A Utah man accused of running a $100 million Ponzi scheme now faces a new indictment after a federal grand jury re-indicted him for various charges including investment and tax fraud. Claud R. Koerber, also known as Rick Koerber, 36, of Alpine, Utah, had originally been indicted in 2009 for his alleged role in the scheme, but a federal judge dealt a blow to the case when he threw out a key piece of evidence against Koerber. After making small changes to a portion of the indictment describing the scheme and means used to defraud, a federal grand jury returned a new indictment substantively identical to the original indictment. Koerber was charged with one count of mail fraud, six counts of fraud in the offer and sale of securities, one count of sale of unregistered securities, ten counts of wire fraud, two counts of money laundering, and two counts of tax evasion. A conviction on all of the charges would leave Koerber facing a maximum sentence of hundreds of years in federal prison.
According to authorities, Koerber operated Founders Capital, LLC ("Founders Capital"), Franklin Squires Investments, LLC ("Franklin Squires"), and Franklin Squires Companies, LLC ("Franklin Squires Co."). Beginning in 2004, potential investors were solicited through real estate seminars in which Koerber described an operation that would acquire various real estate for use in the 'Equity Mill.' Investors were paid monthly returns ranging from 1% to 5%, and told that their investments were secured or collateralized by real estate of equal or greater value. In total, Koerber raised over $100 million from investors. However, authorities allege that neither Koerber nor his companies were profitable, and sustained losses in 2005, 2006, and 2007. Instead, Koerber used $50 million in investor funds to pay interest or principal payments to existing investors. Additionally, Koerber lived a lavish lifestyle, spending $850,000 at restaurants, $1 million on cars, and over $5 million to make a movie.
Gabriel Joseph, a partner with Koerber in Franklin Squires Cos., also faces federal charges in connection with his alleged failure to file tax returns in 2004 and 2005. He is scheduled to stand trial in December 2011.
A copy of the original 2009 indictment is here.