Real estate fraudster Rick Koerber gets 14 years in prison during raucous hearing on his Ponzi scheme
(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.
Nothing has been normal about Utah real estate investor Rick Koerber’s criminal case, a wildly colorful white-collar prosecution that took a tortuous 10-year path to the day Koerber faced his sentence for running a Ponzi scheme.
And Tuesday’s climactic hearing lived up to the hype. It was a chaotic, at times combative, scene far outside the norm of Utah’s federal court proceedings.
Famed anti-government crusader Ammon Bundy and his family protested outside the courthouse.
An out-of-town federal judge made sweeping comments about Latter-day Saints and their vulnerability to fraud.
A man claiming to be a fraud victim was wrestled out of the courtroom by U.S. marshals.
The gallery moaned and groaned, and someone yelling out “It’s bulls--t!” when the judge cut off Koerber supporters who wished to speak.
And, after all that, Koerber learned that he’ll spend a little more than 14 years in a federal prison.
“He was able to prey upon innocent people,” U.S. District Judge Fredric Block said before handing down his sentence. “They trusted him. And their trust was not accommodated.”
Koerber’s sentencing hearing stretched on for more than two hours, with Koerber telling the judge that he did not think at that time that he was running a Ponzi scheme. He conceded that he did make bad business decisions that negatively affected those who trusted him, people whom he loved.
“I have thought for 10 years, hundreds of times, of all the things I could have been better about,” he said. “I could have been less arrogant, of course. I could have been less naive.”
Koerber asked that he be allowed to remain free as he appeals his case, worried that his family would lose their home. The judge denied the request.
Federal prosecutors were seeking a 20-year sentence, saying Koerber targeted fellow members of The Church of Jesus Christ of Latter-day Saints, using common language to gain their trust.
“It was a crime motivated by vanity and ego,” federal prosecutor Tyler Murray argued. “And it was particularly egregious the way Mr. Koerber went about endearing trust in his victims. He knew exactly what to say and do to get members of the Mormon community to trust him. He spoke their language.”
Murray told the federal judge that none of Koerber’s victims wanted to speak publicly Tuesday — but when it was Koerber’s turn to present his case, his defense attorney said there were half a dozen people who had been identified as victims who wanted to speak to the judge.
They didn’t get to say much.
Once Block, a judge from New York brought in to preside over the case, heard that these people did not consider themselves fraud victims, he quickly shut them down one after another. He only wanted to hear from those who would say that Koerber defrauded them, he said.
“I am not a victim,” one man managed to get out before Block dismissed him from the podium.
Another said he was not a victim of Koerber’s, but was victimized by federal prosecutors who insisted on bringing Koerber to trial. That man was wrestled out of the courtroom by marshals after he refused to leave the podium.
Then there was Mary and Brad Colovich, a couple who never got the chance to speak. They said after the sentencing that they lost money in Koerber’s investments, but did not consider themselves fraud victims. They say Koerber was upfront with them when things started going sideways, and they didn’t blame him for an investment gone bad.
“We are terribly disappointed in what we saw today,” Brad Colovich said.
The Coloviches stressed that Koerber never talked about their shared faith during their business dealings. But Mary Colovich said she was offended when Block, the federal judge, made generalized statements about a “good Mormon jury” convicting Koerber and an assertion that Latter-day Saints were overly trusting.
“I took a little offense when he started talking about the Mormons and how we’re gullible,” she said.
Koerber’s attorneys had argued in court papers ahead of his sentencing for fraud, wire fraud and money laundering
that prosecutors’ focus on his political and religious associations amount to an “impermissible anti-religious bias” against the convicted real estate fraudster.
“Prosecutors are not protecting members of The Church of Jesus Christ of Latter-day Saints by calling out and attacking Mr. Koerber’s religious associations and expressions,” defense attorney Kathryn Nester wrote. “They are sounding an impermissible warning that you citizens who might be convicted of a crime — when prosecutors can also identify your religious associations and expressions — you will be prosecuted more harshly.”
But some believe Koerber’s conviction was far more political than it was about his religious beliefs. Hours before filling the federal courtroom, a group of protesters and Koerber supporters gathered around the federal courthouse. They were led by Ammon Bundy, an Idaho man who was acquitted of charges related to his participation in the armed takeover of a wildlife refuge in southeastern Oregon.
(Francisco Kjolseth | The Salt Lake Tribune) Cliven and Carol Bundy, left, join other supporters of convicted fraudster Rick Koerber as they gather ahead of his court sentencing in Salt Lake City at the Federal Courthouse on Tuesday, Oct. 15, 2019, ending a nearly two decade white collar crime saga.
Bundy, standing in front of a makeshift podium of a garbage can wrapped in protest signs, told the crowd that he believes Koerber was targeted with a new indictment in 2017 as a form of retaliation after the Utah man traveled to Oregon to help the Bundys’ defense.
Koerber was instrumental in their case, he said, and helped with legal writings and connected the Bundys to his lawyer, Marcus Mumford.
Bundy said they worked together to expose government corruption, and when he and the others were acquitted, federal prosecutors were “infuriated.” They reacted, he claimed, by indicting Koerber once more.
“It is clear to all that honestly understand the proceedings of Rick’s case that this reindictment is a gross political retaliation for Rick’s involvement in the Bundy defense,” he said.
Bundy was joined by his parents, Cliven and Carol Bundy, and other supporters who waved signs of support for Koerber in front of the courthouse hours before the man was to learn his fate. The Bundy family have been prominently involved in a series of anti-federal government efforts spurred by Cliven Bundy’s dispute with the feds about cattle grazing on public lands.
“Free Rick Koerber,” one sign read. Another: “Gadianton robbers work here,” a reference to a secret criminal organization detailed in the Book of Mormon.
Ammon Bundy said Tuesday afternoon that he wanted to speak out in support of Koerber, and said people need to hold the government accountable when they do wrong. When asked directly what he thought people should be doing, Bundy skirted the question.
“I can’t tell you that,” he said. “I think you should follow the spirit of the Lord and act.”
Federal prosecutors estimate that the victims’ losses add up to more than $45 million.
Despite past disputes, the attorneys for both sides now agree that the number of victims is between 10 and 49.
Prosecutors allege that 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 Mumford, his attorney at the time, 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 15 crimes.
But, even 10 years later, Koerber’s case may be far from over.
There’s a promised appeal to the 10th Circuit Court, which could stretch on for years to come. And there’s no sign that Koerber is giving up.
As his wife, Jewel Skousen, said after his sentencing: "Time is on the side of truth.”