While the nation watched in shock in late 2008 as banks went bust left and right and the federal government backed gargantuan bailouts, news pundits and financial analysts were still scrambling to figure out how U.S. markets could get wiped out so fast. Was it greedy Wall Street tycoons who never should have bet on risky subprime mortgage-backed securities? Or was it Joe Blow consumer, who enjoyed the loose slots of a casino economy by taking out half-million-dollar loans based only on a credit score and a friendly handshake (and sometimes not even a credit score)?

With plenty of blame to go around, experts agree a large chunk of the blame for the bursting real-estate bubble should be hurled at speculative investors. From house flippers to equity skimmers, these schemers gambled on a hot real-estate market for as long as they could. They weren’t just high rollers in the casino economy—they broke the bank.

Literally.

And in Utah some say one company in particular, FranklinSquires Companies LLC run by Rick Koerber, took advantage of loose-lending regulations and a reckless business model to inflate the state real-estate bubble. Koerber, known by billboards touting him as “The Free Capitalist,” may have had quite a lucky streak when the housing market was booming, critics say. But now, after helping pop the bubble, Koerber’s empire is crumbling, forcing him to walk away from investors. Some claim they are owed millions by Koerber and his companies—often leveraged out of life savings and equity from the homes in which they live. Some face foreclosure and bankruptcy. They have lost almost all hope they will see their money again. Critics say Koerber has done his share to contribute to the state’s economic meltdown: home prices sinking into a seemingly bottomless pit, a frozen-stiff credit market and growing unemployment.

Barrett Slade, associate professor of finance at Brigham Young University’s Marriott School of Management, has seen how ugly things get when reckless speculative investors burst the real-estate bubble. “It’s a blood bath,” he says. “People are hurt all over.”

With hundreds of upset investors prompting action, the Utah Division of Securities, since 2007, has been investigating Koerber and his companies, most of them based in Utah County.

Koerber’s company didn’t just make a lucrative profit for him and a few of his buddies when the market was hot—his empire, now disintegrating, was once a massive, organized and far-flung effort. Koerber culled investors and investment properties from across 18 states, according to his company documents. Koerber also spawned nearly 40 separate business entities including investment companies, film production, an AM radio talk show, and his American Founders University, headquartered in Provo.

Koerber bet large and banked big. In November 2007, his investment company Founders Capital made offerings to its debtors to exchange debt owed for equity in the company. A financial disclosure statement in the offering document noted that prior to July 2007 (before several large debtors agreed to swap debt for equity), the company showed liabilities of more than $100 million. Liabilities derived from real-estate promissory notes—the key to the business whereby investors “mill” equity out of homes to be re-invested with Founders Capital for fat interest payments.

But when the economy tanked in late 2008, it was craps for the Free Capitalist rollers. Since the UDS began probing Koerber’s business, his billboards, boasting how average folks can build wealth simply by using their credit scores, no longer dot Interstate 15 from Sandy to Spanish Fork. This aspect of the business showed people how to take advantage of loose-lending rules to get sizable home loans.

Randy Chipman, a Utah County man who invested more than $100,000 with a company to which records show Koerber currently owes approximately $12 million, says he has a slogan for a new campaign: “How about a billboard that says, ‘Hey, Free Capitalist, where’s my money?’” The ad, Chipman says, should include this caveat: “Friends don’t let friends invest with the Free Capitalist.”