A sentencing delay is just the latest hold-up in the decade-old saga of convicted real estate fraudster Rick Koerber
(Chris Detrick | The Salt Lake Tribune) Rick Koerber poses for a portrait outside of the federal courthouse in Salt Lake City Thursday, September 21, 2017.
It’s been 10 years since federal prosecutors first slapped prominent Utah real estate investment guru Rick Koerber with an indictment alleging he ran a Ponzi scheme and defrauded everyone around him while he enjoyed a lavish lifestyle.
And after a tortuous path
of dropped charges, a hung jury
and finally a conviction last fall, it was all supposed to end this week as Koerber would be sentenced for fraud, wire fraud and money laundering.
The sentencing for Koerber is being delayed a third time since the Utah County real estate investor was found guilty of 15 charges
last September. And the number of victims and amount of money scammed is now in dispute.
Federal prosecutors say victims number in the hundreds and their losses add up to more than $45 million as Koerber for years preyed on people who trusted him because of their mutual belief in Utah’s predominant faith.
But Koerber’s defense attorney says those numbers are exaggerated. She’s asking a judge for one last evidence hearing to hash out the conflict.
Prosecutors oppose the request, arguing in court papers that it’s just the latest tactic from Koerber to delay his eventual sentencing.
Federal prosecutors argue in court papers that Koerber, 46, has led a life of deception, perpetuating a gigantic, two-decade-long fraud that targeted those closest to him — friends, family and fellow church members.
He used common teachings of The Church of Jesus Christ of Latter-day Saints as a way to gain trust with his victims, federal prosecutors wrote in court papers, and often bragged that one of his investors was a general authority in their faith.
He took phrases often used when Latter-day Saint members share their religious testimony, telling potential investors from a pulpit at seminars that his investment strategies could help them be self-reliant and better live their faith.
“I am telling you with all the soberness I can muster,” he says in one recording, “though this is not a church pulpit, I know that what we are doing is being inspired by God.”
Koerber’s fraud stands out as one of the biggest in Utah history, federal authorities say. But his tactics of using the Latter-day Saint faith to snare investors is not unusual.
The Beehive State has long had the reputation of being a hotbed for fraud, based mostly on anecdotal evidence. But a nationwide Ponzi scheme database
created by Florida attorney Jordan Maglich seems to confirm that notion.
According to his recently released analysis, Utah had the sixth most Ponzi schemes in the nation over the last decade. Salt Lake City attorney Mark Pugsley dug into the numbers deeper
, and found that, per-capita, the state is No. 1.
Utah has 1.35 Ponzi schemes per 100,000 people, he found. Florida is the next highest at 0.51 per 100,000 people.
(Christopher Cherrington | The Salt Lake Tribune)
Pugsley, who has litigated these sorts of cases for 25 years, was surprised by how high the numbers were for Utah.
So why are Utahns victimized so much more than residents of other states?
Pugsley said the state’s prominent faith has a lot to do with it.
Like Koerber, many fraudsters have used Latter-day Saint teachings to dupe investors.
Some have made pitches while inside church temples, or have paid Latter-day Saint missionaries to come pray with them before closing a deal. It’s not just using church relationships, Pugsley said — fraudsters often talk in their pitches about how rich returns can be used for good, to fund missions for grandchildren or to contribute to the church.
“The bottom line is, people trust their feelings too much,” Pugsley said. “Kids are taught when you read the Book of Mormon, you should wait for a feeling or a spiritual confirmation. That may be fine, but it’s certainly not a legitimate way to define truth in other contexts. You can’t use a feeling to decide if an investment is good.”
In Koerber’s case, prosecutors are asking for a hefty sentence. They want him to spend the next 20 years in federal prison, and to be ordered to pay back more than $45.2 million in losses.
A big prison sentence is warranted, prosecutors argue, to not only deter Koerber from perpetuating similar crimes when released, but also as a warning to other schemers.
“Koerber’s crimes are emblematic of the fraud that occurs here in Utah,” prosecutors wrote in court papers. “Likeminded potential fraudsters must be deterred through an expectation of just punishment should they follow Koerber’s footsteps.”
Prosecutors allege Koerber — who pitched himself as a sort of real estate savant — told investors that their money would go to purchase real estate but that he spent much of it on a hamburger franchise, funding a sexy horror movie
and personal expenses like luxury cars and minting his own coins. They also accuse the businessman of taking money from new investors to pay interest to previous investors to make the enterprise seem profitable.
Defense attorneys had argued at trial that Koerber did not make his business plan with the idea of scamming those around him, but said the housing market crash in 2008 affected his business.
Koerber’s attorney, Kathryn Nester, argues in court papers that prosecutors have overblown the number of victims and amount lost in an effort to put him behind bars for decades. The real losses are half of what prosecutors claim, she wrote, and the number of victims is a fraction of what they assert.
A federal judge is expected to decide on Thursday — originally set to be Koerber’s sentencing date — whether to grant Nester’s request for another evidence hearing.
Koerber was originally indicted on similar charges 10 years ago, but his attorney at the time, Marcus Mumford, disputed how federal agents and prosecutors investigated Koerber, and a federal judge threw out much of the evidence in that case in 2011 and 2013. The judge later dismissed the case.
Prosecutors appealed part of the dismissal to the 10th Circuit Court of Appeals, and the case was sent back to Utah for reconsideration. That process led to a January 2017 indictment, ending in a mistrial that fall after the jury could not reach a verdict. Federal prosecutors retried the case, and Koerber was convicted last September of the 15 crimes.