Teach Me to Trade Indicted - Victims come forward to KSL, By Robert Paisola

Infomercial stars charged in stock trading seminar scheme- Teach Me To Trade, A division of The Whitney Information Network-

Watch the live video on NBC

Two people from Utah are being indicted selling an illegal get-rich-quick stock trading system that made them millions of dollars. This is the latest in a series of high profile white collar crimes connected to Utah.

Experts say, over the years Utah has established a reputation, and it appears the schemes continue to evolve. One thing that hasn't changed is criminals are still able to find plenty of victims.



The offer sounds almost too good to ignore. "Would you like to be your own boss and have the freedom to travel, to set your own schedule?" It's that message the Securities and Exchange Commission says made Utah natives Linda Woolf and David Gengler millions of dollars.

Woolf, 48, of Sandy, Utah, and Gengler, 34, of Draper, Utah, passed themselves off as successful investors and persuaded consumers to pay anywhere from $3,000 to $40,000 to learn the "Teach Me to Trade" stock picking system, according to an indictment in U.S. District Court in Alexandria.

Ken Israel, Regional Director of the Securities & Exchange Commission says, "These people are just very good salesmen."

Prosecutors say Woolf and Gengler lied or omitted pertinent information about their profits in the stock market and their annual gains and losses during presentations given at hotel seminars across the country. One of Teach Me to Trade's supposed stock trading experts was actually recruited by Woolf from a nail salon, according to the indictment.

In one infomercial, Gengler says, "I got involved at a young age, and I knew right away that these guys had the answer for me."

Gengler and Woolf are now being indicted on several fraud charges, and despite their claims, like, "and in less than nine weeks, I replaced my entire income," the commission says the pair lied about the success of the system.

According to the Securities and Exchange Commission, Woolf and Gengler are unsuccessful traders -- Woolf never declared a trading profit on her federal tax returns, and Gengler typically declared losses or no profits. But Woolf pulled in $4 million in commissions for selling Teach Me to Trade products, while Gengler made about $2.25 million, according to the SEC, which filed separate civil fraud charges against the two.

Woolf's civil attorney, Mark Pugsley, said Woolf never recommended specific stocks to students at her seminars, and that the information she provided is unrelated to individual investment choices and therefore not a crime under federal securities laws. "The SEC's complaint contains a novel theory of securities fraud, and we look forward to challenging it in the courts," Pugsley said. "Linda Woolf is an educator; she does not sell securities."

Gengler's attorney did not return a call seeking comment.

Woolf and Gengler worked as independent contractors, according to the indictment, and received sales commissions of 10 percent to 15 percent from Teach Me to Trade, which is a part of the Whitney Information Network, a publicly traded company based in Cape Coral, Fla.

Whitney itself is not charged, though the indictment says Woolf and Gengler relied on the company's "fraudulent marketing efforts" to entice the public to their seminars.

The charges against Woolf and Gengler, which include wire fraud and conspiracy to commit mail and wire fraud, carry maximum penalties of 30 years in prison.

A spokeswoman for Whitney declined comment. In its 2007 annual report, Whitney said it was notified in late 2006 of investigations by the SEC and federal prosecutors.

At the seminars, Woolf and Gengler allegedly helped consumers talk their credit card companies into increasing their spending limits so they could purchase expensive Teach Me to Trade training materials.

The seminars also employed "success coaches" who would review an individual's financial portfolio to target wealthier individuals for more expensive sales, according to the indictment. Whitney estimates about 28 percent of the people who attend its various free introductory workshops -- which also include topics on real estate investing and managing cash flow -- end up purchasing some type of training course.

At a Teach Me to Trade seminar Tuesday at a Hilton hotel in Alexandria, about two dozen people of all ages listened to a presentation urging them to spend $200 to attend a more intensive, three-day session. A welcome screen warned that "testimonial results are not typical. Each student's success depends upon the unique skills, time commitment and individual effort of each student."

Several people stayed for the presentation even after overhearing discussions about the indictment. A few walked out in the middle of the presentation. One man who declined to give his name said he saw an infomercial about the seminar a few days ago but was disappointed that the session focused more on selling classes and software than providing investment strategies. "I thought they would talk about stocks, but they didn't," he said.

In 2006, the company had earnings of $1.8 million on revenue of $225 million. Whitney stock, which trades over the counter, rose 24 cents, or 14 percent, to $2 per share in afternoon trading Tuesday.

Israel said, "I think most promoters are perfectly willing to prey upon anyone anywhere." And, according to him, that anywhere is here.

Since the 80's, Utah has been known for fraudulent activity. Recently Eyewitness News investigations have exposed the public to the devastating effects of "Ponzi Schemes."

Investor Jerry Gomez told us, "I wanted to fall down. It's like, ‘Oh no, it's gone, it's lost. What am I going to do now?'"

The pitch is low risk, high returns. In the VesCorp case, owner Val Southwick is accused of using this method to solicit investors, including numerous members of the LDS church.

Israel said, "We see this in other places too. Here it's LDS, other places it's Evangelicals."

In light of these fraud schemes, the First Presidency of the LDS Church recently passed along a message, which in part reads, "We are concerned that some Church members ignore the oft-repeated direction to prepare and live within a budget, avoid consumer debt, and to save against a time of need." It goes on to recommend members invest with responsible and established financial institutions.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

Another Federal Indictment for Mortgage Fraud Live from KCRA, Robert Paisola Reports

Illegal mortgage scheme affected valuations of 460 homes in Riverbottoms area, Posted by Robert Paisola

Six Utahns indicted for mortgage fraud
Grace Leong - DAILY HERALD


The forfeiture of millions of dollars in criminal assets and lengthy prison terms are among penalties sought by the U.S. Attorney's Office against six Utahns accused of running an illegal mortgage scheme to inflate the value of several high-end homes in the affluent Riverbottoms neighborhood in Provo, according to a federal court document unsealed Tuesday.

In what's been called the first federal indictment filed as part of the newly-formed Utah Mortgage Fraud Task Force, registered sex offender Bradley Kitchen of Provo, David Bolick of Sandy, Steve Wells Cloward of Orem, Ron Clarke of Provo, Jeffery David Garrett of Provo and Rebecca Ann Hadlock of Saratoga Springs were indicted on four counts of mail fraud, nine counts of wire fraud, one count of conspiracy to commit mail fraud.

The indictment, which was filed last Wednesday and sealed in U.S. District Court in Salt Lake City, was unsealed Tuesday.

Each count could carry a maximum sentence of up to 20 years in prison and $250,000 in fines on conviction. The U.S. Attorney's Office also seeks to forfeit $7.5 million from Kitchen, Bolick, Cloward and Clark; $6 million from Garrett and $4.5 million from Hadlock.

The defendants have received a summons to appear in federal court for an arraignment in January.

The indictment alleged the defendants, functioning in various roles as mortgage brokers, investors, real estate agents, appraisers, straw buyers and escrow agents, formed a network to fraudulently obtain loans secured by real estate worth less than the loans themselves. The false statements were included in loan applications and loan packages to divisions of Countrywide Home Mortgage and American Broker's Conduit in California and New York respectively.

The indictment charges that Kitchen reached an agreement with Bolick to conduct property purchases through Bolick's company, Home Owners Group. These purchases were backed up by another Bolick-owned company Paragon Investment Group. Kitchen and others then bought residential properties, and through false statements on loan applications and false appraisals, falsely inflated the properties' values to induce lenders to grant loans for amounts in excess of their fair market value, the indictment said.

Utah County Assessor Kris Poulson said property valuation changes were made and approved by the Utah County Commissioners last month to 460 of 550 homes affected by the illegal mortgage scheme, which drove up house prices in the Riverbottoms area.

"Seven affected homes were reduced by as much as $1 million in property valuations from around $3.5 million," he said.
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dailyherald Dec 11 2007 16:55:06
Illegal mortgage scheme affected valuations of 460 homes in Riverbottoms area
Millions of dollars in criminal assets and lengthy prison terms are among penalties sought by the U.S. Attorney's Office against six Utahns accused of running an illegal mortgage scheme to inflate the value of several high-end homes in the affluent Riverbottoms neighborhood in Provo, according to a federal court document unsealed Tuesday.



In what's been called the first federal indictment filed as part of the newly-formed Utah Mortgage Fraud
Read more...
#340474

Angel Dec 12 2007 03:09:12
Makes you wonder if these six stooges have stopped and thought back to when they came to that fork in the road where they had two choices to make--earn money honestly, or rip people off? That one moment is at this point, very significant considering the potential prison time involved. Probably will be the moment they most regret, perhaps second only to getting caught.
#340559
Leslie40725 Dec 12 2007 06:39:43
The damage done by these alleged fraudsters goes wide and deep. Property owners and speculative developers in the most desirable communities have made millions in capital gains, but the poor souls who bought during the buying frenzy have lost (or will lose) millions in value because property values were artificially inflated. For countless others, home ownership has been put completely out of reach.

Speculative booms leave a wake of destruction in their path even without the fraud. Unfortunately, we have yet to experience the mess these folks have created. Add to the mix the sub-prime financing of homes that were already over-priced and the real estate market can quickly become really fragile.

I would like to see more analysis and investigative reporting done on the direct and indirect impact of this scheme. Almost certainly these activities changed purchasing decisions and impacted other surrounding real estate. It will be impossible to know for sure the tremendous cost this fraud has imposed on the community.

In addition to real estate taxes, buyer and seller commissions, insurance premiums, and lenders were all hit by this in a big way-- most with more dollars in their pocket. The problem is that the unwitting buyers of inflated properties are the ones that pay the price.

BTW, whatever happened to Dave Fox and other participants that called themselves "victims" in the scheme?
#340589
Dogbert Dec 12 2007 14:15:34
Anyone who knows Mr Kitchen...and I do personally....knows he's about the most shifty, dishonest, person you'll ever meet. None of this comes as a suprise to me. He's gotten caught up in these kinds of things before and just been lucky enough to not go to jail so far. I'm good friends with one of his brothers and he used to be business partners with him and he told me a while back that he was distancing himself as far from brad as he could because of his dirty business practices. I have a feeling he'll be going away for a while this time!!!!
#340681
Icowcasse Dec 12 2007 17:14:56
:o This was the nearly exact same CON pulled when the Flippin Clintons were Flippin in Flippin (Arkansas) In the Flippin Clinton CON they used one of the MANY THOUSANDS of DIRT ROAD or Seasonal, Summer, Recreational Subdivisions like you see all over the West AND UTAH. The DAISY chain of STRAW BORROWERS and the Cooked Appraisals and Title Work is something I cut my teeth on around Houston and Conroe Texas back in the very EARLY 1980s. You can google the name Don Bolles, he was an IRE Investigative Reporter back in the 1970s down in ARIZONA. The way these thing work is FRAUDULENT INFLATION of tracts of CHEAP LAND into DIRT ROAD SUBDIVISION LOTS or in the case in Provo, ARTIFICIALLY INFLATING higher end homes.

If you have any questions Google DIRT ROAD LAND CONS, Search the terms COLONIAS and investigate the DIRT ROAD "RED FLAG SUBDIVISION CONS" so famous out of TEXAS. I wonder IF the US Postal Inspectors took the lead on this one. I KNOW the Dallas Texas Postal Boys N Girls did a pretty good job in Texas back in the 1980s.

I would be asking the QUEEN of FLIPPIN, Ms. Hillary though a little more about those DIRT ROAD CONS there in FLIPPIN LAND ARKANSAS. :

SEE THE HOUSTON CHRONICLE ARCHIVES 1985 - 1989 Search Red Flag, Unrecorded Subdivisions

Bradford Norcross



YOUR COMMENTS ON THE MORTGAGE FRAUD CHRONICLES

EAH!!! Finally...... All of us realtors with brains have been watching and waiting for the dishonest to be caught. It wasn't hard to figure out what they were doing. Can't wait till they get the rest of the guys that have been doing this all over. I have names in mind can't wait to see if I'm right!

12/11/2007 11:10 PM by Another Realtor

Brad is a personal friend of mine. There is much more to this story than is being led on. Don't believe the news so much. Special interests are at hand. Brad might be involved with some shady business, but he's not the evil man everyone is making him out to be.

12/11/2007 11:15 PM by dont worry about it

This is fantastic news. I've been watching this situation with interest for some time and was surprised it took so long for the government to do something about it all. The prices of homes in the Riverbottoms and some neighborhoods in Lehi, Eagle Mountain and Saratoga Springs were just plain out of control and showed little or no logic. I mean seriously, when you have homes in upscale gated communities like Pepperwood in Sandy with twice the square footeage selling for less than some of the homes in Provo that were not nearly as nice just because of some illegal flipping how did these folks not think someone would eventually catch on.

12/11/2007 11:40 PM by Jimmy

I used to work with Ron Clark 11 years ago at ReMax here in Orem. He has always been such a nice and caring man. He would give the shirt off his back to anyone! I just cannot see that he would do something like this. It's a terrible tragidy for his family. His wife is such a sweetheart. I hope if this is true that he starts too see what he has done and start making ammends with it. I will always remember Ron Clark as a true professional and a compasionate old friend.

12/12/2007 12:03 AM by Wendy Olsen

Wendy... I am sure he is a great individual, but greed can be and is a power vice. I have seen the deception, and unfortunately for Ron's friends and family, and unfortunately, I believe it is true.

Dont worry... When you are indicted by the Feds, they have dotted all the "i's" and crossed all the "t's." A person has less than a 5% chance of "getting off." So things do not look good for any of these people, Brad included.

12/12/2007 12:30 AM by David Doerr

This is a huge problem and has been for many years. I worked with the State on similar deals 9 years ago. Not much happened so I left the profession. It is good to see these things surfacing and finally being taken care of. There are alot of innocent people getting hurt by this. The reality of it is - it hurts all of us. I have known some of these people for years and they are nice guys, but nice can't hide the wrong being done. The reality is the things that are being done in these mortgage fraud deals are wrong and justice will be served. These guys are just the tip of the ice berge. Don't be suprised how deep this problem really runs.

12/12/2007 01:26 AM by used to be an appraiser

When are they going to get Wade Sleater & Kyle Nelson from Atlas Capital of Provo, Utah. They are bigger crooks than the guys above.

12/12/2007 09:46 PM by Broke & Took

Hey Doerr,



Glad that we have you to judge for everyone here. Who needs the legal system now. You are such a fucking idiot. Who are you to say that anyone of these people are guilty? And why single Clarke out? Isn't Bradley the ringleader here?



You have less than 5% chance of growing a brain and loosing some weight. As I (taking after you) have just judged by reading your comments and seeing you picture.

12/12/2007 09:47 PM by

Wade Sleater and Kyle Nelson ran a mortgage fraud buisness disguised as an investment fund. Mostly Kyle Nelson did the promoting of the investment and the selling of the securities. Wade Sleater used the money to fund his other companies that were failing while pretending to pay 3% interest payments. They are under investigation for fraud and SEC charges. Mortgage Fraud is what KSL's website says. I know the state is still looking for more victims.

12/12/2007 10:30 PM by Jason

To Anonymous:



You are right I am certainly brainless and yes a bit on the hefty side. However, in lieu of posting something anonymously, I have chosen to basically repost what was reported on no less than 3 separate news agency websites, I am standing behind what I said with all my contact info in place. If you have a problem with what I have said, please feel free to e-mail or call me. It really takes someone that is gutless to anonymously call names, and throw around insults.



Greed is a very powerful tool that makes good people blind to what they really want to accomplish in life. It is easy to get sucked in, and I believe we have seen a lot of it in the past few months in Utah County.


I am not trying to convict anyone, just stating what I have seen, and if that is something that people cannot handle than so be it.

12/12/2007 11:00 PM by David Doerr

All I am saying is.... it sounds like Bradley is more to blame than the others. He is the mastermind behind all this. Why are you saying that Clark is the guilty one here?

12/12/2007 11:59 PM by

The indictment points out some serious issues that were not even mentioned in the papers. It will be interesting which defendants try to plea bargain because the allegations are big time. I don't think any of these guys want to go to jail. The finger pointing has just begun but its pretty apparent they were all involved to some degree.



c

12/13/2007 12:08 AM by c$

I am not going to go into detail on what I have seen, it is not my place to put things out into the open, that is for the investigators.

As I stated above, it does not look good for ANY of the individuals listed in the indictments.

"Dont worry... When you are indicted by the Feds, they have dotted all the "i's" and crossed all the "t's." A person has less than a 5% chance of "getting off." So things do not look good for any of these people, Brad included."

12/13/2007 12:09 AM by David Doerr

I have known Ron Clarke personally, as well as professionally. He is one of the most selfless men I have ever met or done business with. He is the most cautious realtor I've worked with and would never do anything that would damage his credibility, reputation, and his business that he has worked hard to create. I personally believe that we are not the ones to be judging him or accusing him of any wrong doing at this time. Just because he has been indicted, that does not mean he is guilty, even if it's on a federal level. We do not know the facts, and it is up to the judicial system to figure it all out. Until then, I stand by him with full support.

12/13/2007 12:17 AM by Sandra

A subjective opinion of any of the individuals in the indictment based on media outlets is quite a ridiculous assumption. So Doerr, I think you should be cautious of what you say. Sounds to me that you are more or less a competitor to Clarke and relish in the recent events.



Didn't you say something about greed? interesting. Who were you talking about? You or those indicted?



Think about it

12/13/2007 12:53 AM by Roger Smith

Sandra,

I pray you are right, however I fear you are not.

Roger,

I don't have to think about anything, I said I have personal knowledge of matters that I will not discuss in this forum, it is not my place.

I am no competitor of Mr. Clarke, and I admired him greatly until I saw what I saw.

I have been posting things on my blog for some time now about mortgage fraud, because I can's stand it. That is all that this or any of my post about fraud have been about.

I am not some rich mortgage broker, just a loan officer trying to make a life for my small family.

I admire your loyalty, I would probabally be in your same position if I did not know what I have seen.

12/13/2007 01:09 AM by David Doerr

This all runs so deep and has for years. I think there will be many people suprised by all those named in this by the time it is all said and done. I wonder when we will start to see the names of the Franklin Squire people in the news. It is very hard to believe when some of these people say they didn't know it was wrong. When I was in the real estate profession, people justified so much, but they knew it was wrong. I hate to see anyones life ruined, but these scams have hurt so many innocent people for so long, it is about time justice is served.

12/13/2007 01:28 PM by

It's funny to see one of Wade's former employees continually come on here and make crazy accusations. We all know who you are already. Get over it.

12/14/2007 11:48 AM by It's funny . . .

everybody knows who you are Mr. National Treasure

12/14/2007 11:50 AM by It's funny . . .

Who would know more about fraud and corruption then a former employee?





12/14/2007 04:39 PM by c

I am an owner of a local mortgage company. Brad Kitchen contacted our company to do financing for one of his so called purchases. My partner went over to his office and was taken into his "Donald Trump styled board room", where he barked orders at his blinded followers. My partner listned and realized right away that this guy was going down the wrong road. He did take a copy of the loan file that he wanted us to look at back to our office. We all had a good laugh, the file was FULL of fraud:

1. Fraudulent bank funds

2. Fraudulent income

3. VERY fraudulent appraisal - The appraiser used three comparable properties that were all sold by the same agent, all of these sales were contracts of sale. All sales were atleast 1 million more than the property sold for in the last year. This is how they jack up the values to create a new FAKE value and keep the ball rolling! Some poor sap underwriter eventually got a hold of this file and I guess the appraiser tweeked it enough and they didn't notice all of the fraud in the appraisal. I have been in the business 22 years and of course one look and it jumped out at me. I can't see how it wasn't seen but it sailed on and closed a few months later. I know that he organized his realtor, appraiser, basically team of individuals to create this scam. So wake up long time friend, forget about the nice boat rides on the lake and all the talk about the money etc. FRAUD FRAUD FRAUD

12/15/2007 12:29 AM by For the Brad kitchen lover

Jason

You mentioned "They are under investigation for fraud and SEC charges..." regarding Wade Sleater and Kyle Nelson. Where can i read about this on KSL? I would like to learn more.





12/16/2007 09:14 PM by concerned

HOA's and even surrounding neighbors are talking about filing a class action lawsuit against Atlas Capital, Wade Sleater, and Kyle Nelson for inflating prices of homes and driving property taxes artificially high.

The FBI states the following and actually allows, neighbors, HOA's, and even entire neighborhoods to be classified as victims and thus press charges and file civil suites:

"Victims of mortgage fraud may include borrowers, mortgage industry entities, and those living in the neighborhoods affected by mortgage fraud. Such victims are plagued with high foreclosure costs, broker commissions, reappraisals, attorney fees, rehabilitation costs, and other related expenses when a mortgage fraud is committed3. As properties affected by mortgage fraud are sold at artificially inflated prices, properties in surrounding neighborhoods also become artificially inflated. When property values increase, property taxes increase as well. Legitimate homeowners soon find it difficult to sell their homes as surrounding properties affected by fraud deteriorates."

Real Estate fraud crimes committed in the State of Utah fall under the RICO Statute. Which pulls all the players at Atlas under one working team and apllies the law equally to all of them.

12/17/2007 01:11 AM by ISOM KNOWS

Does anyone know what relation SLEATER, RYAN C & TIFFANY T are to Wade and Atlas?

The State of Utah and the Utah Mortgage Fraud Task Force are searching for victims of Atlas Capital and Wade Sleater. If you know someone who is a victim, or if you have information that is connected to this investigation then contact:

Phone: (801) 530-6747

email: realestate@utah.gov

Heber M. Wells Building
2nd Floor
160 East 300 South
Salt Lake City 84114-6711

Send in any information that you may have or encourage those you know who might be affected to do the same.

12/17/2007 01:21 AM by Shanda Dawn - What's that flower you have on

Wade is a good man! Someday you'll all be wishing you were Wade. My husband and I lost some money with Wade. My husband has not been happy about it and wants me to put more pressure on Wade, but he is my brother and I just know that someday this is all going to work out. Our family, including Sonny, wouldn't trade this whole mess for anything. We're learning who our friends are and who we can trust. Wade is smart, he's funny, and he makes me laugh...anybody that can do that has got to be smart because I don't laugh very often. He's the best brother I could ever have...even better than my other borther Josh...who lost some money too. Oh Yeah, Sonny is our dad and he lost money too but Wade has been selling stuff on the side to make sure that our dad gets paid back...that's what I call real love. In fact Sonny's life-friend paid for Wade's mission and Wade took $300k of his money too...but even then our dad Sonny got paid back first. So those of you who feel screwed by Wade just ask my dad how loyal Wade is and you'll see a father so proud of his son his wallet could burst. My husband knows that he should be more patient with Wade, I have told him many times that family comes first. Not just because of this money thing but even when we have family pictures and my parents make all the spouses step out while they get a picture with just us kids and our born children. So my husband has known for a long time that family comes first. My husband was saving up for a beak-ectomy for my nose and wanted to speed up the opperation date so he put his money in Wade's fund so it would grow faster (not my nose, the money). The doctor says that it is typically called a Rhino-plasty but in my case I look more like a bird so its called beak-ectomy - anyway Wade is going to pay everybody back the $15million that he owes even if it takes 15 million years. Trust me! And those of you who know me know I wouldn't be blinded by the fact that Wade is my brother. I mean, worng is wrong and I don't need my husband to tell me that much.

12/17/2007 01:48 AM by Jordan Sleater-Shields

Hi Jordan,

You sound like you love Wade very much. But you must give your husband the bennefit of grieving the loss of his money. I mean things could be worse, you could actually end up living in Wade's basement and then you would be just as mad as your husband. So don't forget that!! I see a real courage in your words and a defiance that comes from a strong family. You seem like you and Wade have been raised in a family with principles: Like don't lie, don't cheat, don't steal. Helping your father by paying him back first is a real example to all the other investors of the 3rd commandment - honor thy mother and thy father. They need to belive that they will get paid back and then just be patient. As far as your nose is concerned, have you considered Gelcistic Pins. These are little tube like inserts that can save you a lot of pain. The only side effect is that they make your eyes droopy so if you have a beak-like nose you don't want to add droopy eyes or you'll really look strange. I have a profile online if you guys want to see it it's at: http://corrections.utah.gov/asp-bin/sexoffender.asp?offender=154309&addrid=759997&jurs_flg=U&name_id=459717

12/17/2007 02:24 AM by Brad Kitchen

If you are trying to get money back from Wade Sleater then you may want to file your complaint with the state as soon as you can because you're already falling behind others: LIKE THE IRS

Entry #:116465-2007 Recorded: 8/10/2007 11:13:56 AM
Consideration:$104,039.78 IRS TAX LIEN
Abbv Legal Desc: - SERIAL #381670507
REAL PROPERTY: LT 3 MT AIREY AT RED HAWK RANCH R1-N26,2

SLEATER, SHANDA
SHANDA DAWN SLEATER TRUST SEPT 10 2004
SLEATER, WESTON W (Wade goes by his middle name on some deals and uses his first name "Weston" on others. Also he has some property in his wife's name:
SLEATER, SHANDA

12/17/2007 02:34 AM by TAX LIEN - I.R.S.

Dennis Webb is Wade's mentor and former mission president. He's the owner of opperation kids Toll-Free: 888.257.KIDS I don't know what if any his role is at atlas

· info@operationkids.com

12/17/2007 03:04 AM by Tiffany Sleater

WHO TO CONTACT:

Here are the email addresses of the dudes at the State Division of Securities (part of the State of Utah Department of Commerce) who appear to be investigating SIMILAR transactions and entities. That is not to say that they are currently looking at anybody listed here -- I have no idea. If you want to file a complaint or just contribute info that you are aware of with the Division of Securities they are eager to hear from you. They want to clean things up but require information that they seem unable to get unless it comes from live people.

Mike Hinses: m.hinses@utah.gov
Wayne Klein: w.klein@utah.gov

You can also get additional info about the Division at: http://www.securities.utah.gov/

Or you can call them at: 801-530-6600

Criminal Charges were filed agains one Paul Bouchard and Hunters Capital on or around December 4th for his involvement in a "real estate scheme" which is reminiscent of some folks expereinces as outlined on this board. Here are the actual charges from the Division of Securities web site:

http://www.securities.utah.gov/press/bouchard.pdf

This link was posted previously on this board but I think that in light of all the speculation that has taken place since it was posted we would do well to re-establish that there are actual facts coming out and they are being pursued only because intersted citizens are pushing them through the system and providing the truth to the investigators. Without that participation this would fade away. This thing goes a lot deeper than the one guy charged so far, we all know that, I encourage everybody with a story to tell, whether it's your own or your friends' or your family's, please contact the Division of Securities, give them your story, answer their questions and let's hope that they can sort it all out! Let us know what you find out and we'll help get to the bottom of this.

12/17/2007 03:08 AM by Rick K. F.S.

ATLAS CAPITAL & WADE SLEATER SOUND A LOT LIKE HUNTERS CAPITAL:

According to charging documents, Bouchard and his company, Hunters Capital, commited the following crimes:

Approached investors with the following offers:

* Investor's money would be used for hard money loans to buy real estate in exchange for promissory notes.
* Investors could get their deposit back with a 30-day written notice.
* Investors would receive a 3-4% return per month on their investment with Hunters Capital.

HELLO ATLAS & WADE YOU'RE DOING THE SAME THING AREN'T YOU???

12/17/2007 03:18 AM by Dr. Dre

Those of you who are pretending to be someone from the Sleater family should be very careful about what you are doing. (Note I'm not from the Sleater family), but legally, it isn't wise.

12/17/2007 10:02 AM by Be careful

Man what is going on down there in Provo? This is better then days of our lives.

12/17/2007 10:53 AM by SLC

Anonymous-if you are going to throw around accusations like sixth grader, maybe you should sign your name so it means a little more to all of us.

Joseph Crespillo

12/17/2007 12:32 PM by Joseph Crespillo

Are you kidding me? I've seen maybe 1 percent of the people on here are using their real names and being complete assholes in the process by the way they are talking about people.

12/17/2007 09:59 PM by Eveyone on here is anonymous

Dennis Webb was Wade's mission president. He did not teach Wade any business practices, never partnered on anything related to Wade's business ventures, nor did he ever do any real estate or investing deals with Wade. He was just his mission president and Wade respected him.

12/17/2007 10:09 PM by facts

Jordan Sleater-Shields,

First of all I am pretty sure Wade won't have to worry about having any friends or acquaintances invest with him again. After all if family comes first and he is willing to rip off his own family where do friends or casual acquaintances fit into that picture? Wade has broken the bonds of trust and friendship with several people and though it might be hard for you to hear he is not the best guy in the world. He could have been much more forthcoming with information as his business empire was falling around him. Tell me Jordan why should anyone outside of your family ever trust Wade again (including your husband since it is apparent from your comment about family photos that your parents don't count spouses as family).

Jon has every right to ask you to put more pressure on Wade. Wade owes a lot of money to a lot of people and those fortunate enough to get anything back before 15 million years should thank their lucky stars.

Merry Christmas.

12/18/2007 03:12 PM by Mike

If you knew wade and his family the way you purport to you would know that the entry above was NOT by Jordan. Everyone needs to quit acting like they are on the "inside" and has these grandeous suggestions. If you dont know what your talking about then dont talk. No, Im not Wade or one of his family members! I have lost more than many through this whole thing but Im sick and tired of people coming on here bitching and moaning just because they can. I support David for doing this, and feel it is very healthy but only if the contributions to the conversation are based on facts and actual events and not pent up emotion. There are many people hurting through this including Wade and his family. How about everyone takes a break from feeding your anger by seeking blood and go enjoy time with your families during the holidays instead of reading this blog. Come back in January with a resolution to seek truth, justice and understanding. Sure, there will be much to pay for all of the decisions Wade made most likely one of those being a lot of jail time for him but quit feeding your "I told you so" self righteous attitudes. This email is not directly to Mike but all those above who seem to find satisfaction in letting everyone know that "I know better, why dont you others, now Im the saint who is gonna hunt him down and show everyone they should listen to me next time" attitude. Go do something productive. Call the division of securities, talk to the FBI, go get an attorney do something other than rant and rave to try and sound like you know what your talking about. What a joke! Probably 50% of whats on this blog is discolored and untrue. Im out till January and hopefully everyone will have had some time to breathe and gain some sanity to do this the right way, with the right facts and constructively.

Merry Christmas!

12/18/2007 03:51 PM by If you dont know what your talking about dont talk!

Yeah Mike! You need to know that Jon is only my husband and not actually a Sleater. There's a big difference!! Jon has had trouble accepting this at times, but my dad, Sonny, has had several talks with him about this and he now understands. Trust me, Jon is no Sleater!!!

Jordan

12/18/2007 05:17 PM by Jordan Sleater-Shields

to the jackass who keeps posting as Jordan... you are gutless. (I'm not a sleater. I don't know them that well, but I know this is NOT jordan).

12/18/2007 08:45 PM by Not Jordan

I think you're pretty funny. I have seen your brother Wade in action. I saw daddy Sleater come into town for 3 weeks wondering where the money went that was suppose to be paid monthly to the family friend up in the Northwest that was trying to run the dentist office. Where could the 350K have gone, where is the 3% per month? Daddy Sleater just didn't understand how the kid that had 4 paper routes when he was a little boy could have messed up. How he could have promised the people down in Cedar City that he would pay them the money they owed them only to lose the life savings of many! So to the poor Sleater lover above, let the people on here gripe, cry, complain, moan, make fun, who cares...... Sleater and company deserve all they get.

12/18/2007 10:25 PM by To Jordan

thanks for narrowing it down for us all.... now we all know who you are. Not a sleater lover. Not a sleater. Just think you people suck for pulling wade's family into this and basically saying horrible things about them. Very cool of you.

12/19/2007 12:59 AM by cedar

I am just curious if someone can help me understand. I have heard from both sides of the fence that Wade is hosed and that Wade did nothing illegal (just stupid). Can anyone tell me exactly what was done by Wade that was illegal?

12/19/2007 04:30 PM by Anonymous

There's going to be two parts to the story. First off, there are SEC violations. Wade and his group were soliciting investments without being licensed to do so. Definitely a no-no. Second, the Utah Division of Real Estate is allowed to prosecute unlicensed individuals who commit real estate fraud. Inflating values on homes, not disclosing certain things on a real estate application (like how many homes you actually own). i Don't hold Wade accountable for all these things. There were PLENTY of other people involved; appraisers, loan officers (to an extent).

You see things like mail fraud and wire fraud with the Ron Clarke case. It's going to be the same things for the Atlas Group.

12/19/2007 04:38 PM by Bill

The Utah Division of Securities has an open investigation into Atlas Capital. Anyone with information or a complaint can contact the lead investigator, Dianna Parrish, at 801-530-6600 or email her at dparrish@utah.gov

You may also submit a formal complaint with the following form...
http://www.securities.utah.gov/complaint_general.html



12/18/2007 by concerned family member

12/19/2007 06:46 PM by

bogus you're a concerned family member. We all know who you are.

12/19/2007 10:51 PM by "concerned family member" is mr treasure or the SEC

If loan applications were filled out fraudulently then the Feds will want to prosecute also.

12/19/2007 11:45 PM by Joseph Crespillo

So are the Kitchens really living in a motel right now?



12/20/2007 01:19 PM by bubble butt

Did you shut this thing down or something or has the fury just died down?

12/26/2007 09:52 PM by To David Doerr

Just a calm in the storm

12/26/2007 09:58 PM by David Doerr

Thats what happens isnt it? People vent, cool down and it all goes silent. Next, they'll get a slap on the wrist and move on to the next deal. Thats too bad.

12/26/2007 11:24 PM by to David

It's been way too long since somebody posted here... since I've moved out of state, I only get my info from places like this. I had money invested with Wade Sleater... and was approached multiple times about deals with a company called Source Twelve Real Estate....does that ring a bell to anyone? I would like to know if that is where some of my money went. I have not been able to get a hold of anyone at Mr. Sleater's company for a long time. The last I was able to get was a young lady who worked with him, who said that he would be contacting me soon. I still haven't heard from him. I am afraid that he is trying to get away with my money. Does anyone still have contact with Mr. Sleater? I have heard about some lawsuits, but don't know how to get involved. I have also heard that he may be going to prison? What would happen to my investment then?

If anyone has anything more to say about this, please keep posting...so that people like me can stay involved and up to date. Where is Mr. Sleater now? What does he do to make money now? He must be working....

01/31/2008 01:27 AM by silence is condolence

Sorry dude, I hate to tell you this, but...... YOU'RE NOT GOING TO GET YOUR MONEY!! What did you really expect?? Pyramids always leave you poor suckers holding the bag. There is no money and everyone has their hand out. I was a casual observer of Wade. I must admit, he actually held it together longer than I expected. Do people really think money can grow from a vacuum? We've all made bad deals. The only collecting that happens is hoping the knowledge of what to do in the future is gained.

02/07/2008 02:09 AM by anom

thank you, Mr. Ben Treasure

02/07/2008 03:27 PM by more like casual wanna-be

I must appreciate your work. It is really too good to read. from last couple of days i was searching for something interesting and this post is really nice.

Thanks for this nice post.

Handy Saputra

Home loan, Mortgage Articles, Resources and Information

02/17/2008 12:49 PM by Handy Saputra

Watch out for Wade Sleater and his associate Mark Craner_ FRAUD ALERT!!!!

03/01/2008 03:43 AM by MARK CRANER- FRAUD ALERT!!!

Thanks for posting this link.

03/03/2008 02:34 AM by Find a Notary Public | needAnotary

This is an intersting read... thanks for posting.

03/03/2008 05:44 PM by Kevin Hancock

Brad Kitchen is an EVIL EVIL EVIL person!, ANYONE who would believe a word coming out of his mouth needs their head examined. DON"T BELIEVE HIM BECAUSE HIS IS LYING TO YOU! Plain and simple. Not only is he the ringleader of this Real Estate scam, he is a convicted pedophile, and has also been arrested for domestic violence, among other things. He is a master manipulator and liar, He makes up any story you want to hear. And his wife, ANNE KITCHEN, is just as bad, or maybe worse, because she is his co-conspirator in EVERYTHING (EVEN THE CHILD SEXUAL ABUSE) and then plays the innocent victim, all "woe is me and my poor kids" but yet she has stayed with him all this time, despite them being so "poor" that they have to "live in a motel"...yeah right. Why would she stay with him? Because Brad has PLENTY of money stashed away and that is all she cares about..they just play the woe is me card to try to regain sympathy. And yes, they use their psycho, messed up kids in the scheme, too. Brad and Anne Kitchen are toally EVIL, and I hate to say this, but if he doesn't get convicted of this and do some serious time in jail, he will just cook up another scheme to scam you out of money. This isn't his first scam, and it won't be his last, unless somebody puts a stop to him. He doesn't know how NOT to steal, lie, cheat, or threaten with his big, nasty fatness.

EGENUITY TOOK ME, Robert Paisola Reports

MR ROBERT PAISOLA

WHERE TO BEGIN......I AM SO GLAD I STUMBLED ACROSS THIS SITE. I AM NOT AN INVESTOR OF ANY OF THE COMPANIES MENTIONED HERE (THANK GOODNESS) BUT, I HAVE SEVERAL FRIENDS WHO ARE. OF EVERYTHING I'VE READ, THERE IS SELDOM ANYTHING WRITTEN ABOUT ENGENUITY, VALUE CAPITAL, RAYHAR, AND MIWI. AS I UNDERSTAND IT, ST. GEORGE ENGENUITY IS SET UP LIKE THIS.....VALUE CAPITAL (KURT VANDERSLICE, MARTY WILKINSON) AND RAYHAR (MIKE ISOM) RAISED MILLIONS OF DOLLARS FROM ACCREDITED AND NON ACCREDITED INVESTORS. AN INTERESTING FACT IS THAT ALL THREE OF MY FRIENDS WERE SIGNED UP AS ACCREDITED INVESTORS. AN ACCREDITED INVESTOR HAS A NET WORTH OF $1,000,000 OR A PERSON WITH AN ANNUAL INCOME FOR THE TWO MOST RECENT YEARS OF $200,000. WELL, NONE OF THEM MEET THAT CRITERIA. IN FACT, IF THEY PUT ALL THEIR RESOURCES TOGETHER THEY STILL WOULD NOT MEET THE CRITERIA. SO VALUE CAPITAL AND RAYHAR GIVE THEIR MONEY TO MIWI (MIKE ISOM....AGAIN). MIWI THEN LOANED THE MONEY TO GUESS WHO........? FOUNDERS CAPITAL (C. RICK KOERBER ). THIS DOESN'T LOOK LIKE A PYRAMID SCHEME WHEN DRAWN OUT ON A PAPER DOES IT? FROM REPORTS, FOUNDERS CAPITAL STOPPED PAYING MIWI SOMETIME IN JULY OF 2007. THIS IS WHAT'S INTERESTING. FOUNDERS CAPITAL APPARENTLY OFFERED TO PAY MIWI BACK ITS INVESTMENT SOMETIME IN 2007 OR CONVERT ITS INVESTMENT INTO EQUITY IN FOUNDERS CAPITAL. GUESS WHAT...THEY CONVERTED IT TO EQUITY. SO LETS POINT OUT SOME THINGS HERE. ENGENUITY, WHICH IS (VALUE CAPITAL, RAYHAR, MIWI) IS A FINANCIAL ADVISOR. OK, WHAT FINANCIAL ADVISOR IN THEIR RIGHT MIND WOULD BUY INTO A COMPANY (FOUNDERS CAPITAL) THAT COULDN'T PAY INTEREST PAYMENTS ANYMORE. ESPECIALLY WHEN THEY WERE OFFERED TO BE PAID BACK THE FULL INVESTMENT? THAT'S ONE OF THE HUNDREDS OF QUESTIONS INVESTORS WOULD LIKE TO KNOW BUT, THERE IS NO COMMUNICATION FROM ENGENUITY TO THEIR INVESTORS ON TOUCHY SUBJECTS LIKE THIS. THE COMMUNICATION LETTERS THAT I HAVE READ BASICALLY SAY, WE CANT PAY AT THIS TIME, SORRY. WHY IS ENGENUITY SO QUIET WHEN ASKED WHEN FOUNDERS CAPITAL IS GOING TO PAY THEM BACK? PROBABLY BECAUSE THEY DON'T WANT YOU TO KNOW THAT THEY USED YOUR INVESTMENT DOLLARS TO BUY A BIG CHUNK OF FOUNDERS CAPITAL. THE THREE FRIENDS OF MINE WERE TOLD THEY WERE INVESTING IN HOMES, NOT BUYING FOUNDERS CAPITAL. THEY WERE TOLD THAT SOMEWHERE OUT THERE, THERE WAS A HOME BACKING UP THE INVESTMENT THEY MADE WITH AT LEAST 20% EQUITY IN IT. THE OWNERS OF THESE COMPANIES STILL HAVE THE FANCY CARS, TOYS, AND THEIR HOMES WHILE THE INVESTORS LOSE EVERYTHING. I WILL SAY IT LIKE I SAID TO MY THREE BUDDIES. IF YOU INVESTED WITH THESE COMPANIES YOUR MONEY IS GONE. YOU MAY SEE TOKEN PAYMENTS FROM ENGENUITY TRYING TO MAKE GOOD EITHER ON THEIR OWN OR FORCED BY THE LAW BUT, IT IS HIGHLY UNLIKELY YOU WILL SEE THE TOTALITY OF YOUR INVESTMENT AGAIN FROM THIS HOUSE OF CARDS.

W.T. CRAIG
ST GEORGE UTAH

Federal Authorities Investigating Countrywide, Posted by Robert Paisola

The federal authorities have opened a criminal inquiry into Countrywide Financial for suspected securities fraud as part of the continuing fallout over the mortgage crisis, government officials with knowledge of the case said on Saturday.

The Justice Department and the Federal Bureau of Investigation are looking at whether officials at Countrywide Countrywide Financial , the nation’s largest mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said.

The investigation — first reported on Saturday in The Wall Street Journal — is at an early stage, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss ongoing criminal matters. It is unclear whether anyone will ultimately be charged with a crime.

Richard Kolko, a spokesman for the F.B.I., declined on Saturday to confirm whether the agency had started an investigation of Countrywide related to its securities filings.

A Countrywide spokeswoman, Susan Martin, said, “We are not aware of any such investigation.”

The inquiry comes as the F.B.I. investigates 14 companies as part of a wide-ranging review of business practices in the troubled mortgage industry.

In that broader investigation, the F.B.I. is looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit.

The inquiry into the companies began last spring. It involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities. It is unclear when charges, if any, might be filed.

As part of that investigation, the F.B.I. is cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged and how securities backed by those loans were valued.

Several state prosecutors are also investigating mortgage industry practices.

For years, the F.B.I. has been warning that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 reports of suspected mortgage fraud, up from 22,000 the year before and 7,000 in 2003.

For the most part, the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.

State officials have been active in bringing mortgage cases. The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Connecticut, Illinois, Massachusetts and Ohio have also been looking into the industry.

Countrywide, beleaguered by bad home loans, is in the process of selling itself to Bank of America for about $4 billion. It reported a loss of $422 million for the fourth quarter of 2007.

The company was forced in August to draw down its entire $11.5 billion credit line from a consortium of banks because it could no longer sell or borrow against home loans it had made. It has laid off about 11,000 employees since last summer.

Feature | House of Cards? Anxious investors fear “Free Capitalist” Rick Koerber’s real estate investment empire is folding, Posted by Robert Paisola

Feature | House of Cards? Anxious investors fear “Free Capitalist” Rick Koerber’s real estate investment empire is folding

By Eric S. Peterson
Posted 03/06/2008


An episode of the Free Capitalist radio show returned from commercial break last August with music dramatic enough to bolster an epic battle scene from Braveheart. “Wow, that’s some great welcome-back music,” said show host Rick Koerber.
“I know; I feel like Luke Skywalker in Star Wars,” said co-host David Kirby, as Koerber slipped into an impression of dueling light sabers. The two men rolled along, Kirby laughing at Koerber’s antics. Then suddenly, like a switch had been flipped, Koerber soberly interjected: “Yes [but for us], this isn’t the music of victory. This is to announce the battle has begun.”

The Free Capitalist show broadcasts from a Provo studio and has been carried on KTKK (K-Talk) 630 AM radio for four years. During the duration of that run, Koerber has all but trademarked his own brand of capitalism as a cure-all for our politically troubled times. On the show, Koerber also has pitched his numerous other business interests, including his American Founders University. Koerber has taught thousands of students a process he calls “equity milling”—a real-estate investment strategy that, as some have practiced, has led to multistate securities-fraud charges against and investigations of more than a dozen Free Capitalist followers.

The fast-talking host’s radio rants bounce from pure dollars-and-cents business gab to apocalyptic diatribes about a socialist world takeover. In the course of a two-hour show, Koerber is as likely to reference Ronald Reagan and Ayn Rand as he is The Book of Mormon and the film The Matrix.

“Living in financial fear is like living in the matrix,” Koerber says. “I don’t live in the matrix, but I do visit there often to try and save people who were once like me.”

Last Aug. 31, Koerber, 35, brazenly challenged on the air the “commie-czars” of the Utah Securities Division. “They told me I couldn’t pay my investors!” Koerber shouted of his alleged encounter with securities investigators. Former Utah Securities Division director Wayne Klein would neither confirm nor deny for City Weekly that Koerber was or is under investigation.

“I’ll tell you why there’s more fraud in Utah than any other state in the union,” Koerber said on the show. “It’s because [investigators] go after people like Rick Koerber without facts!”

Koerber hasn’t been charged with any securities violations himself. But, if he is merely a real estate guru whose “13 Principles of Prosperity” have been lost on some wayward students now charged with securities fraud, it begs the question: What has this champion of capitalism done to keep followers from perverting his business philosophy? And, if business associates like recently charged Paul Bouchard—who is alleged to have bilked investors of $11 million meant to be paid from Koerber’s company—what has Koerber done to help make those investors whole again?

Helping prevent fraud and repair its consequences from within the industry is difficult, especially when you’re busy waging war on state regulators.

“I think you’re the wrongdoer,” Koerber continued on the radio show, invoking a rhetorical state regulator. “I think when you look in the mirror, you’re the evil you despise, because nobody in my circle is complaining.”

Even still, dozens of investors from connected companies have pleaded with Koerber for relief. And troubled investors have filed lawsuits in Utah and Colorado against Koerber and his companies.

Principle 5: People Are Assets

“Rick Koerber doesn’t care about anyone but Rick Koerber,” says Steve Skuba. Those are strong words for a man who never directly invested in Koerber’s Founders Capital LLC.

After 16 years as a beat cop in San Diego, Skuba moved to St. George in 2005 and started in real estate. Business acquaintances told him about a firm called SGS Capital. “I was very naïve about it,” Skuba says. “It was the first time I ever invested anything with anyone.”

Ultimately, Skuba pulled $200,000 equity from his home and invested it with SGS. Skuba says SGS representatives told him they would invest the money directly into Koerber’s Founders Capital. According to a Utah Securities Division order to show cause from October 2007, SGS allegedly gave the money to Hunters Capital, which then moved it to Founders.

At 3 percent monthly interest, Skuba was, for a time, earning $6,000 a month in interest payments. Koerber says he’s never taught people to use money from their own homes for investment. But, at the time, the risky move paid off for Skuba.

“It helped a lot to pay the mortgage, it really helped with my daughter,” Skuba says. His 19 year-old daughter was diagnosed at 18 months of age with a brain tumor on her left frontal lobe and has been gripped daily with violent seizures ever since. She requires constant care, Skuba says, and lives in a costly California school.

Skuba felt he had finally caught a lucky break—until Dec. 4, 2007. On that day, Paul Bouchard of Hunters Capital pleaded no contest to two second-degree felony charges filed by the Utah Attorney General’s Office, which charged him with taking $11 million from 140 investors.

According to a Utah Securities Division document on the case, SGS couldn’t pay back Skuba’s $200,000 investment because his money went from SGS to Hunters Capital. Hunters alleges the money had been invested with Koerber’s Founder’s Capital, though Koerber says he was unaware of how Hunters had raised its investments.

Koerber said that such indirect investments did not obligate him to compensate Skuba. Frustrated, Skuba says he never realized the money passed hands with Hunters Capital. He pleaded with Koerber to help him out.

“I didn’t want my credit to be ruined,” Skuba says, adding that he begged Koerber to buy his home so he could avoid foreclosure.

Koerber reluctantly agreed and last October began negotiating terms to purchase Skuba’s home. But Skuba says Koerber avoided finalizing the deal for several months. Finally, Koerber made Skuba an ultimatum: He would buy the house if Skuba signed a “hold harmless” agreement, waiving his rights to pursue legal action against Koerber.

Skuba signed—a costly mistake, he now says, as Koerber reneged on his promise to buy the home. Koerber disputes that; he told City Weekly the deal was only “recently finalized,” and that he would indeed buy the home. “We’ve got an excellent track record on the homes we buy,” Koerber says.

Ten minutes after City Weekly spoke with Koerber on Feb. 22, Skuba called the paper to say that, after spending months of trying to reach Koerber to complete the deal, Koerber had just phoned him to discuss the house purchase. Koerber also told Skuba he would investigate a legal option to buy the promissory note for the money SGS Capital owed Skuba.

Koerber then phoned City Weekly back to report that, after checking, he had discovered Skuba didn’t want to sell the house. Koerber said he had recorded the phone conversation as proof.

Skuba, dumbfounded that Koerber would record their conversation, alleges he didn’t want to sell the house under one option discussed, which would have kept him from recouping his remaining equity. Skuba worried he would still be vulnerable to foreclosure.

“[Skuba] gets pretty emotional,” Koerber responds. “I think that gets in the way of his judgment. But you know I’m just trying to help the guy out.”

Koerber’s Castle

The FranklinSquires building in Provo seems almost an abandoned castle. The once teeming 50,000-square-foot office now holds but a small skeleton crew filling one area.

Inside a room that resembles the Oval Office, Koerber sits behind an oversize mahogany desk. An oil painting of signers of the Declaration of Independence hangs over a gas fireplace. Behind Koerber’s desk, the custom flag of his Free Capitalist Project stands ceremoniously next to the U.S. flag.

“I’m no Ponzi scheme,” Koerber says. “If I was, why haven’t I skipped town for Cabo? I’m still here, coming every day and kicking butt.”

Koerber turns to a wall of his office dominated by six large flat-screen computer monitors, then pulls up a taped phone conversation between a caller and a Utah securities regulator. Besides recording his discussions with investors like Steve Skuba, Koerber says he has spent the past two years documenting his encounters with securities regulators with recordings of private meetings and phone calls. He plays a static-ridden audio file on which a caller learns from an alleged securities regulator that Koerber’s investment model “is based on fraud; the whole model is based on fraud.”

Koerber says his “equity milling” has only drawn suspicion from regulators because others have commandeered his concept and turned it fraudulent. “Unfortunately, what most people understand as equity milling is somebody’s ripped-off version of my model,” he says.

“I got started in the real estate business with no money or credit, so my whole model is based on how you make money in real estate without money or credit.”

Banking on Broke

Koerber, who today banks on his “principles of prosperity,” once declared bankruptcy with debts of nearly $1 million. For Koerber, that’s a selling point.

Koerber alleges to have ridden the dot-com bubble in the mid-’90s with his Wyoming-based Internet company GlobalCentral.com. When the bubble burst, so did his business and, with wife Michelle, Koerber filed for Chapter 7 bankruptcy in 2001.

That bankruptcy is an integral part of his success story, the punch line of his motivational speech to budding investors. In his recently published Free Capitalist Project Primer, Koerber describes the chronology that led him from bankruptcy, bitter disenchantment with moneymaking, to re-emerging from financial ruin as a born-again capitalist:

“Four years ago, I was working as a telemarketer and giving plasma twice a week (along with my wife) just to have enough money to pay the bills. Three years ago, I surprisingly discovered a path to earn sufficient income, to ensure that I would almost certainly never need another paycheck again. Two years ago, I successfully generated over $1 million in revenue—enough to pay back all those debts I had previously been legally discharged from paying (plus an additional 6 percent for good measure). One year ago, I just completed my best business year ever with over $110 million in revenue!”

Koerber champions the surprise path that led him from economic ashes to grand wealth as open to anyone willing to “turn their brain on.” There’s a price: A yearlong real-estate investment course costs about $7,500.

On his Website RickKoerber.com, he testifies of his rollicking success in Wyoming as one unforged in “principles.” Subsequently, he collapsed under the stress of the bursting dot-com bubble, which led to his bankruptcy. Crushed by debt and shame, Koerber gave up the entrepreneur’s life and started selling office copiers.

In the darkness of his plasma-donating, office-supply-hawking doldrums, Koerber engrossed himself in the ancient classics and books about the founding fathers. The old Rick Koerber, living in the matrix of scarcity, soon converted into the Free Capitalist. He followed in the footsteps of revolutionary heroes like George Washington and John Adams.

By investing in real estate.

A Sure Bet

Koerber’s “equity mill,” as he describes it, involves two of his real-estate holding companies, Hill Erickson and New Castle Holdings. These companies work together under the watch of Koerber’s parent company, FranklinSquires Investments. Koerber’s school, American Founders University, also plays a role. Certain graduates of the school help Hill Erickson find “distressed properties”—homes that have been priced below market value—to invite a quick sale. Students who find these properties get nominal finders' fees from Hill Erickson. They get a title, too: “Real estate acquisition specialists.”

Hill Erickson then uses its capital to buy the property. Meanwhile, other Koerber graduates are ready to purchase the property back from Hill Erickson at ideal market value. These students are part of a “preferred buyers” program, Koerber says.

For example, Hill Erickson buys a distressed property listed at $500,000. Under better market conditions, it might go for $600,000. Then, a “preferred” buyer steps in and buys the property back from Hill Erickson, for the increased value.

This may seem like a raw deal for the preferred buyer. But that is when Koerber’s other company—New Castle Holdings—buys a lease option from the preferred buyer and seeks renters for the property.

“It doesn’t remove the [preferred buyer] from liability, but there is a cash flow of a couple hundred bucks a month,” Koerber says. That’s on top of the cash from the lease option of “good and valuable consideration”—a sort of down payment on the lease, which could be tens of thousands of dollars or more, depending on the sale.

“If New Castle defaults, worst case scenario is you got a house that you can still sell,” Koerber says, adding that buyers “prefer” this arrangement. “Our preferred buyers are usually high-end professionals: doctors, lawyers with good credit.”

Usually, but not always. In 2004, when real estate agent George Bible came across a “preferred buyer” from Koerber’s school, he soon realized he wasn’t so lucky.

In less than a month and a half during the fall of 2004, Bible stood to earn more money in commissions than most real-estate agents would clear in a year—more than $130,000 from seven properties. He says now a thought lingered in the back of his mind—if something is too good to be true, it probably is.

In Bible’s Orem realty office, he has kept a file for four years labeled “FranklinSquires.” He considers it insurance against the day he might be called to account for the period between late September and November 2004, when Koerber’s real-estate investment company, FranklinSquires, enlisted him to find and close on residential homes.

“I have no quarrels with anyone making money. I love making money,” says Bible, sitting back in his chair, smoothing out his cash-patterned tie. “But, at the same time, I have no interest in being involved in something that’s going to harm people in the long term.”

In the summer of 2004, Bible helped find a home for Gabriel Joseph, former vice president of FranklinSquires Investments. Bible impressed Joseph with his efficiency, and Joseph hired him to find investment properties.

The money Bible stood to acquire off fast turnarounds on the seven properties gnawed at him. He began more closely investigating the transactions. One of the homes— a ’70s vintage in Alpine—listed for $730,000. Bible says Joseph had arranged for a simultaneous close, which involves the property being simultaneously sold again to another buyer. (Such closings have since been outlawed in Utah without full disclosure to all parties involved.)

The second buyer was a secretary from Springville. She had been recruited into the “preferred buyers” program and had used her credit score in securing the loan to purchase the property. The home Joseph was going to buy for $730,000 would be sold immediately to the secretary—who earned a little over $38,000 annually—for $1.2 million.

Bible found out that the secretary regularly earned $3,200 per month—roughly the same amount she would be spending on house payments for a home she was not even living in.

Although Joseph and Koerber assured him the transaction was legal, Bible decided to walk away from it and the $130,000-plus in commissions.

If New Castle Holdings kept up with payments, Bible estimated the secretary might have banked an additional $3,000 to $4,000 annually—but if, for some reason, FranklinSquires couldn’t make payments, she would be left holding the bag. “She would likely go bankrupt or foreclosed on, or both.”

If the home wasn’t appraised at fair market value, if the value was inflated, the house wouldn’t sell on the open market. “If it’s artificially inflated by asking for 14 different appraisals and you go with the one that’s more than double what the others said, then you’ve got a problem,” Bible says.

Under good market conditions, it’s possible to cycle through appraisals until the buyer finds one offering a bloated value—equity pay dirt. But, if foreclosure occurs, the preferred buyer’s credit gets ruined. And the home gets dumped back on the market—pulling down property values in the surrounding area.

Such “straw buyer” deals can throw off the housing market and force banks to tighten loan requirements. That leaves some lower-income buyers no choice but to seek predatory subprime lenders.

“If it looks too good to be true, it probably is,” Bible says. “And, if anyone ever tells you that you can make a profit using your credit score, you should ask why aren’t they using their credit score then? The answer is because they’re skimming [the equity], and you’re going to pay the bill.”

Principles, Principals and the Paper Trail
For Koerber, buying properties with his company Hill Erickson was problematic. “It was a big cash drain, but it made big cash,” Koerber says. He decided to loan money to Hill Erickson from his parent company FranklinSquires, and pay himself and his fellow Squires principals 5 percent monthly interest on the money loaned to Hill Erickson.

The cash flow made bank for Koerber and his partners, enough so that a colleague asked to get in on the action. Koerber found the only way to do this was to form another company, Founders Capital.

Founders also started loaning money to Hill Erickson and in turn, people started approaching Founders looking to invest. Koerber says he only allowed a small number of “accredited” investors to invest with Founders. According to Utah securities law, securities sold to accredited investors don’t have to meet the same legal disclosure standards that securities sold to other investors might. Accredited investors get more leeway because they have to be wealthy. An individual accredited investor, for example, must have a yearly income of at least $200,000.


That would be an investor like Paul Bouchard.


While Koerber insists Bouchard was simply an investor in Founders Capital, their business connections were closer than others—just down the hall, in fact. According to a January 2008 Utah Securities Division order to show cause, yet another company—Innovator Mortgage—had been employing Bouchard as a licensed mortgage lender. Innovator shared office space with Koerber’s FranklinSquires.

“We just rented space to them; it’s not like there were kickbacks or any kind of informal relationship like that,” Koerber says. Innovator also advertised on the Free Capitalist radio show. Koerber says unbeknownst to him, one of Koerber’s employees started soliciting for investments in Bouchard’s Hunters Capital.

The Securities Division document identifies former FranklinSquires accountant Rachelle Taylor as a sales representatives for Bouchard’s Hunters Capital. Taylor, with 10 others (including Free Capitalist radio producer Israel Curtis) were allegedly soliciting loans for Hunters Capital.

“It created a huge chain of people borrowing money and saying it was going to Founders and FranklinSquires,” Koerber says. Even though Hunters was accredited, the capital it allegedly raised came from more than 140 unaccredited investors, like those whom Skuba invested with. The money, however, still went to Founder’s Capital.

Koerber says he warned Bouchard he would cut him off from investing with Founders if he misrepresented their association. Despite assurances from Bouchard, the money raising continued, Koerber says.

Connections crept closer to Koerber in recent securities complaints from Idaho, where securities officials have filed civil complaints against companies Home Sweet Financial, LLC, and Streamline Financial, LLC. These companies allegedly issued unregistered securities totaling $3 million. The Idaho Department of Finance and Securities alleges the companies raised illicit funds and passed the money to yet another company—Annuit Coeptis—which, in turn, sent the money to Founders Capital.

Annuit Coeptis would pay Streamline and Home Sweet Financial 3 percent interest each month on the money and would in turn pay investors 1.5 to 2 percent monthly. The founder of Annuit Coeptis is former FranklinSquires Vice President Gabriel Joseph.

Joseph no longer works for FranklinSquires, Koerber says. And while Joseph was his right-hand man and a frequent radio show guest, Koerber denies any involvement with Joseph’s alleged fraud in Idaho. “Annuit Coeptis is a completely separate business from FranklinSquires,” Koerber says.


Not Everyone is Buying It

On Feb. 18, Marietta and Dennis Baca filed suit in Denver against Koerber and Joseph, claiming the men pulled them into a scheme that has taken all their assets—a modest retirement, Social Security and a small pension Marietta earned after working at a Safeway store for 22 years.

Marietta, 63, and Dennis, 62, live in Aurora, a Denver suburb. “They’re a real nice couple,” says Miles Gersh, the Bacas’ Denver attorney. According to the lawsuit, Koerber and Joseph pitched a lavish lifestyle to the Bacas, persuading them to take $170,000 from home equity. Marietta also put her 401(k) earnings and costly credit-card advances into Founders, according to the suit.

“It’s a scheme,” alleges Gersh. “A lot of things represented were false, and many things that were true were omitted.”

As in the Idaho case, Gersh says Annuit Coeptis passed investments from the Bacas to Founders Capital, for fat interest payments. “The defendants were engaged in a wide-ranging Ponzi scheme in which defendants induced students of their real-estate instruction programs to use their home equity to invest in [promissory] “notes,” then used funds provided by investors in the notes to pay the interest or principal of the notes sold to earlier investors,” the lawsuit alleges.

While the suit claims that a member of Annuit Coeptis convinced the Bacas to invest, the suit describes Koerber as a “control” person. “It’s for individuals who are effectively in charge of management positions,” Gersh says. “[Koerber] might not have a formal position in the company that our clients invested with, but we don’t think that’s accidental.”

Now You See Them, Now You Don’t …

As of Feb. 11, Koerber had radically downsized FranklinSquires. Amid controversial transactions and alleged meddling in his affairs by state securities, Koerber writes on the FranklinSquires Website:

“I would rather wind up the affairs of FranklinSquires, New Castle and Hill Erickson, pay all our creditors—and refocus my energy and the energy of those who are interested in working with me on something where we can make a more powerful difference in the world.”

Last November, Koerber says, he circulated a letter offering a unique financial opportunity. After Founders Capital had been delinquent on interest payments, Koerber’s lawyers offered major creditors the opportunity to convert the debt Founders Capital owed them into company equity. “We offered everyone the option to swap for equity or get all of their principal back plus 12 percent interest,” Koerber says. “No one opted to take the principal back.”

But at least one company wanted its money back rather than “equity.” Koerber offered Vonco, a Utah County real-estate investment firm, that invitation. His companies owed Vonco $3 million.

The offer to exchange debt for a stake in a company that couldn’t pay its investors raised a red flag, says Vonco’s attorney Reid Lambert.

On Feb. 8, Vonco filed suit in Utah County 4th District Court against Koerber’s companies, seeking a lien on one of Koerber’s properties as compensation for delinquent interest payments. While they were interested in getting their principal back, the amount owed to them by Koerber's companies was far greater than just the offered principal plus 12 percent interest. Vonco's lawyers tried to contact FranklinSquires but received no response.

The following week, FranklinSquires had stripped down its operations. “There was never any disclosure they planned to shut down the company,” Lambert says.

Anxious investors are asking how Koerber, in the middle of drastic downsizing and legal trouble, will carry on.

While you may not be able to catch Koerber on K-Talk (he’s moved to Provo station KHQN 1480), it’s not too late to turn your brain on, according to the Free Capitalist Website. Koerber recently advertised a “unique” one-day, $1,000 seminar on Feb. 27, offering to teach the “almost ancient product” of creating wealth—through life insurance.

You, too, can discover “how life insurance can be the most powerful tool to generate substantial wealth quickly”—and if you’re not completely satisfied, every penny will be returned to you, guaranteed.

Provo firm, FranklinSquires, ascribes closure to state probe , Posted by Robert Paisola

Provo firm, FranklinSquires, ascribes closure to state probe
Grace Leong - DAILY HERALD
A Provo company that is being investigated by the Utah Division of Securities has blamed the securities watchdog and the ongoing subprime lending crisis for its recent downsizing move.

FranklinSquires, a business and real estate development company, quietly closed its East Bay office and laid off the remaining 44 of its former 80-plus work force on Feb. 11 -- a move company founder Rick Koerber blames on what he claims is a "malicious and politically-motivated" investigation by the securities division. The division is undergoing a state audit, which began in November, for alleged mismanagement and unfair prosecutions.


Koerber said he is among those who asked for an audit of the securities division after one of FranklinSquires's units, Founders Capital, was implicated in a criminal investigation of a Provo lender, Paul Bouchard, who was recently charged with securities fraud in a real estate scam involving hundreds of investors, most of them in Utah County and southern Salt Lake County area.

Bouchard's company, Hunters Capital, gave unregistered promissory notes to investors in exchange for millions of dollars of their investments, and then gave those funds to Founders, according to the Utah Attorney General's office. Bouchard allegedly told the investors their funds were used to buy and flip homes, but instead, some of those funds were used to make interest payments to earlier investors, court documents said.

"The investigation into Founders is a large reason behind the downsizing," Koerber said. "When Hunters engaged in business that was outside the norm, that taints any company they do business with. Hunters claims they raised money legitimately. But they were raising money from investors that weren't accredited, and that's very disturbing to us."

"The investigation is costing us lots of money. We're also spending between $20,000 and $30,000 a month to pay our attorneys to work with state regulators who've asked us for financial disclosures and information in their investigation of Bouchard and Hunters," he said. "So far, we've not been named in any of the securities division's actions."

Koerber said former Utah Securities Division director Wayne Klein -- who resigned earlier this month amid growing criticism of the division -- had threatened in June 2007 to seize the assets of FranklinSquires and its units including Founders because Koerber had "criticized the securities division of wrongdoing, and Klein had to take action."

But Klein disagreed. "We seek to preserve assets for the benefit of investors if we find any violations."

"We categorically deny that we are responsible for any of FranklinSquires's problems," Klein said. "Anybody who takes money from investors in violation of the law is obligated to repay that money. It's not the division's fault if Koerber is unable to repay the money to investors. And the question is what he did with all the money he took."

Koerber said FranklinSquires's problems were compounded as its real estate subsidiaries, New Castle Holdings and Hill Erickson, faced mounting cash flow problems in the wake of the subprime lending crisis, which affected its ability to make about $98 million in mortgage and lease payments, and other property-related expenses to 170 creditors, Koerber said. That, along with growing state scrutiny of its operations in recent months, caused the company to downsize its operations, he said.

"FranklinSquires has had to pump in $250,000 a month into New Castle and Hill Erickson to keep them running since February last year," he said. Both real estate units have total assets estimated at around $129 million, he said.

Meanwhile, Hunters Capital and Bouchard are now seeking to recover about $17.3 million in funds it had loaned to Founders.

Bouchard, who settled on Feb. 15 without pleading guilty to the criminal charges, was ordered to pay restitution to its 140-plus real estate investors. The amount of restitution is still being decided by federal prosecutors and will be part of his sentence.

"If required, Bouchard may have to sue for enforcement of the promissory note or loan contract between Founders and Hunters in order to meet his obligations to pay back the investors," said Justin Elswick, Bouchard's attorney. "If we are compelled to sue, we will also seek to have (Koerber's) numerous companies stripped of their entity 'veils' to see how they are related."

But Koerber disputed Elswick's allegations.

"In November, I offered them full repayment of their entire investment plus 12 percent interest. In addition, they were also given an opportunity to exchange their note for equity in Founders. But they did not accept either offer," Koerber said.

Elswick said Hunters could not accept the exchange option because of the criminal charges against Bouchard.

Founders, a private equity company that made high-interest short term bridge capital loans to real estate investors and longer-term loans to small businesses and startups, had nine accredited lenders as of Dec. 1, 2007, according to Koerber.

The lenders include Hunters, Matson Magleby, FranklinSquires, AKL LLC, HIJ Investments, McGuire Group, Michael Kipp, MIWE Holdings and Strategic Holdings. Except for Hunters and Matson Magleby, all the other lenders converted what they were owed to equity in Founders, Koerber said.

Klein declined to comment on whether FranklinSquires' downsizing will affect the division's ability to collect restitution for the Hunters' investors.

"Some of the money that Hunters collected did go to Founders, which is run by Koerber. I won't answer at this point if the money has gone to FranklinSquires. If we find violations of the law, we're only allowed to speak of them publicly through enforcement actions," Klein said.

Klein said separate criminal charges have been filed against Poulson Investment of Spanish Fork, SGS Capital of St. George and Prosperity Capital of Eagle Mountain -- which are accused of securities fraud. The companies allegedly solicited up to $785,000 from investors, and gave those funds to Founders, he said.

But Koerber disputed those allegations, saying Founders "has never done business with Poulson, while SGS Capital and Prosperity Capital have never loaned money to Founders."

Koerber, who settled charges of selling unregistered securities with the Wyoming Securities Division in 2000, is the subject of a lawsuit filed in Denver, Colo. on Feb. 18, alleging securities fraud violations and racketeering.

The suit accused Koerber's partner, Gabriel Joseph and his company, Annuit Coeptis, of engaging in a "wide-ranging Ponzi scheme in which they induced students of their real estate instruction programs to use their home equity to invest in promissory notes, and then used the investors' funds to pay the interest or principal of notes sold to earlier investors."

The Colorado suit also claims Koerber and Joseph, a partner in FranklinSquires, paid for their lifestyle with funds obtained through the Ponzi scheme.

But Koerber denied involvement in the Colorado case, saying "the dispute is with Gabriel Joseph."

Annuit Coeptis is also implicated in a lawsuit filed by the Idaho Department of Finance in the fourth district court of Idaho in December. The suit accused Streamline Financial, which is managed by Michael Breinholt, of selling more than $3 million in unregistered securities to investors, and sending those funds to Annuit Coeptis, which in turn sent the money to Founders.

But Koerber denied doing business with Streamline Financial. "Annuit Coeptis did loan money to Founders, but we have no idea if that money came from Breinholt," he said.

LYR Enterprises LLC, a Spanish Fork company that had made loans to Founders for real estate investment purposes, is accused of selling unregistered securities in Alabama, according to a cease and desist action filed by the Alabama Securities Division in January. LYR is owned by a Spanish Fork couple, David and Lesa Ridge.

"David Ridge and LYR in the past had loaned money to Founders. But that money was repaid," Koerber said.

Despite its financial problems, FranklinSquires, which is currently managed by eight owners and six contracted workers, has no plans to file for bankruptcy at this time, Koerber said. Its former 15,000-square-foot office at East Bay is now occupied by another FranklinSquires affiliate, Free Capitalist Enterprises. Other affiliates including Founders Capital, VIP Media, East Bay Studios, and American Founders University are still located in the FranklinSquires building in Provo.