Estate Financial investors talk about their losses in court

Emotions ran high this morning in Superior Court Judge Judge Jac Crawford’s courtroom as Estate Financial investors told of personal losses they suffered by trusting Estate Financial principals, Karen Guth and Joshua Yaguda, with their money.

Guth and Yaguda have pleaded guilty to 27 felony counts involving their management of the now-bankrupted lending company, Estate Financial Inc. Crawford is expected to sentence the mother and son in court this afternoon. More than 100 people crowded the courtroom this morning.

In his opening remarks, Crawford said for the record that he had gained “a clear impression of the criminal nature of the Guth and Yaguda” as a result of his many meetings with the defense. Crawford stated that he had been convinced Guth and Yaguda made many deceitful representations to investors and misdirected many principle payments that they received while showing a “contemptuous attitude toward investors.”

Crawford also cited Estate Financial’s “sloppy business practices” that have greatly complicated the work of the bankruptcy trustees. Those practices showed that Guth and Yaguda spent far too much time selling investors on their real estate projects and not enough time on their fiduciary duty and diligence required to manage the investments, such as monitoring construction of the projects and evaluating whether or not an investor was actually qualified (by having enough of an asset base) to make an investment with the company.

“I have received heart-rendering letters that placed trust (in Guth and Yaguda) that is now betrayed,” Crawford said. “Far too many victims … made investments that changed their lives. They have been forced to sell homes, give up retirement to take jobs, and have lost college funding for their children.”

Some of the victims speaking before the court included Sherri Bell of Cambria, who said that she and her husband believed Guth’s sales pitches and assurances, and trusted what they thought was her professional experience as a banker.

They discovered instead that she and Yaguda were “adept at lying and stealing,” Bell said. “We never imagined that such evil people existed…in our back yard.”

Bell said Guth and Yaguda were callous and showed no remorse when she appealed to them to give them better accounting as their investments started to decline.

Bell also spoke of the magnitude of Estate Financial’s malfeasance on the community, the result of its $340 million real estate portfolio and thousands of investors who live in the county.

But as investors continued to line up to speak at the podium, many of whom described such trust in Guth and Yaguda that they would turn over their savings after 25 or more years of work, the toll appeared to be much more than extraordinary economic hardship. Many were elderly and won’t be able to re-earn the dollars. Others said the experience of losing their money contributed to or caused poor health, depression and the loss of faith they had in themselves to live a competent life.

“Our trusting nature made us fair game for these predators,” said Ruth Smith, who is 77. Her husband Elmer Smith, who at 93 has Alzheimer’s, slept at her side during much of the testimony. “We have spent down our savings…It’s very humbling to have to receive help from our children.”

Still others spoke of churches that had invested their portfolio and could no longer afford their pastor and people who had lost so much they could no longer make the charitable giving to orphanages and other needy organizations.