The federal criminal case against real estate investment guru Rick Koerber has reached a critical juncture from where the case could go forward to trial or Koerber could walk free, just as the fifth anniversary of the original indictment has passed.
At a hearing scheduled for Thursday, U.S. District Judge Clark Waddoups will hear arguments on whether federal prosecutors have violated the Speedy Trial Act as they have pursued their case against Koerber since the first of three indictments was handed up May 26, 2009.
Koerber was named in two subsequent indictments and currently faces 18 charges connected to his operation of a real estate investment operation under the umbrella of his FranklinSquires Cos., that was based in Provo.
Koerber was scheduled to go to trial this month with a backup date in September. But now, Koerber’s attorney, Marcus Mumford, has asked Waddoups to dismiss the charges, saying prosecutors have allowed too many days to pass without a trial.
Waddoups has vacated the June trial over the objections of prosecutors.
Under the Speedy Trial Act, if more than 70 days pass after the charged person first appears in court without a trial or other resolution, the case must be dismissed.
However, judges can and often do exempt time periods from that requirement because of certain time-consuming court procedures.
In Koerber’s case, Mumford argues that at least 125 non-exempt days have passed without a resolution or trial, and he cites instances of government misconduct.
"This motion is about fairness," Mumford said. "It is based on a pattern of delay and prosecutorial misconduct in this matter, including the court’s ruling last summer where he concluded that prosecutors violated ethical rules, federal law, and Mr. Koerber’s constitutional rights before the case was even filed."
"The case has now been pending for almost 5 years," Mumford wrote in his motion to dismiss. "In that time period, the government has prejudiced defendant with its delays ... "
Prosecutors argue, however, that only 67 non-exempt days have occurred because a delay of 50 days caused by a Mumford motion have not been counted.
"Otherwise, the United States must concede that the 70-day time limit for bringing the case trial has been exceeded," Assistant U.S. Attorney Stewart Walz said in court filing.
If Waddoups rules against the government, Walz asked that the case be dismissed "without prejudice," meaning another indictment could be brought.
The U.S. Attorney’s Office declined to comment for this story.
Koerber was originally indicted on three counts in May 2009, with 19 additional charges added in a second indictment that November. A third indictment was sought by prosecutors after Waddoups tossed out a key piece of evidence from the first two. Since then, Waddoups also has dismissed two other counts, leaving 18 fraud- and tax-related charges.
The indictments allege Koerber promised investors returns of around 5 percent or higher per month from real estate deals. But his companies did not make profits from 2005 to 2007 and, instead, Koerber paid out more than $50 million of $100 million in investor monies to other investors to make it appear the businesses were highly successful.
Mumford also has filed motions to disqualify the federal prosecutors who have been pursuing the Koerber case and a separate motion to dismiss the case because of alleged abuse of the grand jury system.
Those motions are not scheduled to be heard at the hearing Thursday and would be irrelevant if Waddoups rules in favor of Koerber on the Speedy Trial issues. If the judge sides with prosecutors, then those issues would likely come before the court for a hearing and decision.
Prosecutors, meantime, signalled their eagerness to take the case to trial by filing a list of proposed witnesses.
The list has 72 names of those who could be heard in a trial expected to take six weeks, including former employees and several people who ran operations that solicited investors and put those monies into FranklinSquires through a related company called Founders Capital.
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