For the second time, a federal jury is now weighing whether former real estate guru Rick Koerber illegally deceived investors and ran a Ponzi scheme.
Koerber faces 18 charges in an indictment that alleges that from 2004 to 2008 he took in about $100 million from investors and used about half as interest payments, paying it back to investors to give the appearance of profitability.
He first went to trial on allegations of fraud, wire fraud, money laundering and tax evasion last October. The trial stretched eight weeks and ended in a mistrial after jurors spent seven days deliberating — but could not reach a unanimous verdict.
Federal prosecutors decided to try the case again, saying it was in the best interest of justice to get a unanimous vote. Koerber’s second trial began about two weeks ago, with much of the same evidence shown to a new set of jurors.
The jury began deliberating the case Tuesday afternoon.
Prosecutors allege Koerber told investors that their money would go to purchase real estate but that he also spent money on a hamburger franchise, funding a horror movie and other personal expenses like luxury cars. They also accuse the businessman of taking money from new investors to pay interest to previous investors to make the enterprise seem profitable.
In his closing arguments Monday afternoon, prosecutor Tyler Murray accused Koerber of a “bait and switch,” saying the defendant created a perception that he was a successful businessman when he wasn’t.
“Everyone was attracted to the promise of a high return,” Murray said. “The reality was those returns were a fraud.”
Defense attorneys argued in their closing arguments that Koerber did not make his business plan with the idea of scamming his family, friends and fellow church members — but said the housing market crash in 2008 affected his business. They noted that much of the prosecutors’ case relied on decade-old recollections from witnesses, and pointed out that none of the paperwork with Koerber’s investors indicated that the man would use the money solely for real estate.
“There was no fraud,” Kathryn Nester, federal public defender for the district of Utah, told jurors. “It is time to end this. And you can end this.”
In the early 2000s, Koerber had touted himself as a guru of real estate investing who offered classes to teach his “Equity Milling” strategy. That led him to head a real estate investment operation using that strategy, running, in part, on loans from investors.
The Utah County entrepreneur was originally indicted on charges nine years ago. But his first attorney, Marcus Mumford, challenged how federal agents and prosecutors had investigated his client and their evidence. A federal judge tossed out significant pieces of evidence in 2011 and 2013. By 2014, the judge dropped the case altogether due to speedy trial issues.
Prosecutors appealed part of the dismissal to the 10th Circuit Court of Appeals, which sent the case back to Utah for reconsideration. That process led to a January 2017 indictment and the first trial that ended with a hung jury.
If convicted of any of the charges, Koerber faces a possible sentence in federal prison.