White Collar Greed | Cover Story | Salt Lake City | Salt Lake City Weekly
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News » Cover Story

White Collar Greed

Some Utah businessmen say the Utah Division of Securities treats them like common thugs. What’s the problem?

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568-2787“I been reading in the news lately there’s some scandalous behavior out there with these major corporations like Enron,” says Dave Chappelle from a 2004 episode of his Comedy Central show. “They rip everybody off and they don’t be getting no time in jail. It’s like there’s two legal systems, damned near.” Chappelle then plays out a Law & Order parody showing what it would be like for a white-collar criminal to switch places with “Tron” the crack dealer.

A SWAT team bursts into the home of the “Fonecom” CEO. The cops shoot his dog and throw the corporate exec into shackles. Tron, by contrast, gets a polite call from a police detective asking what they can do about a pesky drug-trafficking charge. “We don’t want to make a big deal out of this,” the detective assures Tron. “You’re a cocaine dealer, but you’ve done a lot of good for the community.” At sentencing, the CEO gets life in jail while Tron appears before a committee, pleads the “fif” and gets two months at “Club Fed.”

Utah’s own version of Law & Order—from increasingly tough sex-offender laws to sweeping anti-meth initiatives—has always been about the good guys locking up the bad guys. But when it comes to the Utah Division of Securities (UDS)—the watchdog agency over investment programs and fraud that might grow out of them—some legislators allege the equivalent of police brutality. To hear these lawmakers tell it, the division is running roughshod over the rights of decent and trustworthy entrepreneurs—several of them businessmen who happen to be the lawmakers’ friends and close business associates.

Representatives Jim Bird, R-West Jordan, and Carl Wimmer, R-Herriman, called for a legislative audit of the division, the results of which were released in early July. The audit criticized former UDS Director Wayne Klein (left) for being too involved in cases and alleged that investigators “intimidated” suspected offenders, conducted “secret investigations” and emphasized punishment over compliance.

The uproar raised by targeted securities agents months before the audit’s release forced Klein out of office in March 2008. The division now faces an extreme makeover in the next legislative session. Bird wants to change the way the division brings charges and Wimmer hopes to completely dissolve the agency. From the sidelines, former lead watchdog Klein wonders why the audit blasted the division simply for doing its job.

Auditors specifically mentioned three anonymous cases that Wimmer and Bird brought to their attention. The two lawmakers are deeply familiar with each case. One investigation subject was a former supervisor over Bird, who also happens to be a securities salesman. Another case subject has been confirmed by both Wimmer and the subject himself: Utah County radio talk-show host “Free Capitalist” Rick Koerber claims Wimmer as a former student of his investment school. Koerber is currently under investigation for allegedly defrauding investors through his numerous businesses.