A federal judge from New York will be on the bench when real estate investor Rick Koerber goes on trial a second time on fraud and money laundering charges in U.S. District Court in Salt Lake City.
After seven days of deliberations, jurors in Koerber’s first trial announced on Oct. 16 that they were deadlocked and a mistrial was declared. Prosecutors decided to retry the businessman, who insists the allegations against him are false, and an eight-week retrial is scheduled to begin June 4.
On Tuesday, a document was filed in Utah’s federal court, noting that the case has been assigned to Frederic Block, a senior judge in the Eastern District of New York. Senior judges are required to hear only a portion of the caseload of active judges.
According to court records, the chief judge of the 10th U.S. Circuit Court of Appeals in Denver had certified that there was a “necessity for the designation and assignment of a judge from another circuit or another court to perform judicial duties” in Koerber’s case. U.S. Supreme Court Chief Justice John Roberts assigned Block to the case on Feb. 14.
The document making the assignment does not specify why a judge from another federal district is needed.
Judge Robert Shelby, who presided over last year’s trial, recused himself from the case on Nov. 3, saying “an unwaivable conflict has arisen after the declaration of a mistrial in this case.” He did not give a reason for stepping down.
Shortly before last year’s trial began, Marcus Mumford, then Koerber’s defense attorney, filed motions seeking to disqualify Shelby and all other federal judges in Utah from the case, but none stepped down then.
The motion targeting Shelby said the judge should recuse himself because he formerly worked at the law firm Snow Christensen & Martineau, which advised Koerber during state and federal investigations into his companies and whose attorney could testify at the trial.
Shelby denied the motions, saying in his ruling that he didn’t work at the firm during the time it advised Koerber. He also said that the request to disqualify the other judges was moot and that their recusal would become relevant only if Shelby himself stepped down.
Koerber — a self-styled "free capitalist" and former Utah County real estate investment guru — was originally indicted in 2009. 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.
In January 2017, a federal grand jury indicted Koerber on 18 charges of wire fraud, money laundering, tax evasion and fraud in the sale or offering of securities. The indictment said he took about $100 million from investors and used 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. Those investors lost life savings, retirement funds and home equity that they had taken out as loans and poured into Koerber’s businesses in the alleged Ponzi scheme.
About a half-dozen federal judges other than Shelby who hold court in Utah have recused themselves throughout the years from one of the Koerber cases; none specified a reason.
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