SALT LAKE CITY — After weeks of testimony and seven days of deliberations, jurors announced Monday they are deadlocked in the federal fraud case of an embattled Utah businessman.
The eight-man, four-woman jury confirmed Monday that while earlier in their deliberations they couldn't come to a decision, they continued considering the case and at one point believed they could return at least a partial verdict.
After discussing the case further, however, they maintained that following six weeks of testimony and seven days of deliberations, they couldn't reach a unanimous decision on any of the charges against Claud R. "Rick" Koerber.
In response, U.S. District Court Judge David Nuffer declared a mistrial and dismissed the jury, leaving the door open for prosecutors to refile the case if they choose.
As he left the courthouse Monday afternoon, flanked by his wife and children, a jubilant Koerber insisted the allegations are now and always have been "absurd."
"It is not a Ponzi scheme when you use money from your own successes to build your business, even if you're borrowing money for a period of that time," he said. "I think there is a problem with the government's theory, and I think this jury identified it."
While the mistrial is short of an acquittal, "whenever it says 'United States of America versus somebody' and that somebody lives to fight another day, it's a victory, and that's how this system works," Koerber said.
As the allegations he has been battling for a decade were brought to trial, Koerber said he would trust in the jury. And if prosecutors choose to file the case again, he believes the outcome won't tip in their favor.
Assistant U.S. Attorney Stewart Walz said prosecutors will carefully review the trial and attempt to identify where their arguments were strong and where they may have lost jurors, before deciding whether to take Koerber to court again.
But in the meantime, U.S. Attorney for Utah John Huber maintains that white-collar and affinity crimes remain a problem in Utah, and Koerber has been a part of that problem.
"In this case, it was obviously a challenge that some jurors believed the evidence we presented and perhaps some jurors believed the evidence that they presented," Huber said. "I guess it's a good illustration of the complicated fraud dynamics in Utah, that people sometimes are very good with their words and they that they present themselves."
Huber called it a "classic case of a Ponzi scheme and Utah fraud, and there are many more out there that we still have to look at."
The 18-count indictment alleges Koerber, now 44, used his businesses — Founders Capital, and related businesses Franklin Squires Investments and Franklin Squires Cos. — as a $100 million Ponzi scheme from 2004 to '08.
While investors believed their money would be used in secure real estate investments, Koerber spent it instead on flashy cars, a low-budget horror flick and his own lavish living, according to federal prosecutors.
During opening arguments in the case, prosecutors claimed Founders Capital and Franklin Squires didn't turn a profit any of the five years they were in operation, leaving Koerber using more than $50 million in investors' funds to pay earlier investors. When the payments stopped in 2007, investors lost an estimated $47 million, prosecutors said.
But Koerber maintains the expenditures were legitimate investments intended to turn a profit for his clients.
His attorney, Marcus Mumford, told jurors at the trial's outset that while Koerber's businesses may not have appeared to have turned a profit every year, all the while he was "accumulating assets" worth a whopping $127 million and carefully tracking the profits on a balance sheet he maintained.2 comments on this story
However, allegations that Koerber's business was a Ponzi scheme proved "a death sentence" that no company could survive, Mumford claimed.
Once he was cleared, Koerber spoke out publicly, insisting charges never should have been filed in the first place, and blasting state regulators who first brought allegations against him.