Back in June, U.S. District Judge Clark Waddoups dismissed $48 million in assorted white collar charges filed against real estate entrepreneur and alleged Ponzi scheme architect Rick Koerber of Utah County. Earlier this month, he expanded on the ruling by dismissing the case with prejudice, meaning the case cannot be refiled. Judge Waddoups pointed to the prosecution’s handling of the case as key factors in his decision, citing “neglect” and “questionable ethical conduct.”

Koerber Permanently Cleared of Criminal Charges

The American legal system (and every participant and procedure within it) is bound to detailed and rigorous regulatory codes. Trials and other court proceedings are strictly governed by rigid deadlines and rules of conduct — and when those rules and deadlines are violated, the result can sometimes be the complete dismissal of charges against a defendant.

That seems to be precisely what happened earlier this month in the case of Claude “Rick” Koerber, who spent five years at the center of 18 criminal charges pointing to one of the largest alleged fraud schemes in Utah’s history, valued at a staggering $48 million.

Koerber was originally indicted in May of 2009. The case continued over the next several years, with Koerber pleading not guilty to a long list of white collar charges including money laundering, tax evasion, mail fraud, wire fraud, and the sale of unregistered securities. Prosecutors alleged Koerber had orchestrated a massive Ponzi scheme with his companies Founders Capital and FranklinSquires.

Koerber, however, has consistently denied the accusations, stating in 2009, “I can’t say we’ve never paid interest with new capital. That’s not a big deal, and all our investors know that.”

In light of the latest ruling, Koerber describes himself as “vindicated,” stating, “It is absurd to anyone who looks at the records to suggest this business was a Ponzi scheme. The people I did business with were grown men and women who knew what we were doing who took some risks. We made some and we lost some and most of the people who did business with me walked away profitable.”

But what thought process went into that ruling? What prompted Judge Waddoups to dismiss the case specifically with prejudice?

Judge Waddoups: “A Pattern of Widespread and Continuous Misconduct”

The procedural issues with the Koerber trial can primarily be traced back to 18 U.S. Code Chapter 208, also known as the Speedy Trial Act. Under 18 U.S. Code § 3161(c)(1), “In any case in which a plea of not guilty is entered, the trial of a defendant charged in an… indictment with the commission of an offense shall commence within 70 days from the filing date… of the information or indictment, or from the date the defendant has appeared before a judicial officer of the court in which such charge is pending, whichever date last occurs.”

In his 17-page decision, Judge Waddoups pointed to “the government’s pattern of neglect and dilatory conduct,” adding, “But in addition to this administratively dilatory conduct and pattern of neglect, the court has already found significant problems with the substantive prosecution of this case essentially amounting to ‘a pattern of widespread and continuous misconduct.'”

Koerber’s defense attorney, Marcus Mumford, was supportive of the judge’s ruling, stating, “We’ve been as troubled as the court now confirms it was in what I think he [Judge Waddoups] calls the sordid history of the case, what the court refers to as… widespread and continuous misconduct.”

Judge Waddoups also criticized the U.S. Attorney’s Office in its application of potentially tainted evidence, saying interviews conducted with Koerber in February of 2009 represented “a tactic of illegally planning and conducting impermissible ex-parte interviews.” Judge Waddoups is referring to ABA Rule 4.2: Communication with Person Represented by Counsel, which states that “a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer… unless the lawyer has the consent of the other lawyer, or is authorized to do so by law or a court order.”

Department of Commerce Executive Director Francine Giani, who brought the case to the U.S. Attorney’s Office after Utah Attorney General Mark Shurtleff didn’t initiate prosecution, is sorely disappointed in the outcome of the case.

“I am appalled,” stated Giani, adding, “I do not anticipate ever referring cases to federal prosecutors again.”

“I just know that we didn’t prosecute him because my staff attorneys said the evidence was insufficient to charge him,” says Shurtleff.

If you have been charged with fraud or other white collar crimes in Utah, an experienced Salt Lake City criminal defense lawyer can help fight the allegations and protect your legal rights. To set up a free and confidential case evaluation, call attorney Darwin Overson at (801) 758-2287, or contact us online today.