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A federal judge has sentenced a former associate of Rick Koerber, the one-time Utah County real estate investment guru, to 6½ years in federal prison for a fraudulent deal in which he pocketed nearly $2 million.
Gabriel Joseph had been a student of Koerber's real estate investing classes and was a co-founder of their Franklin Squires Cos. that were once at the center of charges in federal court that Koerber operated a $100 million Ponzi scheme. Those charges, however, were eventually dismissed by a federal judge who found the government had violated the Speedy Trial Act and engaged in misconduct, though several issues in the case remain outstanding.
In November, a federal court jury convicted Joseph of two counts of wire fraud, one count of money laundering, one count of false statement to a bank and one count of failure to file an income tax return.
Joseph, through a company he controlled, bought a home in 2007 for $3.4 million on Park City's Red Hawk Trail, then he turned around and sold it about a week later for $7 million to another company he owned for which he obtained $5.6 million in loans. He didn't disclose to Washington Mutual Bank that he was selling the home to himself, falsely claiming on loan documents an income of $172,000 per month and substantial assets in Koerber's Founders Capital.
At a sentencing hearing Friday, Joseph asked U.S. District Judge Jill Parrish for mercy, saying while he takes responsibility for his actions, the judge and jury had "not heard the full story."
Prosecutors dragged him into federal court to try to coerce him into testifying against Koerber, Joseph said.
"They wanted me to provide testimony on things I knew nothing about or provide testimony that I knew to be false," he said, adding he was left with the "terrible choice" of facing additional charges or accepting a plea deal and testifying against Koerber and others.
Before the sentencing, Koerber called for supporters to attend the hearing to support Joseph and also said "in the government's zeal to find a way to prosecute me, they also went after several of my close colleagues."
But FBI Special Agent Cameron Saxey testified at a 2012 hearing that the case against Koerber had actually begun as an investigation into Joseph.
Speaking through sobs, Joseph's wife, Shannon, also asked Parrish that he be allowed to remain with his family that includes six children.
"Gabe is an honest and ethical man," she said.
Assistant U.S. Attorney Tyler Murray, however, said the real estate deal was not made because Joseph needed the money, but rather to enable him to maintain an image of success as a real estate investor who maintained a "million-dollar lifestyle."
"He might not have been a brilliant real estate investor, but he was good at projecting that he was," Murray said.
Parrish said she found the decision difficult, given that Joseph appeared to be a devoted husband and father.
"Unfortunately, I think that many white-collar criminals are devoted spouses and devoted parents," she said, "but that doesn't mean we don't have to impose the punishment that Congress has indicated is appropriate."
She also pointed to the nearly $2 million Joseph had pocketed in the deal, saying that was more money than most people earn in a lifetime. But the sentence was at the low end of possible sentences recommended by federal guidelines.