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Principles, Principals and the Paper TrailFor 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.
