THE RICK KOERBER PRESS CONFERENCE RELEASED IN HD VIDEO- UNEDITED!The Official Rick Koerber Franklin Squires Indictment Video by Robert Paisola - The most amazing bloopers are hereThis is the official link to the full Rick Koerber Franklin Squires Press Conference. This is a 38 Minute UNEDITED Video. We will provide more details as they come in, Stay tuned for further details.WATCH THE FULL RICK KOERBER FRANKLIN SQUIRES INDICTMENT PRESS CONFERENCE IN HD VIDEO NOW!
To your Success
Robert Paisola
CEO
RobertPaisola.com PRESS RELEASE
* RICK KOERBER RESPONDS TO FEDERAL INDICTMENT
* ANNOUNCES A MULTI-PARTY FEDERAL CIVIL RIGHTS LAWSUIT, AND
* RELEASES TRANSCRIPTS AND RECORDINGS OF STATE OFFICIALS ENGAGING IN CRIMINAL VIOLATIONS OF UTAH LAW AND OF THE STATE’S CHIEF INVESTIGATOR CLEARING HIM OF ANY WRONGDOING
SALT LAKE CITY -The following statement was delivered by FranklinSquires President & CEO Rick Koerber at a press conference held at the Grand America in downtown Salt Lake City, UT at 3:30pm on Friday May 29, 2009-
.PDF version of Mr. Koerber’s Remarks (This .pdf version contains footnotes describing the source of each quote and/or sound clip, these footnotes are omitted in the .html version)
“My name is Rick Koerber and I am the President and CEO of FranklinSquires. In 2004 employees within the Utah Department of Commerce first contacted me and informed me that my business was being investigated for what the Division of Real Estate deemed “suspicious behavior.” During an in person meeting with several Department employees I was told that “while there was not currently any evidence to support their suspicion” I was being investigated for fraud. The investigation grew and expanded to last more than five years and it included the Division of Real Estate, Consumer Protection, Securities, Licensing, and the Division of Corporations & Commercial Code. After failing to find any evidence that I was involved in breaking any “rule or law” and after failing to convince any state agency to take civil or criminal actions against me, and specifically after their own attorneys suggested there was not sufficient evidence to bring charges, Francine Giani continued shopping for a prosecutor until in January or February of 2008 when, as she recently admits, she had the files sent to the US Attorneys office.”
“As you all know, after several years of speculation, conjecture and an extended whisper campaign of rumors and grand jury leaks, on Tuesday of this week a three count indictment was returned by a federal grand jury accusing me of certain crimes supposedly committed between 2004 and December 31, 2008 related to a purported “$100 million dollar Ponzi-Scheme.”
RESPONSE TO INDICTMENT
“In response to this indictment I can only say that the allegations made therein are absurd and the charges are false. Up until now everything done by the state and federal government has been done in the shadows, making it virtually impossible for me to fight to defend my reputation, my business, and my associates. But, I can fight an indictment full of absurd and bogus charges and that is exactly what we are gearing up to do. I am looking forward to having my day in court, to having the real facts at hand laid before an objective court, and trusting a judge and a jury of my peers to come to a fair and reasoned conclusion. I am confident that I will be exonerated and that the allegations contained in the indictment will be shown to be patently false.
“Today I ask only that those concerned with this case exercise care in avoiding a rush to judgment and remember that, contrary to the behavior of our government officials on Tuesday (who were literally applauding and congratulating each others as if some conclusions had been reached about me and my business activities), an indictment is not a statement of guilt, and it simply outlines the case for the prosecutor. I am unsure as to why the United States Attorney and other agencies involved have decided to launch a trial of this case, first in the media. However, I am confident that trying the case in court, is a much better way to preserve my rights and to ensure that real justice is served.
“After witnessing the government’s odd, premature celebration on Tuesday, I also feel to remind Mr. Tolman, Mr. Fuhrman, Mr. Brito, Mr. Walz, and Ms. Giani that in our system of government an accused person is presumed innocent until a contrary finding is made by a jury after an opportunity to answer the charges and a full airing of the facts.
“Because this is a pending legal proceeding, it would be inappropriate for me to comment on the specific facts related to the charges or other matters that need to be decided during the future court proceedings. But, I will ask if the government is now taking the position that when any businessman invests millions of dollars into legitimate businesses and industries such as restaurants and movie production, that this is considered a personal expense. Are they suggesting that such sums are considered the same as admission tickets or meal expenses? If so I think several Utah small business owners who work in the restaurant and film industries would like to know that.
“Nevertheless, I will repeat that I deny these allegations and declare, well in advance, that I will be entering a plea of “not guilty” on all counts and vigorously exercising my rights to bring a full defense. I do this first and foremost for myself, and I also do this for my colleagues and fellow entrepreneurs like those individuals standing behind me today, each of which is a local Utah business owner or entrepreneur. I also want to express my personal, deep felt appreciation for the patience, faith, support and strong efforts of virtually all of my colleagues, creditors, and clients. Rumors and false charges can bring a heavy toll on the innocent, and the only remedy I know is to stand up, tell the truth, and have confidence in the good people on both sides of our justice system-whose efforts, when given a chance to make the choice, almost always outweigh the shady and misguided efforts of the few abusive and overzealous government workers.
ANNOUNCING INTENT TO FILE A FEDERAL CIVIL RIGHTS LAWSUIT
“I also want to take this opportunity to announce my intention of filing, as soon as is legally permissible (at the conclusion of this pending criminal case, or earlier if legally possible) , a section 1983 Federal Civil Rights lawsuit naming several government officials and employees including but not limited to Department of Commerce Executive Director Francine Giani, Securities Enforcement Director Michael E. Hines, Susan Jones, Diana Parrish, Jonny Stewart, A. Gary Bowen, Jennifer Korb, and former Securities Division Director Wayne Klein.”
“Because citizens are entitled by right to have their lives, their property and their liberty protected by all government workers, bringing a court action against the individuals named above is an appropriate way to address abuse and corruption. I do not make these charges lightly, for certainly I understand the consequence, and what it means to be openly accused of wrongdoing. Every citizen, whether in business or in government must be willing, when pressed, to be responsible and accountable for their conduct. I am willing to be accountable for mine and I will have my day in court. This civil rights action will hopefully require the government employees named above, to do the same.
RELEASE OF RECORDS AND RECORDING
Early in the week several media outlets began questioning Utah Representative Carl Wimmer and Utah State Attorney General Mark Shurtleff regarding their activities related to me. Some seemed to be suggesting that having an audience with me, by an elected official, was somehow inappropriate. Why a private citizen, asking to meet with his or her elected representative is ever, in any circumstance inappropriate, is a mystery to me. Are elected officials not representatives of each citizen? Should only special interests and lobbyists have access to government officials? If any citizen were to feel that a government bureaucracy was falsely accusing them, taking illegal actions, and doing serious harm to their business and family - wouldn’t any person so situated be interested in contacting his or her elected official to state their case? Or, instead, have we come so far that as citizens we are now willing to give up our constitutional rights to criticize our government and to petition our government for redress?
Yesterday, the local media began reporting on the Utah Attorney Generals refusal to bring an action against me in 2008, citing a lack of evidence. I applaud KSL and reporter John Daley for beginning to uncover the facts related to this topic. When I say “beginning” to uncover the facts it is because there is much more to the story. Today, I have brought with me several selections of transcripts and audio recordings, and I’m releasing to the media (and to the public), essential information related to the rest of the story, both regarding the case the Attorney General decided not to bring and regarding the activities of Department of Commerce Executive Director Francine Giani and her staff.
The reason I’ll be playing a selection of these audio recordings today is that the information contained in them is in some instances so sensational and so outstanding that only hearing the words coming out of the mouths of the government officials making these statements will anyone likely believe what they hear.
Note: Because the most likely defense coming out of the Department will be the contention that these short segments are taken out of context, the full records of the phone calls, meetings, and the full printed documents will also be provided, as soon as possible, at the bottom of this page.
Item #1 - Selected Transcript of Statement from John Brown (Ut. Dept. of Commerce, Division of Real Estate)
In this transcript you will notice a clear violation of the law as described in title 61, Chapter 2, Section 11.5. This was John Brown’s concluding remark to me on my first encounter with the Utah Department of Commerce in 2004. He said,
Mr. Koerber, we haven’t yet identified any illegal or fraudulent activity on your part, but we do not like the way you are doing business and we have serious reservations and concerns. We will keep looking, and for the time being let me put you on notice - We cannot touch you, because you are not one of our licensees, however I will use the full power of this office to come down with both of my feet squarely in the chest of any Utah licensee who does business with you or FranklinSquires.”
This kind of over reaching continued for years. At first, I sought an audience with then Department of Commerce Director Mr. Russell Skousen. When Mr. Skousen resigned from his position I hired him as my attorney to help me work to ensure that my businesses were structured and operating properly and to help communicate with state regulators to ensure that I was given fair treatment and individuals like John Brown did not simply have their way. Mr. Skousen and I have worked together now for years, and unfortunately the behavior by a few individuals in the Department of Commerce has only become worse over time.
Item #2 - Selected audio recording of former Utah Securities Division Director Wayne Klein in discussion with me and two attorneys, in a meeting at the Division of Securities, in the presence of an attorney from the AGs office, and Enforcement Director Michel Hines.
In this recording, Mr. Klein answers an inquiry, after he and Mr. Hines had both revealed that after several years of investigation no evidence had uncovered that I was involved in any wrongdoing. I asked Mr. Klien why he was so insistent that I admit to violations of the law in order to settle the investigation when no evidence or facts discovered in the investigation had yet implicated me. Mr. Klein’s response was telling-
audio icon[Sound Clip #2a]
“We’re in an unusual situation here where we’re trying to find a solution before we get resolved all the factual questions…so we’re all sort of planning without necessarily knowing all the facts, so the next stage is to get the facts and then see whether or not the facts conform to the plan.”
Item #3 - Selected transcripts and audio recording of Utah Securities Division Enforcement Director Michael Hines.
While much controversy seems to exist now given the recent federal indictment, there was never a time when the state investigators told me that any evidence had implicated me in wrongdoing. The opposite was true. For the entire course of the state’s investigation (2004-2007), after learning detail after detail related to my businesses, the lead investigator Michael Hines regularly cleared me of any illegal behavior. The statement below is part of the introductory statement he made the first time we met in February of 2006.
“The Department has been investigating you and your companies over the last two years and as of this time has no evidence to suggest and I personally do not believe that you have been involved in wrong doing.”
Even when troubling evidence started to surface about the business practices of some of Founders Capital’s creditors started to service, Mr. Hines clearly drew the distinction between their activity and mine.
audio icon[Sound clip #3a]
“Rick, you recognize that what I call the bottom feeder LLCs here are going down to visit people to borrow money on their homes, cash out their entire retirements, to put money in that LLC to lend it up line to an LLC that goes up line to an LLC and you’re right, it doesn’t have any association with you.”
Mr. Hines not only regularly told me of his findings, but he would openly tell some inquiring third parties the same thing. Towards the end of 2007, when asked by Jacob Dayton about the rumor that my business was a Ponzi-scheme, or a pyramid/multi-level scheme, Mr. Hines clearly explained that the investigation had not uncovered the facts to substantiate this claim.
audio icon[Sound clip #3b]
DAYTON: So, I’ve also heard that Founders and Franklin are operating an illegal pyramid scheme, something along those lines. Is that true?
HINES: I’ve not heard the word illegal pyramid scheme used.
DAYTON: Well, some people call it ponzi-scheme, is that the same thing?
HINES: Well, there is a difference in a ponzi-scheme and pyramid scheme. A pyramid scheme is nothing more than multi-level marketing where you build downlines. A ponzi-scheme merely means that you are paying old investors promised returns from new investors money. But certainly no one associated with the Division has used either of those terms in reference to this investigation basically because we don’t have the facts to reach any of those conclusions.”
Between 2006 and 2007 I relied heavily on the advice and communication given to me by the Department of Commerce. They had reviewed my business operations thoroughly and regularly discussed with me their opinion and advised me and my attorneys on what they considered acceptable businesses. In October of 2007 I talked to Mr. Hines when he unequivocally told me-
audio icon[Sound clip #3c]
“There is no conduct that has been isolated, to my satisfaction that you violated any laws or rules. There is none. You are not going to be put in jail, there is no warrant and I would tell you if there was. I’d say it. But, Rick there is not…No, you’re not going to be put in jail, I would talk to your attorneys, you and I and your attorneys would have lengthy discussions before charges were ever filed.”
In the same call Mr. Hines suggested we meet and have a cup of tea together and discuss philosophy. His statements related to his opinion of my rumored involvement in ‘wrongdoing’ were regularly repeated to unrelated third parties. In the clip below, Mr. Hines-in talking with Jacob Dayton about my case-once again confirms this same opinion. Note: Mr. Dayton made this recording and provided me a copy.
audio icon[Sound clip #3d]
Dayton: “You know Rick Koerber right?”
Hines: “Sure, yeah, he and I have met several times.”
Dayton: “I’ve heard he’s going to be charged with felony fraud or something, that’s what I’ve heard. Do you know what that’s all about?”
Hines: “Hmmm. No idea. There is an ongoing investigation relative to the collection of money by a lot of LLCs and uh, there have been decisions made on some individuals that it appears will be charged with criminal conduct, but right now Rick Koerber is not one of those. So, I don’t know what that is. There is a tremendous amount of misinformation in the market.”
What we would learn during the course of the investigation is that the most serious “misinformation in the market” the Mr. Hines referenced, often came from the Department of Commerce.
When, the story broke yesterday, that Mr. Shurtleff had declined to bring charges against me at the conclusion of the Department’s investigation, his decision was consistent with most of Mr. Hines statements throughout the investigation.
Some might suggest that Mr. Hines was not being genuine, that perhaps he was attempting to mislead me as part of his investigation. Evidently this is sometimes permissible by police offers or other law enforcement agents. Unfortunately for Mr. Hines and others in the Division of Securities, the Utah legislature explicitly has prohibited any person from using deception in conjunction with enforcing the securities laws, no matter the role they play. The law describes any false statements made in this context as felony violation of the law.
61-1-16 - False statements unlawful
It is unlawful for any person to make or cause to be made, in any document filed with the division or in any proceeding under this chapter, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.
If both Mr. Hines and Mr. Shurtleff concluded that there was no evidence that justified brining any charges why was Ms. Giani (who is not a lawyer and not family with the law) so persistent? Well, only she knows the full answer, but the following information might help, at least in part, to clarify the rest of the story.
Item #4 - Selected audio recording from Wayne Klein, former Director of the Division of Securities.
The statement below was made by Mr. Klein following my August 31, 2007 radio broadcast where I openly criticized him and his division, calling him a ‘commissar’ (though not by name) and had suggested that the state legislature should reduce the size of government and add some check or balance against the unlimited powers of the Division of Securities.
audio icon[Sound Clip #4a]
“Part of the problem is that I’ve been painted in a corner because you’re client has gone on the radio and publicly accused us of stuff. He’s got legislators out there trying to cut our powers because what we’re doing as if he’s entirely right in what he’s doing and government is unfairly coming after him. So ordinarily we have more flexibility but where I’ve got public attacks coming in saying we’re being accused of being unfair…[interrupted].”
It’s important to note that this is the same conversation where Klein admits he does not have the facts (see Sound Clip #2a) and the same conversation where Hines admits the problems being uncovered don’t “have anything to do with” me.
Mr. Klein was so “peaked” that even after he had been provided with a copy of the Founders Capital Balance Sheet showing that the company had approximately sixty million dollars more in assets than it did in liabilities and after his staff had spent the time necessary to investigate the supporting records-including real estate agreements securing the majority of the balance sheet equity-which review included looking at purchase contracts, appraisals, loan documents, property reports, lease agreements, etc.,-nevertheless, Mr. Klein continued in that same meeting to make even more startling demands.
In this meeting and subsequent related meetings Klein explained that he had reviewed the matter with his superior (Francine Giani) and that in order for me to avoid being charged with criminal violations of the law (though, again, in the same meeting he admitted there was no evidence to warrant it) Mr. Klein demanded that I remove my billboards, that I and my partners sell our “expensive cars” and as part of his written counter proposal (on official Department letterhead) demanded that I agree to a 3rd party administrator of my company who would liquidate the companies assets.
Perhaps most alarmingly, his written offer included that demand that I sign a written affidavit promising not to criticize (in public or in any future court) “any action” the Department took against investors in my business.
“Mr. Koerber will provide an affidavit to the Division affirming…[that he] will not claim publicly or in court that any action the Division takes against investors in Founders…is impeding the companies efforts…”
As Mr. Klein continued to insist on his demands, in meeting after meeting he grew more insistent. In other communications he suggested that if I resisted his demands, he and his department would start communicating that my business was a multi-level ponzi-scheme.
When asked why he would communicate such a claim given that he and his staff had investigated financial statements and related documenting, making such a claim absurd, he informed candidly responded that despite the financials, if he and his Department made the allegation of a ponzi-scheme, it would “stick to me like glue” and that he had contacts in the media who would tell the story. The first media source to publicly allege that my business was a ponzi-scheme was City Weekly reporter Eric Peterson. Evidently, City Weekly was publishing its information with Klein as a source, because an insider later forwarded me a copy of an email sent from Klein to City Weekly (who had since been forced to resign from office) congratulating Eric on the story and asking if, now that the story had been published if “it was acceptable” for him to by Mr. Peterson lunch.
Item #5 - Audio recording of Mr. Hines changing his story and telling third parties that my business was a multi-level scheme.
While Mr. Hines sometimes insisted that “no one in the Division of Securities” would use the terms “ponzi-scheme” or “multi-level scheme” because the evidence did not warrant it, consistent with Mr. Klein’s agenda Hines himself spread this gossip to Jonathan Bond in a telephone conversation.
audio icon[Sound Clip #5a]
“I know what happened in this case, clearly, everybody got carried away with this idiotic multilevel marketing of promissory notes is what occurred…they did violate state and federal law…as long as the money was coming this was a wonderful multi-level marketing program and then the money dried up.”
Item #6 - Audio recording of Corporate Finance employee Gary Bowen carrying out the policy of Klein in a conversation with an unrelated third party.
Hines was not the only one who later engaged in spreading gossip about me and my company after I refused to give in to the terms outlined by Mr. Klein. In November of 2007, Mr. Gary Bowen then in the Corporate Finance section of the Securities Division offered the following to Devon Anderson who had called about an unrelated matter. In an effort to “get the word out” made several startling, false, and criminal accusations.
audio icon[Sound clip #6a]
“If [your friends have] invested in FranklinSquires they’re going to lose their money. FranklinSquires is putting the buzz out that the division is going to lock them up, that’s not so. We’ve seen their balance sheets and they’ve got a shortfall of about $60 million dollars so it’s just a matter of time before that collapses. So if you know anyone that’s invested, bye-bye they’ve lost their money…under securities regulations and rules, this secrecy concept, and that’s part of the FranklinSquires model, is fraud. Its just, it is.”
Of course there is not, and never has been, any secrecy concept related to FranklinSquires. At the time of this statement the financials in possession of the Division showed approximately sixty million in assets that exceeded liabilities. I was so startled by this behavior by a government employee (whose statements directly impacted our ability to do business successfully) that I promptly called Mr. Bowen to challenge him on his statement. The following transcribed selection is from Mr. Bowen’s portion of our telephone conversation.
audio icon[Sound clip #7a]
“Rick, I have not seen your financials. I don’t know that you’re going bankrupt. I don’t know where these people are getting that information… They’re not getting it from me… I’m not in the loop on investigations and so forth…I understand that you are in the process of dealing with either Mike or Wayne but I haven’t seen it…”
CONCLUSION
When the Attorney General’s office declined to bring charges against me in 2007, after the government had thoroughly investigated my business and on multiple occasions advised that there was “nothing illegal” about our business and that I “had not broken any rule or law” despite the gossip and rumors otherwise, I was relieved and thankful that in Utah we have an Attorney General who was more interested in the law than in retaliating against me for my political opinions, my criticisms, or my refusal to agree to a corrupt regulators unjust demands.
I cannot imagine how anyone would suggest that Mr. Wimmer, in joining with other elected representatives, in calling for an audit of the Division of Securities, after learning of the kind of behavior, was doing me a favor. He was doing all Utahns a favor. Mr. Wimmer and his associates were clearly vindicated when the independent audit - which declined to include my case in its review since it was then an ongoing investigation - documented abusive prosecutorial and enforcement tactics by the division, a lack of leadership and policy guidelines for how and when to bring changes, lying and deception in settlement offers with innocent citizens, and several other very serious problems.
I did not invent the results of the audit. I did not influence the results of the audit. I am only astonished that after Wayne Klein resigned (one month after the approval of the audit) the rest of the leadership of the Department (Ms. Giani) and the head of Securities Enforcement (Mr. Hines) where most of the audit’s documented abuses took place)-are both still employed by the State. The results of that audit have to be the most under reported political and public policy event of the last year and a half.
I want to thank not only Mr. Wimmer and Mr. Shurtleff, but the other government officials and representatives who listened to my evidence. Speaker Curtis, Rep. Dougal, Senator Stephens, and several others who all voiced agreement with me that Ms. Giani was known to be unable to effectively manage her department. In our breakfast meeting Mr. Shurtleff told me that given what he had learned about Mr. Klien when he had worked for the AGs office, he was certain that Ms. Giani did not have the qualifications to reign in someone like Mr. Klien who was known even in his past employment as chasing down personal vendettas rather than focusing on the law.
I cannot believe that after Ms. Giani supported these activities, after Klein was forced to resign, after she unequivocally stood by him and publicly predicted that he and his department would be vindicated by the audit (which he most clearly was not) and after she herself was directly implicated in the audit results, and now after she has admitted that she (not being an attorney, nor authorized by the law to do so) went against the advice of the Attorney General, went against the facts uncovered in her case - and after all that she still has her job. Tuesday, was Ms. Giani’s ‘victory day’ as it was called, as she participated in the orchestration of that premature celebration (Tuesday’s press conference). But, because of what happened leading up to it, the indictment announced Tuesday is not just troubling news for me, it represents an ominous precedent for all Utah business owners.
My statements today have not been to offer up any defense on my case whatsoever - I am satisfied to do that in court. I am willing to be accountable for all of my actions. I can only hope that with the release of this information, the governing authorities might take the necessary steps to ensure that Ms. Giani and her colleagues finally have to do the same.
–END
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