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SALT LAKE CITY — A convicted Utah fraudster was jailed Friday, months ahead of his sentencing, after a judge found there's reason to believe he schemed to mislead an Oregon court.
U.S. Chief Magistrate Judge Paul Warner said Rick Koerber has shown a pattern of deception that "has to end," and his time behind bars will help protect people financially.
"No more fraud, no more deception. This has been going too long and today ends that," Warner said just before ordering Koerber into custody of U.S. marshals. Koerber had been free pending sentencing in the case, and had been doing administrative work for law firms in the interim, according to testimony from his clients and others on Friday.
Koerber, a real estate investor, was found guilty of more than a dozen counts of fraud and money laundering last year, after nearly a decade of legal fights that included a mistrial. He is expected to be sentenced in September when the judge who oversees the case is available.
Prosecutors on Friday argued he created a company using an alias. The creation of the company allowed one of his attorney clients to have court documents filed in Oregon past a deadline, they said. Koerber registered the company with one start date, even though he'd received the filings days earlier, according to a receipt submitted to the court.
The move was "just the latest Koerber attempt to wriggle around the rules," they wrote in court documents.
Such a false statement is a criminal offense and violates the terms of his release, prosecutors argued. Alternately, if he backdated the receipt, that amounts to records tampering, the state argued, and either offense is a class B misdemeanor.
"There’s something just plain shady about what’s going on," assistant U.S. Attorney Aaron Clark said. "Upstanding members of society don’t operate this way."
Koerber's attorney, Kathryn Nester, argued that using an alias to register a business is perfectly legal. A previous iteration of Koerber's business had its registration lapse before he signed up again with the Utah Department of Commerce earlier this year, Nester said. And while that lag opens a company up to legal liability, it doesn't bar it from doing business, she added.
Her client filed the paperwork after a probation agent identified the lapse in court documents and would not remove it, according to Nester.
"There’s been no evidence of a falsity" on Koerber's part, she said.
Nester must also tap into her client's vast knowledge of his business dealings in order to put together a good defense for his sentencing, she said, so jailing him could possibly drag out the case even more. She acknowledged the chain of events was odd but said her client did the job he was hired to do and has consistently showed up for court dates.
“It’s been a decade. He’s exhausted. Please let us just finish this and not make it any more complicated," Nester said.
Morgan Philpot, the attorney who employed Koerber in the Oregon case, testified that he paid Koerber about $200 to email a notice of appeal in a civil case to a woman in Oregon who Philpot had met at the trial of Ammon Bundy, the leader of the 2016 occupation of the Malheur National Wildlife Refuge who was found not guilty of federal charges in Oregon. That woman then received $300 from Philpot's firm to print and deliver the notice in March, part of a case where $4 million and a family ranch were at stake, Philpot said.
The judge questioned why Philpot didn't simply use FedEx for such an important deadline.
"I wanted it hand-delivered by somebody I knew and trusted," Philpot said.
“It has an odor to it," Warner said. "It just doesn’t add up."
While Koerber is not violent or a flight risk, he's also "not a big deal" and not deserving of different treatment than others who have been convicted, Warner said. The judge determined there is probable cause to believe Koerber tried to deceive the court.
“I’m intersted in protecting people and the community right now, and right now the best way to do that is for Mr. Koerber to be detained," he said.
Koerber, 46, used his businesses — Founders Capital, and related companies Franklin Squires Investments and Franklin Squires Cos. — as a $100 million Ponzi scheme from 2004 to 2008. Prosecutors say an estimated 600 "indirect" investors lost a total of $45.2 million.
Government prosecutors say based on those numbers, Koerber should spend 20 years behind bars under federal sentencing guidelines. Koerber's defense has disputed the number of victims and the losses identified by the U.S. Attorney's Office and is set to argue for a lower number next month.