Defense • Attorney in alleged Ponzi case says feds conducted interviews improperly.
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An attorney said Thursday that accused financial fraud suspect Rick Koerber was illegally interviewed by federal agents and that prosecutors who indicted him for allegedly operating a $100 million Ponzi scheme also had acted improperly.
But an agent who participated in the interviews said it was Koerber who had first asked to meet with them and that once he arrived at the local FBI office they couldn't shut him up.
U.S. District Judge Clark Waddoups took testimony Thursday on Koerber's motion to quash evidence from two meetings between Koerber and FBI and tax-enforcement agents in early 2009 when they were investigating him for possible financial crimes.
Koerber faces 18 criminal charges for his operation of FranklinSquires Cos. and related entities. The Utah County businessman hotly denies his businesses functioned as a Ponzi scheme, although the indictment alleges he used about half of the $100 million in funds the companies received to pay investors and make the operation appear profitable until it collapsed in 2008.
Attorney Marcus Mumford told Waddoups that agents illegally interviewed Koerber without his attorney present, a "serious violation of my client's rights and serious misconduct on their side."
Assistant U.S. Barbara Bearnson called that a "bare, unsupported allegation."
The hearing was held in anticipation of a trial that has yet to be scheduled in the case, even though the first indictment was handed up in May of 2009. Koerber's attorney has managed to get three charges dismissed but Waddoups has declined so far to toss out any more of the 18 charges still pending.
Mumford is seeking to bar federal prosecutors from using evidence gathered in interviews Koerber had with agents in February of 2009, contending the meetings were improperly held without Koerber's legal representative in attendance.
But FBI Special Agent Cameron Saxey said it was Koerber who requested the first meeting so he could tell investigators his side of the story. Koerber also wanted to meet the agents because he wanted to talk about what he knew about political corruption and illegal acts by others, the agent said.
"Mr. Koerber did 90 percent of the talking," Saxey said. "I remember wanting to end the interview and he continued to talk."
At one point, it came out that Koerber might have believed he was still represented by well-known defense attorney Max Wheeler, Saxey said.
"I said you want to stop [the interview]? You want to end it? He said no," Saxey said.
Jennifer Korb, a former attorney with the Utah Division of Securities, the agency that began the investigation of Koerber's companies and who also participated in the federal probe, testified she telephoned Wheeler in December of 2008 to see if he still represented Koerber.
"He told me he did not," said Korb, who is now in private practice.
The judge said proceedings will continue at a hearing next week when Mumford is expected to call witnesses, including Koerber.