Estate Financial president Karen Guth pleaded guilty to all 26 felony counts against her in a packed courtroom today in San Luis Obispo.
The charges included fraudulently selling real estate-backed securities, illegally taking more than a half a million dollars and taking or destroying property worth more than $3.2 million.
Seven Estate Financial investors spoke in court today, asking that Guth and her son, Joshua Yaguda, get maximum sentences so they would have time to consider the damage they’ve done.
Yaguda is expected to plead guilty later today.
A sentencing hearing has been scheduled for Dec. 7. Guth is expected to get a 12 year prison sentence, while Yaguda could get eight years.
Estate Financial, a lender based in Paso Robles, had collected $340 million from an estimated 3,000 private investors in real estate-backed securities before it started collapsing in 2007.
Called a “hard money” lending business, the company offered high interest rates to its investors.
The firm then lent that money to builders of homes and commercial developments — also at high interest — and promised investors return of their principal in one to three years.
After the real estate market began to collapse, Guth said the subprime mortage crisis was to blame. Investors cried foul, and she put the firm in Chapter 11 bankruptcy protection in July 2008.
She and Yaguda — the vice president of the firm and her son — were arrested and charged with criminal malfeasance in October 2008. They have been in County Jail since, awaiting trial in lieu of posting $5 million bail.