Fraud • Alleged scheme falsely inflated value of a property in order to obtain a loan.
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A federal grand jury has indicted a former associate of Rick Koerber, the Utah County man accused of running a massive Ponzi scheme through his real estate investment companies.
The grand jury indicted former Utah County resident Gabriel S. Joseph, 34, now of Fremont, Calif., on three counts of wire fraud and money laundering for an alleged scheme that falsely inflated the value of a property in order to obtain a loan and line of credit far in excess of the real market value.
Joseph was one of the principals in Koerber's FranklinSquires Cos. and related entities. Koerber has pleaded not guilty to a 20-count indictment on charges of securities and wire fraud, money laundering and tax evasion.
Joseph allegedly used a company called SCIPC LLC to hide his involvement in the purchase of a Park City property in 2006 for $3.4 million. Less than two weeks later, Joseph entered into a contract to purchase the property for $7 million.
He allegedly used a false "seller carry" loan to fool the lender into believing he had financing from other sources and provided false financial and other information to a mortgage broker.
The broker in turn used the information to obtain a loan from Washington Mutual for $4.9 million and a line of credit for $700,000, netting Joseph about $2 million in the transaction, the indictment said.
Joseph also is set to go to trial March 13 on two misdemeanor counts of failing to file a tax return for 2004 and 2005.
Joseph's company, Annuit Coeptis LLC, was listed as one of the managers of Koerber's FranklinSquires LLC. Joseph also was named as a top executive of the operation.
Koerber allegedly used about half of the $100 million that FranklinSquires Cos. and his Founders Capital took in to pay interest to investors in what's known as a Ponzi scheme. No trial has yet been scheduled in the case.
Joseph did not return a voice mail message seeking comment on the indictment.
If convicted, Joseph faces a maximum penalty for each count of wire fraud and money laundering of 10 years in prison and fines of $250,000.
Joseph will be issued a summons to appear for an arraignment on the charges, according to the U.S. Attorneys Office in Utah. The case was investigated by the FBI and IRS Criminal Investigation.
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