After deliberating for seven days, federal jurors on Monday afternoon announced that they were deadlocked over the allegations against former real estate guru Rick Koerber, who is accused of illegal business dealings and running a Ponzi scheme.
U.S. District Judge David Nuffer declared a mistrial, and prosecutors in the U.S. attorney’s office will decide whether to retry Koerber.
Outside court, assistant U.S. attorney Stewart Walz said that call will be made in the near future.
“It‘s not an acquittal,” Walz said, adding that it was merely a jury that could not reach a consensus.
Koerber, who insists that the allegations are false, said the case is not going to get better at another trial.
Noting that he was originally indicted eight years ago, he also said: “Time is on the side of truth.”
Nuffer — who was filling in for Judge Robert Shelby, who is out of town — told courtroom spectators that jurors had sent a note out last Tuesday, saying they were deadlocked, but they were asked to continue deliberating.
Another note was sent Monday, asking whether the jurors could make a finding on some counts and not on others. The answer they received was yes.
Another note followed later Monday that said the jury of eight men and four women was deadlocked.
Marcus Mumford, Koerber’s attorney, said outside of court that he was told the jury ended its deliberations with 11 of the 12 siding with the defense.
Koerber said he wishes the jurors had been in favor of acquittal, but that “11 is good.”
“Whenever it says United States of America vs. somebody and that somebody lives to fight another day, it’s a victory, and that’s how our system works,” he said.
An 18-count indictment accused Koerber of taking about $100 million from investors and using about half as interest payments, paying it back to investors to give the appearance of profitability, from 2004 to 2008. One count was dismissed before the trial began.
When the enterprise stopped making payments in 2007, investors were owed about $47 million, according to the indictment, which was issued in January. Those investors lost life savings, retirement funds and equity in their homes that they had taken out as loans and poured into Koerber’s businesses.
Koerber used the money for personal purposes and did not pay taxes on it, according to prosecutors.
But Mumford told jurors in his closing argument that his client is innocent. He accused federal prosecutors of deception, saying they presented only “snippets” of Koerber’s business dealings and purposely limited the evidence given to jurors.
Koerber admitted on the witness stand that he did at times take money from new investors to pay interest to previous investors to make the enterprise seem profitable. But he said the money was backed completely by equity in real estate and asserted that that meant he was using the equity to pay interest.
In the early 2000s, Koerber touted himself as a guru of real estate investing and offered classes to teach his “Equity Milling” strategy. That led him to head a real estate investment operation that used that strategy and which ran, in part, on loans from investors.
He still owes people money, the Utah County entrepreneur told reporters after closing arguments as the jury began to deliberate. He said he looks forward to “getting back to work” when this case is behind him. Koerber said he feels “confident” in the judicial process.
Koerber was originally indicted eight years ago, but Mumford challenged the evidence and how federal agents and prosecutors had investigated his client. A federal judge tossed out significant pieces of evidence in 2011 and 2013, and had tossed the case altogether by 2014, due to speedy trial issues.
Prosecutors appealed part of the dismissal to the 10th U.S. Circuit Court of Appeals, which sent the case back to Utah for reconsideration. That process led to the current indictment, which included allegations of securities fraud, wire fraud, money laundering and attempted tax evasion.
The trial lasted eight weeks. Jury selection was done on Aug. 21 (with a break to view the eclipse) and a panel of 16 jurors, which included four alternates, was seated. Opening statements were given on Aug. 22 and closing arguments on Oct. 6; between those dates, the prosecution and defense spent 26 days presenting evidence.
U.S. Attorney for Utah John Huber said the mistrial is “an unfortunate outcome in that there is no winner and no loser and we perhaps have to restart this case again.”
“But we will not give up on our fight against financial fraud in Utah,” Huber said, adding that there are many more cases “out there that we still have to look at.”