All Bets Are Off
How Rick “The Free Capitalist” Koerber’s real-estate scheme helped wreck Utah’s economy.
By Eric S. Peterson @ericspetersonPage 5 of 5
Poor Stewards
nWilliam Young doesn’t remember anything about Koerber being in the business for the long haul. The Springville real-estate developer recalls working with Koerber when Koerber expressed interest in actual real-estate development. Young also had an agent helping Koerber buy and sell investment properties. “They were poor stewards of the properties they purchased,” Young says. “They had hundreds of properties that were left vacant,” he says, noting infrequent maintenance and unwatered lawns. Young waited for Koerber to commit to development, but he never did. “He just refused to take the step, he didn’t have the liquidity.” Young also disapproved of how Koerber’s business relied on sellers using promissory notes for security. The practice, Young says, was common in the ’70s before many loan options were available, but generally, participants would get an escrow company to back up their financing. “Those things weren’t being taken care of,” he says. Instead, average folks were making transactions based solely on promissory notes with little backing in case things went bad. Young parted ways with Koerber in 2007.
Koerber says Young’s claim of vacant properties is unfair because Young’s exposure to those properties was limited. He does concede his company had trouble getting renters into properties. “It was a big challenge we had,” Koerber says. “One we battled from Day 1.”
Ron Brown also complains Koerber left properties vacant. As Koerber’s property-maintenance man, Brown kept track of more than 160 homes across the state. All of these homes were empty, Brown says.
Koerber denies Brown’s characterization of the homes, thinking it preposterous for Brown to claim he cared for that many homes. “He’s an 80-year-old guy,” Koerber says, overreaching by four years. He adds Brown’s responsibilities were much more limited. Koerber disagrees with the idea his properties’ equity was stripped, since he is continuing to work from his home trying to liquidate assets and pay off debts. “We’re part of the team that’s trying to alleviate the current mess.”
The Midas Touch
nIn spring 2007, again in Creative Real Estate Lifestyles magazine, Koerber was extolled as the guy with a Midas touch—even minting his own silver and gold coins as a bit of a show. “Rick says he always wanted to tell his mother he finally started ‘making money,’” writes the author. But now, Koerber struggles amid lawsuits, state and federal investigations and a frozen credit market to resurrect his company. He’s not the only one struggling.
Ron Brown is fighting off home foreclosure. The FranklinSquires investor who holds the deed to his home is no longer receiving payments from Koerber, so he is demanding $2,300 a month in rent (well over Brown’s old $1,700 mortgage payments) for the home Brown built with his own hands. The increased payment comes from the fact that his home had been refinanced and a second mortgage put on it by Koerber’s program. Making the payments will be tough, since Koerber fired all of his employees in February 2008, including Brown. In dire straits, Brown and his wife have few options left.
“Find the money to pay it off,” Brown says with a weak smile. “Or get our tent out.”
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