Rick Koerber Rick Koerber figured out how to make the Mormon
community trust him with their livelihoods and scammed them for millions.
Koerber was a double-whammy scammer.
He combined his get-rich-quick schemes with an elaborate Ponzi scheme that reached over
$100 Million dollars.
He name-dropped well-respected Mormons, using that person's acquired goodwill as a weapon.
But why did his followers deny any allegations against him even after it was so apparent
he stole all their money?
Upbringing Born in Casper, Wyoming, the future con artist
had a knack for winning arguments and, over the years, became quite the skilled debater.
At the age of 17, a group of missionaries from the church of the Latter-Day Saints knocked
on his door.
After listening to them, he decided to join the church himself.
Before Koerber ever became a prominent Ponzi schemer, he started a company called New Business
Solutions.
However, even back then, he was on the wrong side of things and trying to trick people
out of their hard-earned money.
In the 1990s, Koerber ran a group called SoFaith that petitioned against Casper College's "Safe
Zone" program.
In 2000, the secretary of state over Wyoming sent out a cease and desist order to Koerber.
It stated that his company violated state security laws for giving investors false financial
information.
The following year he filed for chapter 7 bankruptcy and stated that he had to pay back
over $100,000 to investors.
With his reputation in question, he had to find a new hunting ground.
He decided on Utah County, Utah, which turned out to be a feast for his scams.
The Koerber Lure Utah turned out to be the best place that
he could have gone, as it's the Mormon capital of the world.
With his ties to the religion, Koerber had perfect targets close to home.
Famed Mormon leader Brigham Young founded Salt Lake City in 1847.
He is quoted quite often nowadays with the words he used when he first got to Utah.
"This is the place; this is where we want to stay and build our temple."
Ever since that fateful day, Mormonism has thrived in Utah and continues to do so to
this day.
There are signs everywhere around Utah of Mormon ideas and history.
Missionaries walk along the streets, offering tours that focus on their religion to anyone
that will go.
Temple square is another major area dedicated to Mormonism, and there lies its most sacred
temple.
You can find statues of the first settlers all around Salt Lake City, and over half the
population are Mormons.
This heavy influence on culture by the Mormon religion allowed Koerber to take advantage
of his fellow Mormons.
They are loyal to a fault, and unfortunately, the con artist used that to his advantage.
Equity Milling Rick Koerber's scams started with a basic
investment strategy.
This strategy, called "Equity Milling," a term coined by Koerber, is risky, but it can
work.
I, it's just purchasing something for cheap and selling it at a higher price, but once
you get into it, the strategy becomes a bit more complicated.
The first step into this financial plan is to locate and purchase a low-valued property.
Then you fix it up and convert it to a rental.
The property has to be appraised for more than you paid for it for the plan to work.
Once you have the new value of your property, all you do is apply for a loan at the new
price.
Now you have made your money back and have some leftover profit.
The logic of Equity milling suggests that your next step is to invest that extra money
in something concrete.
However, you can also use it in more devious ways.
Another way many people legitimately profit off of this tactic is to turn the property
into a money-making machine.
The best way to do so is to fill it with renters.
A steady flow of renters looks excellent to an investor looking to buy a property and
makes profiting off Equity Milling a sound financial strategy.
Three Prongs Koerber's con was no simple matter; it involved
three companies he created, his school, American Founders University, and a lot of help from
people who didn't know any better.
Koerber's company, FranklinSquires Investment, was the parent company of Hill Erickson and
New Castle Holdings.
Erikson and New Castle bought and sold the properties for Koerber and his clients.
With a small finders fee and the promised title of "Real Estate Acquisition Specialist,"
some graduates from AFU helped Erickson find and purchase "distressed properties."
Erickson ran the "preferred buyers program" made up of AFU graduates eager to get into
Equity Milling.
Preferred buyers would step in and buy the property for an inflated value.
This may sound like a bad deal for the preferred buyer, but New Castle Holdings had that handled
before any questions could be asked.
New Castle was right there, ready to lease out the property and fill it with renters.
This keeps money coming in every month for the investor and allows Koerber to keep his
profits.
Koerber stated that the investors from his preferred buyer program liked this option
because even if New Castle defaulted, they still had a property with value.
However, the scam turns devious when preferred buyers are buying properties for inflated
values.
Koerber would have upwards of 14 appraisals done on the property and go with the highest
value.
A higher appraisal meant a bigger bank loan.
So, when the preferred buyer steps in, they're left with a house they'll never realistically
profit off.
If New Castle defaults on their payments, the preferred buy is left holding the bag.
Koerber had a legitimate company to buy, flip, lease, and sell houses at face value.
He attracted investors, mainly AFU students he convinced to take out home equity loans
and sold them promissory notes and high-interest payments.
In hindsight, the whole thing was a cut-and-dry Ponzi Scheme.
The Free Capitalist Show Koerber learned many different ways to get
his strategy into the publics' minds.
One of the most successful was his radio program, "The Free Capitalist Show."
During the two hours that he got on the K-Talk network, he covered a vast list of topics.
Some days he would talk about the Mormon religion and his views on it.
Other times he would go on tirades about his political views.
However, no matter what the radio host was talking about, he never stopped pushing his
idea of Equity Milling and how it could solve all of your financial problems.
Between his radio show and his business, Koerber was thriving.
As soon as he was rolling in the dough, the con man left his modest home for a 13,000-square-foot
mansion.
His life of luxurious purchases had only just begun, and he would quickly start digging
himself a hole that he couldn't climb out of.
It was discovered that Koerber had purchased a burger franchise and funded an erotic horror
movie.
He told a story on his program about buying a Ferrari while his Maserati was being serviced.
When a religious caller phoned in to let him know he wasn't living under God's will, Koerber
responded with, "God is a capitalist, my friend."
House Of Cards The 2007-2008 collapse of the United States
housing bubble played a heavy role in the downfall of Koerber.
With the prices of residential properties plummeting, Koerber had no way to pay the
investors.
He scrambled to find a solution, but it couldn't come quick enough, and with no proof of returns,
people started asking for their money back.
Koerber was hit hardest when Marietta and Dennis Baca decided they had enough and filed
a lawsuit.
The focus of the lawsuit was both Rick Koerber and his right-hand man Gabriel Joseph.
The couple claimed that the two con artists tricked them with empty promises of luxury
living.
They had given all of their retirement money to Koerber and Joseph.
With every dime they had wrapped up in this scheme, the couple didn't know if they would
ever get their money back.
They took a total of $170,000 in home equity from the elderly couple, making them just
another victim of the massive Ponzi scheme.
Last Ditch Effort Koerber knew everything was coming to an end.
It was becoming painfully clear to everyone except his Mormon clients that the man was
scamming them.
However, Koerber came up with a plan.
His last-ditch effort to simultaneously escape his troubles and gain more money was to send
out a "unique financial opportunity" to his clients.
He offered them the option to trade the capital they were owed for equity in the company or
receive their money with 12% interest.
Most of the major creditors under his company's umbrella took this offer.
Unfortunately, getting equity in one of Koerber's failing companies was like buying a ticket
on a sinking ship.
While he could convince almost all of his clients, one company in particular just wanted
out.
Vanco, a real estate firm in Utah county, filed a lawsuit against Koerber to get their
money.
On top of all this controversy, Koerber offered a class to teach others how to profit from
life insurance.
2 Day Lawyer Koerber needed someone to defend him, and
he knew it.
Luckily for him, he found Marcus Mumford.
Mumford had been practicing law in California and wasn't registered in That.
Luckily for Koerber, Mumford passed the Utah bar two days before he was hired.
With his empire falling apart, Koerber couldn't pay his new lawyer.
He instead offered Mumford the title to an Iceberg drive-in restaurant, which he accepted.
Mumford was quoted saying, "the government will too often mischarge a so-called 'white
collar' case because prosecutors and investigators don't understand business or the regulatory
burdens that businesses face."
His tactic was to question how every piece of evidence was found and, in the end, got
a few serious pieces of evidence thrown out.
Fighting Back Koerber was at the end of his rope, with creditors
and state regulators breathing down his neck.
His scheme couldn't stand any longer without its foundation of exorbitant real estate prices.
The radio host began to use his show to go on long rants about the investigators and
his spin on the whole story.
He even used billboard advertisements to taunt them.
After talking to some connections, he got the attorney general's office to deny opening
a case due to a lack of evidence.
However, this didn't sit right with the Utah Department of Commerce Executive Director
Francine Giani, and she brought the case to the FBI.
Koerber was indicted in 2009 by the feds.
However, the case was thrown out in 2014 due to mishandling of the process.
Mumford claimed they violated the Speedy Trial Act, and Koerber was a free man.
Koerber's Mormon clients were called to the stand during the initial trial, and, to everyone's
surprise, they defended him.
They said that he didn't scam them, that they just made bad financial decisions.
The people were so passionate about him that one person had to be dragged out of court.
Why did they defend him so vehemently?
Only the Mormon Church can answer that question.
From what we know about their steadfast loyalty to one another, coupled with Koerber's ultra-right-anti-government
views and morals, It's not surprising that an attack on Koerber felt like an attack on
the entire community.
Aftermath After an appeal of the original decision to
throw out the case was overturned, Koeber found himself back in court.
In September 2018, he was convicted on fifteen counts of fraud, wire fraud, and money laundering.
He was also ordered to pay back restitution for $45 million.
In 2019, amidst a sea of boos and yelling coming from Koerber's Mormon allies, he was
sentenced to 14 years and two months in prison.
Still to this day, the Mormon community defends him and says he never duped them.
They believe that he was unjustly imprisoned and don't seem to be changing their minds.
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