Alpine man accused of widespread investment scam

The Salt Lake Tribune ^ | May 27, 2009 | Pamela Manson, Lisa Schenker, and Dawn House

[Colofornian]

Federal prosecutors on Tuesday accused an Alpine man of defrauding investors in a multimillion dollar real estate scheme.

U.S. Attorney Brett Tolman said Rick Koerber collected more than $100 million from investors but spent much of it on expensive cars, restaurants, movie making and his own housing. Tolman announced a three-count indictment of Koerber on Tuesday.

The number of victims, most of whom live in Utah, could be in the hundreds, said Tolman. But investigators have yet to determine which of Koerber's investors are "purely victims" and who may have "facilitated the crime," he said.

Koerber, who dubs himself a "Capitalist, Mormon, Dad" on his Web site, could not be reached for comment Thursday. Koerber was an ardent backer and donor to the school voucher movement in 2007.

He speculated in April that he might face an indictment.

"Am I preparing for it? As best I can," he wrote at www.rickkoerber.com. "Regardless of what happens, I'm sure it's only more likely that I'll eventually be indicted as I continue to criticize the government, government employees, the lazy government PR media, and now complicit lawyers."

The indictment says Koerber, 36, held seminars beginning in 2004 and told potential investors they could make substantial amounts of money through a program named the Equity Mill. The investments allegedly were to be used by Founders Capital to make loans to its associated entities -- including Hill Erickson LLC and New Castle Holdings LLC -- so they could buy real estate.

Koerber generally paid 5 percent a month in interest to Founders Capital's first-line investors, the indictment says. Those investors allegedly were encouraged to obtain money from other people and pay 3 percent interest a month to those second-line investors. The second-line investors, in turn, were allegedly encouraged to pay 1 percent a month to third-line investors.

The indictment alleges that Founders Capital and Franklin Squires Investments, another Koerber company, never made a profit.

The indictment says Koerber used more than $50 million to make "Ponzi" payments to keep his scheme going. Of the remaining money, Koerber invested more than $850,000 in restaurants; loaned $800,000 to an associate for a restaurant; and spent more than $1 million on expensive automobiles. Koerber also allegedly spent more than $5 million making movies.

State records show Koerber and his company donated heavily to the school voucher movement in 2006. That year, Koerber, along with five of his related companies, gave at least $30,000 to Parents for Choice in Education, a group that led the pro-voucher fight.

Judi Clark, Parents for Choice executive director, said Tuesday she doesn't expect the indictment to affect the organization because Parents for Choice hasn't had any dealings with Koerber nor his companies in recent years. She declined to comment on Koerber's indictment.

Tolman would not comment on Koerber's involvement with Parents for Choice. He did, however, say, "If groups have any investors' money, we will pursue all leads."

Koerber's Franklin Squires Investments hatched the Franklin Squires Institute, which taught creative investing. That Institute later became its own independent business called American Founders University, which is an Internet-based school that offers liberal arts and vocational courses.

Attempts to reach the school on Tuesday were unsuccessful. Calls to the phone number listed on the school's Web site were answered by a loan counseling company. Attempts to reach Glenn Kimber, who served as the school's president, were also unsuccessful. Joseph Abbott, who co-owns the separate Kimber Academy National Program, which oversees two private K-12, LDS schools in Utah, said Kimber is out of the country.

Abbott said he doesn't expect the Kimber Academies in Lehi and Midvale to be affected by the indictment as Koerber was not involved with them.

The American Founders University Web site still listed Kimber as its president as of Tuesday, but Abbott said Kimber left that school within the last year.

"When he found out some of the things going on with Rick, he left American Founders," Abbott said. He declined to elaborate.

Koerber is charged with one count each of mail fraud, wire fraud and tax evasion. He will be issued a summons to appear in court, according to the U.S. Attorney's Office.

[Colofornian]

From the article: Koerber, who dubs himself a "Capitalist, Mormon, Dad" on his Web site...

May 27, 2009: Alpine, UT
April 8, 2009: Aurora, CO
March 20, 2009: Sacramento, CA

Seems to be a pattern of big-time financial scamming via individuals in the Lds church -- all against the backdrop of Salt Lake City being known for years as one of the leading white-collar crime areas for real estate fraud, etc.:

Ex-Mormon Bishop Charged in $20M Ponzi Scheme Fox News (April 08, 2009) Ex-MormonBishopChargedIn$20MPonziScheme

Calif. Man Charged with $40 million Ponzi scheme, AP (March 20, 2009) ["...running a $40 million investment scam that bilked about 150 investors, many of whom he met through his Mormon church.] Calif.ManChargedWith$40MillionPonziScheme

[Admin Moderator]

Moved to news, unless you also care to contemplate if Bernie Madoff is an indictment of Judaism...

[Colofornian]

Moved to news, unless you also care to contemplate if Bernie Madoff is an indictment of Judaism...

(I don't mind...this pattern, though, isn't simply about Lds perpetrators...many of these victims are Lds because they were trusting a fellow church member...so if there were a number of Bernie Madoffs starting to make the news at about a monthly rate -- and most of the victims were those met in synagogues...then yes, I'd say there was definitely a religious dimension to that...wouldn't you?)

[ghost of nixon]

Seems to be a pattern of big-time financial scamming via individuals in the Lds church

As a long-time non-mormon Utah resident, my observation is that with the LDS church comes the good, the bad, and the ugly. This would be the bad and ugly side - and yes, there has been a pattern of mormons using the church "seal of approval" to scam other mormons out of boatloads of money - but it has been going on for 40+ years. The current economic downturn is just exposing the latest wave of frauds. My advice - if someone from your church or religion has a great investment scheme - don't even think about it.

[Colofornian]

As a long-time non-mormon Utah resident, my observation is that with the LDS church comes the good, the bad, and the ugly. This would be the bad and ugly side - and yes, there has been a pattern of mormons using the church "seal of approval" to scam other mormons out of boatloads of money - but it has been going on for 40+ years. The current economic downturn is just exposing the latest wave of frauds. My advice - if someone from your church or religion has a great investment scheme - don't even think about it.

Well said. Well-advised.

[Liz]

”Affiliation” frauds are common----these are the people perps associate with-----who trust the perps implicitly.

Madoff's investors centered exclusively on Orthodox Jewish groups (three other branches of Judaism were not involved). When Madoff confessed he resigned as chairman of Yeshiva University's Sy Syms School of Business, and as board treasurer. Yeshiva's board scrubbed all mention of Madoff from its Web site. Madoff also sits on the boards of North Shore-Long Island Jewish Graduate School of Molecular Medicine, the Picower Institute for Medical Research and New York City Center, a theater organization.

Madoff and his wife, Ruth, Madoff also run a “self-funded non-profit“……………with about $19 million in assets, according to IRS filings…………donating millions to Jewish charities, Dalton School, the Metropolitan Opera, Queens College, Lincoln Center Theater, the Robin Hood Foundation, and groups for underprivileged kids.

SOURCE http://www.nypost.com/seven/12132008/news/regionalnews/charity_trustees_a_bustee_143968.htm

==============================================

Stanley Chais tops Madoff's speed-dial entry....as a longtime money manager and Bernie's close friend on the Palm Beach country club circuit of wealthy Jewish returees and businessmen. Chais said the swindle wiped out the Chais Family Foundation, which made millions of dollars in annual contributions to various Jewish charges. Chais must have known about the disgraced financier's multibillion-dollar Ponzi scheme, a complaint filed in Bankruptcy Court claims.

THE RELIGIOUS, SOCIAL, AND BUSINESS LABYRINTH
(4800 INVESTORS) MADOFF USED TO RAKE IN BILLIONS.

MAP IS INTERACTIVE AT WEB SITE

WEB SITE http://news.muckety.com/2008/12/28/madoff-used-social-family-networks-to-rake-in-billions/9031

CHAIS FEEDER FUND Brighton Co Investments is headed by Stanley Chais, a Beverly Hills "philanthropist" who served on "charitable" boards with Madoff. Chais (pronounced Chase) told the Jewish Journal of Los Angeles that he personally invested with Madoff but also "facilitated" others who wished to do likewise. However, spokesmen for the SEC and the California Dept of Corporations said they could find no record of Chais registering as an investment advisor or a broker.

Stanley Chais offers remarks at the Weizmann Institute of Science.

======================================

Chais said the Madoff swindle wiped out the Chais Family Foundation, which made millions of dollars in annual contributions to various Jewish charges.

If Chais took out any monies from the Madoff operation that went into the Chais Family Foundation, the money has to be returned so that it can be redistributed to the investors swindled by Madoff. Comes under the legal principle of "fraudulent conveyance"....means one cannot legally profit from a fraud.

[Frantzie]

Scientology, which I do not think is a real religion, had Reed Slatkin and others who scammed at least $1 billion. Note I am not comparing Mormonism with Scientology.

It is generally a bad thing to wear religion on your sleeve to generate business. You see a pattern in all groups or scammers who use their religion to scam.

[Colofornian]

I appreciate the detail you provided.

Very Interesting.

”Affiliation” frauds are common----these are the people perps associate with-----who trust the perps implicitly.

Yes and no. I mean, obviously, "affiliation" frauds are common. But that could also be said in a way to downplay patterns & trends. For example, I could also justifiably "downplay" your observation that "affiliation" frauds are common. How? Well, simply put, most sin is, after all, "affiliatory." People tend to commit sins against those they affiliate with.(I mean, we could get to the point where we simply "write off" most crime & most sin due to our sinful nature & the fact that we're social creatures...but those obvious observations don't tend to explain trends).

I would simply caution that just because people tend to sin against those around them; or commit crimes vs. those they know, that we don't offer up the prime reason as being "affiliation."

...who trust the perps implicitly

I'm very glad you highlighted this. My contention is not only that sin is sin, and affects all of us to various degrees, but intensified vulnerability comes from exercising false trust. People place their trust in false sources -- untrustworthy sources -- and some people do that more than others.

The religious dimension in all of this: Rest assured no religious group is certainly immune from this; however, my contention is that members of cults are more vulnerable to exercising misplaced trust. (They've usually already, to one degree or another, placed their trust in a mortal authority figure over that of God or Jesus Christ...thereby finding it easier -- even if it's under conscious "radar" -- to trust in other mortal authorities, some/many of whom "burn" them).

[Liz]

......my contention is that members of cults are more vulnerable....they misplace their trust in a mortal authority figure over that of God or Jesus Christ......

Some think they are doing God’s will. One of the most infamous religious cults was Jonestown, Guyana, scene of 900 mass suicides (murders).

Shocking to realize parents brought their children there .....deluded by Rev Jim Jones that this was to be some kind of "socialist heaven."