unit and pediatrics at Sierra Vista Regional Medical Center in San Luis Obispo.

Loper is a graduate of San Luis Obispo High School. She has a master’s degree in perinatal nursing from UC San Francisco.

She has managed women’s and children’s services in hospitals throughout California, and is an instructor in the Neonatal Resuscitation Program of the American Heart Association.

Loper is also a member of the Northern California Association of Neonatal Nurses and was an assistant clinical professor at the UC San Francisco School of Nursing for two years.

— Julia Hickey