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A federal judge has denied a motion by accused Ponzi scheme operator Rick Koerber to dismiss his indictment and disqualify prosecutors and investigators.

U.S. District Judge Clark Waddoups said after reviewing a sealed grand jury transcript that he found no evidence to support Koerber's arguments.

Koerber's attorney, Marcus Mumford, had claimed that a letter the judge previously ruled couldn't be used as evidence still had tainted the latest indictment, the third to accuse Koerber of running a Ponzi scheme through his Utah County real estate investment companies.

At a recent hearing, Waddoups ordered prosecutors to produce a transcript from the grand jury that handed up the latest indictment of Koerber so the judge could review it to see if the letter might have influenced the jury. Waddoups previously had ruled the letter was privileged communication between Koerber and his attorneys, and couldn't be used as evidence.

"Simply stated, the court cannot find the faintest reference to the privileged letter, or its contents, in the latest grand jury transcript," the judge said in a ruling made public Thursday.

He refused to dismiss the 20-count indictment handed up Sept. 29, the third in the case that concerns Koerber's operation of his companies called FranklinSquires Cos. and Founders Capital and related entities.

Mumford said the ruling did "not directly address our central argument that the government's previous unlawful violations of Mr. Koerber's attorney-client privilege has irreparably tainted its investigation."

The attorney said that although he was disappointed in the ruling, "we have filed a number of other motions recently that continue to challenge the government's actions and the unfounded theory of its case. Mr. Koerber is innocent."

The indictment alleges Koerber used about half of the $100 million taken in from investors to pay back other investors and make it appear the operation was profitable when it was not. Koerber has pleaded not guilty, and has accused the government of unfairly persecuting him for a failed business.

Koerber also had sought to disqualify from the case Assistant U.S. Attorney Stewart Walz and other prosecutors, along with FBI agents and investigators. Mumford argued that their actions were "tainted" by their knowledge of the letter and that the integrity of the judicial process was affected.

"Because the argument is premised on the erroneous factual foundation that defendant's privileged information was substantially used, the argument is rejected," Waddoups ruled.

The letter did figure prominently in the first two indictments. Koerber was originally charged with three counts of fraud and tax evasion in May 2009. A second indictment in November 2009 added 19 charges. A third indictment was sought by prosecutors after Waddoups tossed out the letter.

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