Koerber Charged With Wire Fraud, Money Laundering, Tax Evasion, And Fraud In The Offer And Sale Of Securities In 18-Count Indictment Returned By Federal Grand Jury
SALT LAKE CITY – A federal grand jury returned an 18-count indictment Wednesday afternoon charging Claud R. Koerber aka Rick Koerber with violations of federal law in connection with an alleged fraudulent investment scheme.
Koerber, age 43, faces four counts of fraud in the offer and sale of securities, 10 counts of wire fraud, two counts of money laundering, and two counts of tax evasion.
"In reinitiating this prosecution, the United States brings a case that the community deserves to have determined on its merits. Our intent is to press this matter to such a resolution. We seek a speedy public trial, without undue delay, where a jury of his peers can fairly assess the evidence against the defendant," U.S. Attorney John W. Huber said today.
The indictment alleges that Koerber was involved with several businesses in Utah. He exercised almost complete control over Founders Capital, which received investment money, sometimes termed as loans, from victims of the alleged fraud scheme described in the indictment. The indictment alleges Koerber was also involved with Founders Capital, Franklin Squires Investments, and Franklin Squires Companies.
According to the indictment, which is attached to this press release, from about 2004 to about Dec. 31, 2008, Koerber devised a fraud investment scheme to obtain money through false pretenses, representations, and promises. Koerber used the United States mails, interstate wire transmissions, and interstate commerce to execute the scheme, the indictment alleges.
The indictment alleges that Koerber used investors’ money for purposes not disclosed to many investors or potential investors, such as for Koerber’s personal housing, other personal expenses, expensive automobiles, investments into restaurants, and unsecured loans to other businesses and entities.
The indictment alleges that in order to convince earlier investors that their funds were earning money and to convince potential investors that the program was working and earning money, Koerber operated the businesses of Founders Capital and related entities as a “Ponzi scheme.” According to the indictment, Koerber used money placed with Founders Capital to make interest payments to earlier investors to create the false impression that the businesses were profitable, that investments were safe, secure, and that interest was being paid.
The indictment alleges that at no time during the operation of the investment scheme did Founders Capital or Franklin Squires entities operated by Koerber make a yearly profit. Koerber, by means of his misrepresentations and omissions, obtained approximately $100 million in investor funds, the indictment alleges. More than $50 million of the investor funds were used to make Ponzi payments to other investors. When Founders Capital stopped making payments to investors in 2007, investors lost approximately $47 million, according to the indictment.
Despite the fact that neither Founders Capital nor Franklin Squires made a profit in 2005, 2006, or 2007, the indictment alleges that Koerber falsely stated in an article distributed to investors and potential investors that in 2005, the Franklin Squires Companies did $111 million in revenue and in 2006 Franklin Squires and the businesses in which Franklin Squires had a substantial interest generated revenues in excess of $500 million.
A summons will be issued to Koerber to appear on the charges. The potential maximum penalty for each count of fraud in the offer and sale of securities is five years. Each wire fraud count carries a potential penalty of 20 years. The money laundering counts, which allege Koerber used criminally derived money to purchase expensive cars in excess of $200,000 each, carry potential 10-year sentences. The two tax evasion counts have potential penalties of five years. The tax counts allege Koerber had taxable income of in excess of $600,000 in tax year 2005 and taxable income in excess of $300,000 in tax year 2006 and failed to file an income tax return with the IRS.
The case is being prosecuted by the U.S. Attorney’s Office in Utah and investigated by special agents of IRS-Criminal Investigation and the FBI.