A former partner of indicted Utah businessman Rick Koerber is facing three additional criminal charges after an earlier plea negotiation failed.
A federal grand jury on Wednesday handed up a superseding indictment against Gabriel S. Joseph that added the new felony charges to three previous ones. Joseph also faces a misdemeanor charge of failing to file a tax return.
He was among a group of Utah County businessmen who ran companies associated with Koerber’s FranklinSquires Cos. A grand jury indicted Koerber in 2009, alleging he operated the real estate investment operation as a Ponzi scheme in which about half of the $100 million it received from investors went to pay other investors in order to make the businesses appear profitable.
Joseph, now a California resident, faces three additional charges of making false statements to banks in order to obtain loans. The charges came after talks failed that apparently were aimed at getting him to testify against Koerber. Joseph already was fighting two wire fraud counts and one money-laundering charge, also involving a real estate transaction.
Despite the new charges, Joseph’s attorney, Steven Killpack, said Thursday that negotiations with the government would continue.
“Plea negotiations are ongoing,” said Killpack.
According to the new indictment, Joseph allegedly made false statements and concealed information from Washington Mutual Bank when he applied for loans involving property in Park City, Orem and Alpine. That includes falsely claiming he had a monthly base income of $172,000 and assets of $7.4 million, the indictment alleges.
Koerber has pleaded not guilty to his charges but no trial date has been set. Federal prosecutors also have charged three other former Koerber associates with crimes in what appears to be an attempt to pressure them to testify if Koerber goes to trial. The men and their charges are:
• Jason K. Vaughn faces four felony counts for allegedly running a Ponzi scheme in which he told investors their money would go into Koerber’s Founders Capital. Vaughn has pleaded guilty and was to go to trial in February but that was postponed and no new date set.
• Stephen A. Freestone has pleaded guilty to two misdemeanor tax charges. No sentencing date has been set.
• Michael Isom of St. George has pleaded guilty to a misdemeanor aiding and abetting charge in connection with his raising funds for Founders Capital. Court records say Isom agreed to cooperate with prosecutors but do not provide details.