A combative witness insisted repeatedly Friday that a fund into which he poured his and his family’s monies was nothing more than a funnel into Rick Koerber’s alleged Ponzi scheme.
But Jeffrey Goodsell of Springville admitted in a federal court trial that, because his investment did not go directly into Koerber’s companies, the former Utah County real estate guru doesn’t owe him money.
Koerber is facing 18 charges related to the operation of his real estate investment companies, which took in about $100 million and allegedly paid more than half of that back to investors to make it appear the operations were profitable. Investors were owed about $47 million when the scheme stopped making interest payments in 2007, a January indictment says.
The back and forth with attorneys over who took in Goodsell’s $200,000 was important because Koerber asserts that he had no legal obligation to those who put their money into third party funds that made loans to his companies.
Goodsell said he met Koerber when both went to the same LDS Church ward and that he was impressed that Koerber went from being poor to having a lot of money.
Goodsell attended numerous classes and seminars put on by Koerber to teach others his “Equity Milling” strategy, and he eventually asked Koerber if he could invest. Koerber directed him to another fund run by Jason Vaughn, an employee of a Koerber company.
“I asked Rick first if I could invest and he said yes, talk to Jason Vaughn,” Goodsell testified.
During cross examination, Koerber defense attorney Marcus Mumford asked whether Goodsell’s promissory note from Vaughn obligated Koerber to repay him.
While legally the note didn’t obligate Koerber, Goodsell said as he and Mumford went back and forth over that point, “that’s not what happened. Rick had access to that money and he used it.”
Mumford also jumped on Goodsell about his repeated use of the phrase “pass through” when describing his money going from Vaughn to Koerber.
Mumford suggested that prosecutors had planted that phrase with Goodsell.
After the jury had taken a lunch break, that line of questioning brought a rebuke from U.S. District Judge Robert Shelby, who asked what “good faith” basis Mumford had for questions about whether prosecutors had suggested the phrase to Goodsell.
His voice rising, Mumford said he did have such a basis and suggested Shelby was treating prosecuting attorneys differently than him.
“I’m going to hold you to the standard I hold every attorney to in a trial,” Shelby said.
Another witness, Clavell Anderson, the former manager of one of Koerber’s companies, wandered back and forth in his testimony depending on whether he was being questioned by prosecutors or Mumford.
On Thursday, Anderson said the company he managed, New Castle Holdings, which leased homes with an option to buy, had not made profits and depended on monthly funds from other Koerber companies to pay expenses.
Anderson also admitted under questioning from Assistant U.S. Attorney Stewart Walz that he had questioned Koerber about the use of monies loaned by investors to make interest payments.
But when answering Mumford’s questions, Anderson said such a practice “is something that’s done in business all the time. It’s not a Ponzi scheme.”