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A former associate of Rick Koerber, the one-time Utah County real estate investment guru once charged with operating a Ponzi scheme, went on trial Wednesday over accusations of fraud for allegedly obtaining a loan to sell himself a luxury Park City home and then pocketing $1.9 million.

A federal jury on Wednesday began hearing testimony in the case against Gabriel Joseph, who is facing charges of making false statements to a bank, wire fraud, money laundering and failing to file a tax return.

Joseph, a cofounder of Koerber's FranklinSquires Cos., used a company he controlled to buy a home on Park City's Red Hawk Trail for $3.4 million, according to an indictment. Then he allegedly sold the home to himself about a week later for $7 million by obtaining a loan and line of credit from Washington Mutual Bank in 2007. He then defaulted on the loan.

Joseph, 37, now of Fremont, Calif., allegedly told the bank he had income of $70,000 a month and had substantial assets in Koerber's Founders Capital.

But Assistant U.S. Attorney Tyler Murray told a federal court jury that evidence would show Joseph provided false information to the bank in order to obtain the loans and did not disclose the company he controlled had just purchased the property days earlier for about half the price.

"Mr. Joseph did not tell the bank he was both the seller and the buyer in this transaction," Murray told the jury in the prosecution's open statement.

He also failed to tell the bank that the $2.8 million he claimed ownership of from Koerber's Founders Capital was actually largely owed to investors.

"The evidence will show here that Mr. Joseph bought a house he already owned and walked away with $1.9 million," said Murray.

But Joseph's attorney, Richard Mauro, countered that his client did not provide the financial information to the bank to obtain the loan but rather that was done by others who participated in the deal.

"Mr. Joseph didn't commit fraud because he didn't provide any information to the bank," said Mauro in his opening remarks. "It's that simple."

Joseph believe the Red Hawk home was undervalued and engaged in the deal only because the bank agreed with him when it approved the loan, Mauro said.

"I would contend to you that there was fraud in this case, but it wasn't fraud committed by Mr. Joseph," he said.

Previous charges against Joseph had been dismissed when a judge found prosecutors had violated the Speedy Trial Act, which calls for a quick trial but allows for delays for specific reasons.

Koerber had been facing 18 charges related to allegations he had been operating a Ponzi scheme through his real estate investment companies. They also were dismissed for Speedy Trial violations.

But in Koerber's case, U.S. District Judge Clark Waddoups found that prosecutors had engaged in misconduct and dismissed the case with prejudice, meaning it can't be refiled.

Federal prosecutors appealed Waddoup's decision to the 10th Circuit Court of Appeals in Denver, where it waits a decision.

Joseph was re-indicted in February because the original judge in his case had dismissed the charges without prejudice. U.S. District Judge Jill Parrish is presiding over the trial.

Another Koerber associate, Jason Vaughn, was found not guilty of fraud-related charges last year by a federal jury in a related case. Like Joseph, Vaughn funneled investor monies into Koerber's operations.

In an Idaho case, a judge in 2009 ordered Joseph, formerly of Cedar Hills, and his company Annuit Coeptis, to return $2.4 million to investors who were defrauded.