Document shows delays and disagreements over Koerber case | Buzz Blog

Monday, February 6, 2012

Document shows delays and disagreements over Koerber case

Posted By on February 6, 2012, 2:42 PM

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Documents in a recent court filing on the case of indicted businessman Rick “The Free Capitalist” Koerber show delays and arguments between regulators and the Attorney General’s Office in failed attempts to file charges against Koerber in 2007 on the state level. ---It wouldn't be until 2009 that Koerber would face federal charges alleging him to be the mastermind behind a $100 million Ponzi scheme.

In 2009, it was discovered that Utah Attorney General Mark Shurtleff had a private meeting with Koerber and then Rep. Carl Wimmer, R-Herriman, during the same time Koerber was under investigation by the state for allegedly defrauding investors through his various real-estate holdings and other businesses, in a scheme where money from new investors goes to pay off old investors while at the same timing lining the pockets of the fraudster. 

While the state declined to bring charges against Koerber, he was indicted by the federal government in 2009 and received superseding indictments again in 2011, alleging six counts of fraud in the offering of the sale of a securities, 10 counts of wire fraud, two counts of money laundering and two counts of tax evasion.

City Weekly had reported that Wimmer, a former student of Koerber’s investing school and campaign donation recipient, had once entertained passing legislation that would put the Utah Division of Securities (UDS) under the Attorney General’s Office instead of the Utah Department of Commerce, where it’s currently located. Now in a filing made by Koerber’s attorney in response to federal indictments, a document (see below) shows the troubles Utah’s former securities director Wayne Klein (pictured) had in getting the Attorney General’s Office to file a civil lawsuit against Koerber back in late 2007. The document also creates a timeline of the disagreements between the two offices leading up to Klein's sudden resignation from UDS in early 2008.

In a document, Klein creates a timeline of the division's dealings with the Attorney General’s Office that shows throughout December the office struggling to hear back from the Attorney General’s Office about the proposed complaint. The document shows Klein noting that members of the Attorney General's Office felt that his complaint draft was “too long” and contained “too much detail.”  Regardless, Klein pushed hard on getting the complaint right and worked with several members of the Attorney General's Office to hammer out a working complaint they could file on Koerber. But during this process, there were miscommunications. 

In one entry, Klein writes that a former securities-division investigator gave the attorney generals wrong information about the case, arguing that UDS did not have Koerber’s signature attached to any of the investment documents. “This was not correct. We had Koerber’s signature on at least a dozen notes,” Klein reports in the document.

According to the entry, the investigator told the Attorney General's Office that the complaint was “long on conclusions, but short on facts.” In follow-up entries, Klein writes of providing more documents to disprove this claim by the investigator.

On Jan. 9, 2008,  the Department of Commerce and the Attorney General’s Office clashed over the case in a conference meeting where Assistant Attorney General Kirk Torgensen accused the Director of the Utah Department of Commerce, Francine Giani, of telling a legislator that the Attorney General’s Office “refused to bring the case.”

“[Torgensen] said they will bring the case if the proof is there, but that his attorneys say the proof is not there. There were lots of accusations and acrimony,” Klein writes. “In the end, I said our real goal is to find a way to bring a case that the A.G.s feel good about. I said I would prepare an annotation of the complaint, showing what evidence we had for each allegation in the complaint.” According to Klein’s timeline, the new draft was given to the assistant attorney generals two days later and Klein walked through the evidence and the complaints with them.

On Jan. 31, 2008, according to the document, Klein says that he was told by the Attorney General’s Office that the office had made revisions to the lawsuit complaint and would meet with him on it shortly.

“This chronology ends Jan .31 [2007],” Klein says during a recent interview. “It was like a week and a half, two weeks, later that I announced I was leaving [UDS].”

Klein’s resignation came under a cloud of a state audit that would later ding the agency for not keeping up-to-date policy manuals and other problems. City Weekly also reported that the legislators who called for the audit had close ties to individuals who had been investigated by UDS—including Rick Koerber.

While the last entry seems to suggest that the two agencies were close to compromise, after Klein’s resignation, the complaint faltered and the Attorney General’s Office did not follow up on the matter. In an e-mailed statement, Attorney General’s Office spokesman Paul Murphy writes that “We did not file a complaint because our attorneys were never give evidence to support the complaint drafted by Wayne Klein.” Murphy also explained that Shurtleff's brief meeting with Koerber had no bearing on the case. The Utah Department of Commerce declined to comment for this post.

Currently Koerber’s federal fraud case is still involved in pre-trial hearings. KleinChronology

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