On Feb. 18, Marietta and Dennis Baca filed suit in Denver against Koerber and Joseph, claiming the men pulled them into a scheme that has taken all their assets—a modest retirement, Social Security and a small pension Marietta earned after working at a Safeway store for 22 years.
Marietta, 63, and Dennis, 62, live in Aurora, a Denver suburb. “They’re a real nice couple,” says Miles Gersh, the Bacas’ Denver attorney. According to the lawsuit, Koerber and Joseph pitched a lavish lifestyle to the Bacas, persuading them to take $170,000 from home equity. Marietta also put her 401(k) earnings and costly credit-card advances into Founders, according to the suit.
“It’s a scheme,” alleges Gersh. “A lot of things represented were false, and many things that were true were omitted.”
As in the Idaho case, Gersh says Annuit Coeptis passed investments from the Bacas to Founders Capital, for fat interest payments. “The defendants were engaged in a wide-ranging Ponzi scheme in which defendants induced students of their real-estate instruction programs to use their home equity to invest in [promissory] “notes,” then used funds provided by investors in the notes to pay the interest or principal of the notes sold to earlier investors,” the lawsuit alleges.
While the suit claims that a member of Annuit Coeptis convinced the Bacas to invest, the suit describes Koerber as a “control” person. “It’s for individuals who are effectively in charge of management positions,” Gersh says. “[Koerber] might not have a formal position in the company that our clients invested with, but we don’t think that’s accidental.”
Now You See Them, Now You Don’t …
As of Feb. 11, Koerber had radically downsized FranklinSquires. Amid controversial transactions and alleged meddling in his affairs by state securities, Koerber writes on the FranklinSquires Website:
“I would rather wind up the affairs of FranklinSquires, New Castle and Hill Erickson, pay all our creditors—and refocus my energy and the energy of those who are interested in working with me on something where we can make a more powerful difference in the world.”
Last November, Koerber says, he circulated a letter offering a unique financial opportunity. After Founders Capital had been delinquent on interest payments, Koerber’s lawyers offered major creditors the opportunity to convert the debt Founders Capital owed them into company equity. “We offered everyone the option to swap for equity or get all of their principal back plus 12 percent interest,” Koerber says. “No one opted to take the principal back.”
But at least one company wanted its money back rather than “equity.” Koerber offered Vonco, a Utah County real-estate investment firm, that invitation. His companies owed Vonco $3 million.
The offer to exchange debt for a stake in a company that couldn’t pay its investors raised a red flag, says Vonco’s attorney Reid Lambert.
On Feb. 8, Vonco filed suit in Utah County 4th District Court against Koerber’s companies, seeking a lien on one of Koerber’s properties as compensation for delinquent interest payments. While they were interested in getting their principal back, the amount owed to them by Koerber’s companies was far greater than just the offered principal plus 12 percent interest. Vonco’s lawyers tried to contact FranklinSquires but received no response.
The following week, FranklinSquires had stripped down its operations. “There was never any disclosure they planned to shut down the company,” Lambert says.
Anxious investors are asking how Koerber, in the middle of drastic downsizing and legal trouble, will carry on.
While you may not be able to catch Koerber on K-Talk (he’s moved to Provo station KHQN 1480), it’s not too late to turn your brain on, according to the Free Capitalist Website. Koerber recently advertised a “unique” one-day, $1,000 seminar on Feb. 27, offering to teach the “almost ancient product” of creating wealth—through life insurance.
You, too, can discover “how life insurance can be the most powerful tool to generate substantial wealth quickly”—and if you’re not completely satisfied, every penny will be returned to you, guaranteed.