Government To Appeal Dismissal Of Charges In Alleged $100 Million Ponzi Scheme

The Salt Lake Tribune is reporting that federal authorities intend to appeal a federal judge's permanent dismissal of charges against a Utah man accused of masterminding an alleged $100 million Ponzi scheme on the basis that government prosecutors failed to timely pursue the case.  Rick Koerber, a former real estate businessman who was indicted in 2009 on charges that he operated a massive Ponzi scheme, successfully argued to a California federal court earlier this year that government prosecutors failed to abide by the Speedy Trial Act in prosecuting him.  While the government conceded it may have technically violated the Speedy Trial Act, it has maintained that a dismissal with prejudice, which permanently foreclosed the re-filing of charges against Koerber, was improper.  Government prosecutors indicated that they intend to file their opening brief on or before December 5th.


Koerber, who called himself a "Latter day capitalist," garnered a growing following for his purported real estate investing prowess and was well known in the community not only for his membership in the Latter Day Saints Church but also his hosting of a radio show and frequent real estate seminars.  Through his companies, Founders Capital and Franklin Squires, Koerber touted his "equity milling" program that promised lucrative returns through buying and selling residential real estate.  Investors came in droves, entrusting tens of millions to Koerber's operations.  Even Koerber's radio show changed its opening theme song to, "Money, Money, Money" by Abba.  Koerber also appealed to listeners' religious beliefs, even remarking to one listener who questioned his motives that "God is a capitalist."  In total, Koerber raised approximately $100 million from investors.  

However, the collapse of the real estate bubble in 2007 was catastrophic to Koerber's operations, as the majority of Franklin Squires's assets were in the form of real estate that quickly erased any equity as housing prices declined.  He was indicted in May 2009, and a superseding indictment handed down six months later included twenty-two charges including wire fraud, money laundering, and tax fraud.  

Koerber Obtains Dismissal With Prejudice

In April 2014, nearly five years after the first indictment was handed down, Koerber filed a Motion to Dismiss for Impermissible Delay citing multiple grounds, including the violation of Koerber's right to a speedy trial.  The Speedy Trial Act (the "Act"), codified at 18 U.S.C. § 3161, requires that the trial of a defendant entering a plea of not guilty was to start within 70 days of the later of the filing of the indictment or appearance by the defendant in front of a judicial officer.  While the Act also allows for certain exemptions, Koerber's motion argued that at least 125 non-exempt days had passed without a trial or other resolution.  

At a hearing, the Government conceded that while a "technical" violation of the Act had occurred, the Court should "cure" the violation by entering an Order pursuant to the Act essentially making a finding that the "ends of justice" warranted a retroactive continuance and outweighed the best interests of the public and Koerber.  However, the Court cited precedent standing for the proposition that such a retroactive mechanism was prohibited and that a violation of the Act would have occurred even of such actions were taken.  

In deciding whether or not to grant dismissal with prejudice, which would prevent prosecutors from re-filing the charges, the Court referenced the seriousness of the offenses and also the "Government's problematic conduct in prosecuting this case," including a "pattern of neglect," tactical delays, an inappropriate use of attorney-client privileged information, and ex parte interviews with Koerber that violated his due process rights.  Noting that prejudice to Koerber was presumed, the Court opined that re-prosecuting Koerber would be impossible and ordered that the case be dismissed with prejudice.

Koerber's Associates Have Also Managed To Escape Criminal Liability

The government's prosecution of Koerber and his associates has been unsuccessful by all accounts.  Charges against Gabriel Joseph, a former officer of several of Koerber's companies, were recently dismissed on the same violations of the Speedy Trial Act.  However, those charges were dismissed without prejudice, meaning that federal prosecutors have the ability to refile an indictment.  Another Koerber associate, Jason Vaughn, was cleared earlier this year of fraud charges after he took the stand and testified that he had completely relied on Koerber's assurances that the scheme was legitimate.  

In a statement, Koerber's attorney stated:

We welcome the chance to have the 10th Circuit review what Judge Waddoups described as the ‘sordid history’ of the government’s misconduct in this case. Hopefully, this appeal will finally put an end to the government’s overreach in pursuit of an unjust prosecution of Mr. Koerber.

The Order dismissing the charges is below: