At the age of just 43, Rick Koerber has already been described as a “prominent Utah real estate investment guru.” Unfortunately for Koerber, he has also been described using a different term: “guilty,” according to a federal jury. After being charged last year with 18 counts of various tax and financial crimes, including allegations of tax evasion, wire fraud, and money laundering, Koerber was acquitted on two counts – and convicted on more than two dozen. At his sentencing hearing, which is currently scheduled to take place on January 21, 2019, Koerber may face years or even decades of prison time – a fate shared by virtually all taxpayers who are investigated by the Department of Justice or IRS-CI (Internal Revenue Service Criminal Investigation Division). If you have been targeted by an IRS criminal investigation into tax fraud or related crimes, you should discuss your legal situation with an experienced tax evasion defense attorney right away.
Jury Finds Utah Businessman Guilty of Tax Fraud, Money Laundering in Ponzi Scheme Case
To provide some background on this case, prominent Utah business owner Claud “Rick” Koerber was originally indicted on 18 criminal counts in January 2017, including the following charges: (1) two counts of tax evasion; (2) two counts of money laundering; (3) four counts of fraud relating to the sale of securities (i.e. securities fraud); and finally, (4) 10 counts of wire fraud, bringing the final count to 18 charges.
Koerber was initially tried during October 2017. However, despite seven days of deliberation, the jurors, in that case, were unable to agree on a unanimous verdict, resulting in a mistrial after eight weeks in court. Consequently, prosecutors initiated a second trial with a different jury in 2018, again building on evidence from the original case.
In Koerber’s second trial, prosecutors were more successful, arguing that, according to one DOJ press release, the defendant deliberately misused investor funds, spending millions of dollars on “personal housing, other personal expenses, expensive automobiles, investments into restaurants, and unsecured loans to other businesses and entities” – hardly the “profitable” businesses in which Koerber’s clients were led to believe they had invested. Nonetheless, by using a combination of “false pretenses, representations, and promises,” Koerber maintained the deception for years, relying on “interstate wire transmissions, and interstate commerce to execute the scheme.”
Roughly $100 million in investment funds poured into the business at the heart of the scheme, Founders Capital – a company Koerber operated not as a legitimate business organization, but rather, a well-disguised Ponzi scheme. According to the DOJ, neither Founders Capital nor any of the related entities established by Koerber were ever profitable, despite Koerber’s claims to the contrary “in an article distributed to investors and potential investors.” In fact, approximately half of the funds “were used to make Ponzi payments to other investors,” creating the illusion of profitability.
This is the classic defining characteristic of the Ponzi scheme structure (and, similarly, that of the closely-related pyramid scheme), which relies on funds from initial investors to pay investors who join later on. The logical conclusion of this arrangement, of course, is that when the investments inevitably slow or halt, the scheme is drained of the funds needed to continue operating. Investors can lose millions, especially if an unforeseen event – such as an economic crash, a scandal surrounding a financial company, or even a natural disaster – causes other investors to pull their funds.
Even if Koerber’s business operations had been legitimate, he would still be in violation of the law, having failed to file federal tax returns for the tax years 2005 and 2006. By failing to file, Koerber also failed to report nearly $1 million in income: more than $600,000 for the 2005 tax year, and over $300,000 for the 2006 tax year.
Unless the court calendar changes, Koerber will not face sentencing until early next year, with a hearing currently scheduled for January 2019. Subject to federal sentencing guidelines, he may face the following penalties:
- Up to 20 years in prison for each count of wire fraud
- Up to 10 years in prison for each count of money laundering
- Up to five years in prison for each count of fraud in the offer and sale of securities
- Up to five years in prison for each count of tax evasion
On a related note, readers may be interested in learning about the penalties for tax evasion, the penalties for Spies tax evasion, or the penalties for not filing tax returns.
California and Federal Tax Evasion Defense Attorneys
The zealous tax professionals at the Tax Law Office of David W. Klasing have extensive experience representing individuals facing misdemeanor and felony tax crimes, including tax fraud, offshore tax evasion, filing a false return, and willful failure to file a return. If you are being investigated by IRS-CI, or if you have been chosen for an IRS tax audit, eggshell audit, or reverse eggshell audit, our dedicated and aggressive criminal tax defense attorneys can fight to protect your best interests and mitigate the penalties you face. For a reduced-rate consultation concerning tax evasion, failure to file, or failure to pay California or federal taxes, contact our IRS tax lawyers online, or call the Tax Law Office of David W. Klasing at (800) 681-1295 today.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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