Indictment Charges Mail, Wire Fraud and Tax Evasion in Connection with Real Estate Investment Scheme

Allison Tussey —  May 29, 2009 — Leave a comment

Claud R. Koerber aka Rick Koerber, 36, Alpine, Utah, has been indicted by a federal grand jury and charged with mail fraud, wire fraud, and tax evasion in connection with an alleged fraudulent investment scheme he devised to get money from investors. Koerber was involved with several businesses in Utah, including Founders Capital, Franklin Squires Investments, and Franklin Squires Companies, during the course of the scheme which the indictment alleges operated from sometime in 2004 to about Dec. 31, 2008.

The indictment alleges that in 2004, Koerber created and presented a series of seminars designed to encourage individuals to make money through a real estate program that he named the “Equity Mill.” The indictment alleges Koerber accepted money from individuals and companies through Founders Capital by means of representations that Founders Capital would use the money to make “hard money” or bridge loans to other entities associated with Founders Capital.

The indictment alleges Koerber used seminars, phone calls, mailings, radio programs, web sites and advertisements to communicate with investors and potential investors.

According to the indictment, Koerber represented to investors and potential investors that substantial amounts of money could be made through the “Equity Mill.” Koerber, according to the indictment, paid varying amounts of interest on the money provided to Founders Capital, but generally paid 5 percent per month to its first line investors.

Koerber, as a part of his seminars, encouraged first line investors “to act and think like a bank,” according to the indictment, by obtaining money from other people to place with Founders Capital. It was suggested that first line investors could pay 3 percent per month to second line investors, and in turn, second line investors, also thought to think and act like a bank, could pay 1 percent per month to third line investors.

Koerber represented to investors that Founders Capital provided an opportunity for families to loan their funds directly to Founders Capital in exchange for an aggressive interest payment and a high degree of liquidity. Founders Capital would then re-loan the money to parties that met Founders Capital‘s lending criteria, Koerber said. The indictment alleges Koerber represented to investors and potential investors that the funds loaned to Founders Capital were secured by real property of greater or substantially similar value. The indictment alleges the money invested through the program would be used as “short term” financing to acquire and improve real property investments prior to obtaining more permanent cost effective financing.

The indictment alleges that Koerber told investors that when individuals or families make loans to Founders Capital, typical interest rates on the loaned funds would range between 1 and 10 percent a month, and that typical levels or security or collateralization ranged between 50 and 150 percent.

In fact, the indictment alleges, Koerber knew that those representations were false, or that Koerber made them false by using some of the money for purposes other than real estate bridge loans and to purchase real property. Furthermore, the indictment alleges, most of the money placed with Founders Capital was not secured or collateralized by real estate, and was diverted by Koerber for other purposes.

The indictment alleges Koerber used investor funds for personal housing, expensive automobiles, investments into restaurants, and investments into other businesses. For example, Koerber spent $850,000 on restaurants, loaned $800,000 to an associate for a restaurant, and spent more than $1 million on expensive automobiles. In addition, the indictment alleges, Koerber spent more than $5 million on making movies.

Defendants charged in indictments are presumed innocent unless or until proven guilty in court.

A summons will be issued to Koerber to appear for an initial appearance in federal court. The investigation, which is being conducted by the FBI, the IRS, and the Utah Department of Securities is continuing.

Be Sociable, Share!

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>