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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 http://www.rickkoerber.com" Target="_BLANK">http://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.