Though he's been facing federal charges for most of the last decade, convicted real estate fraudster Rick Koerber has been allowed to remain free as the case played out.
That changed Friday, when federal prosecutors asked that Koerber be put behind bars ahead of his sentencing. They said Koerber has been involved in yet another scheme — this time an effort to deceive an Oregon court.
Koerber’s attorney argued there was no fraud when Koerber was hired to serve a notice of appeal — but U.S. District Judge Paul Warner said there was enough information to convince him that Koerber should be jailed for the time being.
"This pattern of deception has to end," the judge said. "It just has to end. It's just been going too long. And today ends that."
The alleged fraud, prosecutors wrote in court papers, involves Koerber’s work as a litigation consultant for Morgan Philpot, a former Utah state representative who now works as an attorney in Utah and Oregon.
Philpot had 30 days to file an appeal in a recent case where a $4 million judgment had been entered, according to court filings, and that notice could be done by “a commercial delivery service,” such as FedEx or UPS.
Koerber allegedly committed fraud when he submitted notice that the appeal had been filed March 2 through a commercial delivery service. Prosecutors say that delivery service was actually created by Koerber and was not registered as a business until March 6.
"Koerber involved himself in this scheme to deceive an Oregon court by creating the perception that the notice of appeal was transmitted to a commercial delivery service in an arm's length transaction," federal prosecutors wrote, "when in reality, the filing was deceptive and untimely."
In other words, prosecutor Aaron Clark argued Friday: Koerber lied.
"There's something shady about that," Clark said in court. "Upstanding members of society do not operate in this way."
Federal prosecutors also say that Koerber registered his delivery service under the name “Derrick Roebuck,” which they say is Koerber’s alias. He put the address of the business as a UPS store in Salt Lake County.
Prosecutors say Koerber either broke state law by tampering with records by backdating the delivery receipt or by he registered his business online and listed March 6 as the day he began doing business. Either way, prosecutors say, Koerber committed a class B misdemeanor — and in doing so, violated the terms that have allowed him to be free after a jury last fall convicted him of fraud, wire fraud and money laundering.
But defense attorney Kathy Nester argued that it's not uncommon for a company to use a UPS business box as its address in applications. And Nester said Koerber's business had existed for years — and that he had let his registration lapse until recently when his probation agent told him he needed to renew it.
And while Koerber did put an alias on the business application — which his brother-in-law testified was because of the notoriety that Koerber has had over the years due to the criminal charges — Nester argued that’s not illegal.
"The question here is, was there an attempt to commit a fraud on the court?" Nester argued. "And in this particular case, there's no evidence Mr. Koerber submitted anything untrue."
As part of the hearing that stretched on for more than four hours Friday, Philpot testified and told the judge he had hired Koerber to serve a notice of appeal. It ended up being served by an Oregon woman that Philpot said he met during the trial for Ammon Bundy, who was acquitted of charges relating to his participation in the armed takeover of a wildlife refuge in southeastern Oregon.
Philpot described the woman as "a supporter of Ammon Bundy" who had attended the trial. He paid just over $200 to Koerber, he testified, and another $300 to the woman.
Warner, the judge, said he found Philpot's testimony "peculiar," and wondered why the attorney would pay two people hundreds of dollars for something FedEx could have done for less than $50.
"It just has an odor to it, for lack of a better word," Warner said. "It just doesn't look right to me and I've been doing this for close to 45 years. It just doesn't add up."
Warner ultimately found that there was probable cause to show that Koerber violated the terms for his release, noting that the standard for such a finding is much lower than the “beyond a reasonable doubt” standard used for a conviction. He ordered that Koerber be held in jail, but said he’d been willing to revisit the issue in a few weeks if Koerber’s attorney can assure him her client will not be involved in any more fraudulent behavior.
“I’m interested in protecting people and the community. And right now, the best way to do that is for Mr. Koerber to be detained," the judge said.
Koerber’s sentencing on his fraud charges has been delayed several times since the Utah County real estate investor was found guilty of 15 counts last September. The latest delay revolved around a dispute about the number of victims and amount of money scammed.
Federal prosecutors say victims number in the hundreds and their losses add up to more than $45 million. They want Koerber put behind bars for the next 20 years.
But Koerber’s defense attorney says those numbers are exaggerated. She asked a judge for one last evidence hearing to hash out the conflict. That hearing will be held next month.
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, federal prosecutors wrote in court papers, and often bragged that one of his investors was a general authority in their faith.
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 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, which ended 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.
Follow @jm_miller