For Immediate Release

Contact: Attorney Marcus Mumford
mmumford@mumfordlaw.us

Re: News of the superseding indictment reported in the local media on the evening of Tuesday, November 10, 2009

“Nothing has been filed.  We learned of the superseding indictment from the government’s press release.  Apparently the government’s practice here is to issue a press release to the public before giving the defense an opportunity to review the underlying document.  So, we are unable to comment on the specifics.

“Notably, Mr. Koerber’s lead attorney was on the phone with the prosecutors today discussing matters in the case, and they did not say anything about it.  Nevertheless, an increase in the number of counts does not change the flawed and disjointed foundation of the government’s case. Judging from its press release, the government seems to be trying to stretch the same allegations over more and more charges.  These are the same allegations, mind you, that the government first asserted in the course of an investigation which an independent government Auditor has described as “inappropriate” and “inconsistent” with “established policies and procedures.”  The head of the investigation now is the same individual who first referred this matter to the Attorney General of the State of Utah-the Attorney General, of course, declined to prosecute the case for a lack of any real evidence of wrongdoing.  Adding more words and allegations should not change the fundamental conclusion.”

Related:  Rick Koerber Responds to Indictment

-End

For Immediate Release

>>>.PDF VERSION OF RECORDS RELEASE IMPLICATING UTAH DEPARTMENT OF COMMERCE WORKERS

Contact: Jewel K. Skousen
jskousen@freecapitalist.com
801-808-7896

© 2009 Robert Paisola, Inc. Utah News Media prepare for Rick Koerber's release of audio recordings

“Early in the week several media outlets began questioning Utah Representative Carl Wimmer and Utah State Attorney General Mark Shurtleff regarding their activities related to me.  Some seemed to be suggesting that having an audience with me, by an elected official, was somehow inappropriate.  Why a private citizen, asking to meet with his or her elected representative is ever, in any circumstance inappropriate, is a mystery to me.  Are elected officials not representatives of each citizen?  Should only special interests and lobbyists have access to government officials?  If any citizen were to feel that a government bureaucracy was falsely accusing them, taking illegal actions, and doing serious harm to their business and family – wouldn’t any person so situated be interested in contacting his or her elected official to state their case?  Or, instead, have we come so far that as citizens we are now willing to give up our constitutional rights to criticize our government and to petition our government for redress?

“Yesterday, the local media began reporting on the Utah Attorney Generals refusal to bring an action against me in 2008, citing a lack of evidence.  I applaud KSL and reporter John Daley for beginning to uncover the facts related to this topic.  When I say “beginning” to uncover the facts it is because there is much more to the story.  Today, I have brought with me several selections of transcripts and audio recordings, and I’m releasing to the media (and to the public), essential information related to the rest of the story, both regarding the case the Attorney General decided not to bring and regarding the activities of Department of Commerce Executive Director Francine Giani and her staff.

“The reason I’ll be playing a selection of these audio recordings today is that the information contained in them is in some instances so sensational and so outstanding that only hearing the words coming out of the mouths of the government officials making these statements will anyone likely believe what they hear.”

Note: Because the most likely defense coming out of the Department will be the contention that these short segments are taken out of context, the full records of the phone calls, meetings, and the full printed documents will also be provided, as soon as possible, at the bottom of this page.

Item #1 – Selected Transcript of Statement from John Brown (Ut. Dept. of Commerce, Division of Real Estate)

In this transcript you will notice a clear violation of the law as described in title 61, Chapter 2, Section 11.5.  This was John Brown’s concluding remark to me on my first encounter with the Utah Department of Commerce in 2004.  He said,

Mr. Koerber, we haven’t yet identified any illegal or fraudulent activity on your part, but we do not like the way you are doing business and we have serious reservations and concerns.  We will keep looking, and for the time being let me put you on notice – We cannot touch you, because you are not one of our licensees, however I will use the full power of this office to come down with both of my feet squarely in the chest of any Utah licensee who does business with you or FranklinSquires.”

This kind of over reaching continued for years.  At first, I sought an audience with then Department of Commerce Director Mr. Russell Skousen.  When Mr. Skousen resigned from his position I hired him as my attorney to help me work to ensure that my businesses were structured and operating properly and to help communicate with state regulators to ensure that I was given fair treatment and individuals like John Brown did not simply have their way.  Mr. Skousen and I have worked together now for years, and unfortunately the behavior by a few individuals in the Department of Commerce has only become worse over time.

Item #2 – Selected audio recording of former Utah Securities Division Director Wayne Klein in discussion with me and two attorneys, in a meeting at the Division of Securities, in the presence of an attorney from the AGs office, and Enforcement Director Michel Hines.

In this recording, Mr. Klein answers an inquiry, after he and Mr. Hines had both revealed that after several years of investigation no evidence had uncovered that I was involved in any wrongdoing.  I asked Mr. Klien why he was so insistent that I admit to violations of the law in order to settle the investigation when no evidence  or facts discovered in the investigation had yet implicated me.  Mr. Klein’s response was telling-

[Sound Clip #2a]

“We’re in an unusual situation here where we’re trying to find a solution before we get resolved all the factual questions…so we’re all sort of planning without necessarily knowing all the facts, so the next stage is to get the facts and then see whether or not the facts conform to the plan.”

Item #3 – Selected transcripts and audio recording of Utah Securities Division Enforcement Director Michael Hines.

While much controversy seems to exist now given the recent federal indictment, there was never a time when the state investigators told me that any evidence had implicated me in wrongdoing.  The opposite was true.  For the entire course of the state’s investigation (2004-2007), after learning detail after detail related to my businesses, the lead investigator Michael Hines regularly cleared me of any illegal behavior.  The statement below is part of the introductory statement he made the first time we met in February of 2006.

“The Department has been investigating you and your companies over the last two years and as of this time has no evidence to suggest and I personally do not believe that you have been involved in wrong doing.”

Even when troubling evidence started to surface about the business practices of some of Founders Capital’s creditors started to service, Mr. Hines clearly drew the distinction between their activity and mine.

[Sound clip #3a]

“Rick, you recognize that what I call the bottom feeder LLCs here are going down to visit people to borrow money on their homes, cash out their entire retirements, to put money in that LLC to lend it up line to an LLC that goes up line to an LLC and you’re right, it doesn’t have any association with you.”

Mr. Hines not only regularly told me of his findings, but he would openly tell some inquiring third parties the same thing.  Towards the end of 2007, when asked by Jacob Dayton about the rumor that my business was a Ponzi-scheme, or a pyramid/multi-level scheme, Mr. Hines clearly explained that the investigation had not uncovered the facts to substantiate this claim.

[Sound clip #3b]

DAYTON: So, I’ve also heard that Founders and Franklin are operating an illegal pyramid scheme, something along those lines.  Is that true?
HINES:  I’ve not heard the word illegal pyramid scheme used.
DAYTON:  Well, some people call it ponzi-scheme, is that the same thing?
HINES:  Well, there is a difference in a ponzi-scheme and pyramid scheme.  A pyramid scheme is nothing more than multi-level marketing where you build downlines.  A ponzi-scheme merely means that you are paying old investors promised returns from new investors money.  But certainly no one associated with the Division has used either of those terms in reference to this investigation basically because we don’t have the facts to reach any of those conclusions.”

Between 2006 and 2007 I relied heavily on the advice and communication given to me by the Department of Commerce.  They had reviewed my business operations thoroughly and regularly discussed with me their opinion and advised me and my attorneys on what they considered acceptable businesses.  In October of 2007 I talked to Mr. Hines when he unequivocally told me-

[Sound clip #3c]

“There is no conduct that has been isolated, to my satisfaction that you violated any laws or rules.  There is none. You are not going to be put in jail, there is no warrant and I would tell you if there was.  I’d say it.  But, Rick there is not…No, you’re not going to be put in jail, I would talk to your attorneys, you and I and your attorneys would have lengthy discussions before charges were ever filed.”

In the same call Mr. Hines suggested we meet and have a cup of tea together and discuss philosophy.  His statements related to his opinion of my rumored involvement in ‘wrongdoing’ were regularly repeated to unrelated third parties.  In the clip below, Mr. Hines-in talking with Jacob Dayton about my case-once again confirms this same opinion.  Note: Mr. Dayton made this recording and provided me a copy.

[Sound clip #3d]

Dayton: “You know Rick Koerber right?”
Hines: “Sure, yeah, he and I have met several times.”
Dayton: “I’ve heard he’s going to be charged with felony fraud or something, that’s what I’ve heard.  Do you know what that’s all about?”
Hines: “Hmmm.  No idea.  There is an ongoing investigation relative to the collection of money by a lot of LLCs and uh, there have been decisions made on some individuals that it appears will be charged with criminal conduct, but right now Rick Koerber is not one of those. So, I don’t know what that is.  There is a tremendous amount of misinformation in the market.”

What we would learn during the course of the investigation is that the most serious “misinformation in the market” the Mr. Hines referenced, often came from the Department of Commerce.

When, the story broke yesterday, that Mr. Shurtleff had declined to bring charges against me at the conclusion of the Department’s investigation, his decision was consistent with most of Mr. Hines statements throughout the investigation.
Some might suggest that Mr. Hines was not being genuine, that perhaps he was attempting to mislead me as part of his investigation.  Evidently this is sometimes permissible by police offers or other law enforcement agents.  Unfortunately for Mr. Hines and others in the Division of Securities, the Utah legislature explicitly has prohibited any person from using deception in conjunction with enforcing the securities laws, no matter the role they play.  The law describes any false statements made in this context as felony violation of the law.

61-1-16 – False statements unlawful

It is unlawful for any person to make or cause to be made, in any document filed with the division or in any proceeding under this chapter, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.

If both Mr. Hines and Mr. Shurtleff concluded that there was no evidence that justified brining any charges why was Ms. Giani (who is not a lawyer and not family with the law) so persistent?  Well, only she knows the full answer, but the following information might help, at least in part, to clarify the rest of the story.

Item #4 – Selected audio recording from Wayne Klein, former Director of the Division of Securities.

The statement below was made by Mr. Klein following my August 31, 2007 radio broadcast where I openly criticized him and his division, calling him a ‘commissar’ (though not by name) and had suggested that the state legislature should reduce the size of government and add some check or balance against the unlimited powers of the Division of Securities.

[Sound Clip #4a]

“Part of the problem is that I’ve been painted in a corner because you’re client has gone on the radio and publicly accused us of stuff. He’s got legislators out there trying to cut our powers because what we’re doing as if he’s entirely right in what he’s doing and government is unfairly coming after him. So ordinarily we have more flexibility but where I’ve got public attacks coming in saying we’re being accused of being unfair…[interrupted].”

It’s important to note that this is the same conversation where Klein admits he does not have the facts (see Sound Clip #2a) and the same conversation where Hines admits the problems being uncovered don’t “have anything to do with” me.
Mr. Klein was so “peaked” that even after he had been provided with a copy of the Founders Capital Balance Sheet showing that the company had approximately sixty million dollars more in assets than it did in liabilities and after his staff had spent the time necessary to investigate the supporting records-including real estate agreements securing the majority of the balance sheet equity-which review included looking at purchase contracts, appraisals, loan documents, property reports, lease agreements, etc.,-nevertheless, Mr. Klein continued in that same meeting to make even more startling demands.

In this meeting and subsequent related meetings Klein explained that he had reviewed the matter with his superior (Francine Giani) and that in order for me to avoid being charged with criminal violations of the law (though, again, in the same meeting he admitted there was no evidence to warrant it) Mr. Klein demanded that I remove my billboards, that I and my partners sell our “expensive cars” and as part of his written counter proposal (on official Department letterhead) demanded that I agree to a 3rd party administrator of my company who would liquidate the companies assets.

Perhaps most alarmingly, his written offer included that demand that I sign a written affidavit promising not to criticize (in public or in any future court) “any action” the Department took against investors in my business.

“Mr. Koerber will provide an affidavit to the Division affirming…[that he] will not claim publicly or in court that any action the Division takes against investors in Founders…is impeding the companies efforts…”

As Mr. Klein continued to insist on his demands, in meeting after meeting he grew more insistent.  In other communications he suggested that if I resisted his demands, he and his department would start communicating that my business was a multi-level ponzi-scheme.

When asked why he would communicate such a claim given that he and his staff had investigated financial statements and related documenting, making such a claim absurd, he informed candidly responded that despite the financials, if he and his Department made the allegation of a ponzi-scheme, it would “stick to me like glue” and that he had contacts in the media who would tell the story.  The first media source to publicly allege that my business was a ponzi-scheme was City Weekly reporter Eric Peterson.  Evidently, City Weekly was publishing its information with Klein as a source, because an insider later forwarded me a copy of an email sent from Klein to City Weekly (who had since been forced to resign from office) congratulating Eric on the story and asking if, now that the story had been published if “it was acceptable” for him to by Mr. Peterson lunch.

Item #5 – Audio recording of Mr. Hines changing his story and telling third parties that my business was a multi-level scheme.

While Mr. Hines sometimes insisted that “no one in the Division of Securities” would use the terms “ponzi-scheme” or “multi-level scheme” because the evidence did not warrant it, consistent with Mr. Klein’s agenda Hines himself spread this gossip to Jonathan Bond in a telephone conversation.

[Sound Clip #5a]

“I know what happened in this case, clearly, everybody got carried away with this idiotic multilevel marketing of promissory notes is what occurred…they did violate state and federal law…as long as the money was coming this was a wonderful multi-level marketing program and then the money dried up.”

Item #6 – Audio recording of Corporate Finance employee Gary Bowen carrying out the policy of Klein in a conversation with an unrelated third party.

Hines was not the only one who later engaged in spreading gossip about me and my company after I refused to give in to the terms outlined by Mr. Klein.  In November of 2007, Mr. Gary Bowen then in the Corporate Finance section of the Securities Division offered the following to Devon Anderson who had called about an unrelated matter.  In an effort to “get the word out” made several startling, false, and criminal accusations.

[Sound clip #6a]

“If [your friends have] invested in FranklinSquires they’re going to lose their money.  FranklinSquires is putting the buzz out that the division is going to lock them up, that’s not so.  We’ve seen their balance sheets and they’ve got a shortfall of about $60 million dollars so it’s just a matter of time before that collapses.  So if you know anyone that’s invested, bye-bye they’ve lost their money…under securities regulations and rules, this secrecy concept, and that’s part of the FranklinSquires model, is fraud.  Its just, it is.”

Of course there is not, and never has been, any secrecy concept related to FranklinSquires.  At the time of this statement the financials in possession of the Division showed approximately sixty million in assets that exceeded liabilities.  I was so startled by this behavior by a government employee (whose statements directly impacted our ability to do business successfully) that I promptly called Mr. Bowen to challenge him on his statement.  The following transcribed selection is from Mr. Bowen’s portion of our telephone conversation.

[Sound clip #7a]

“Rick, I have not seen your financials.  I don’t know that you’re going bankrupt.  I don’t know where these people are getting that information… They’re not getting it from me…  I’m not in the loop on investigations and so forth…I understand that you are in the process of dealing with either Mike or Wayne but I haven’t seen it…”

CONCLUSION

When the Attorney General’s office declined to bring charges against me in 2007, after the government had thoroughly investigated my business and on multiple occasions advised that there was “nothing illegal” about our business and that I “had not broken any rule or law” despite the gossip and rumors otherwise, I was relieved and thankful that in Utah we have an Attorney General who was more interested in the law than in retaliating against me for my political opinions, my criticisms, or my refusal to agree to a corrupt regulators unjust demands.

I cannot imagine how anyone would suggest that Mr. Wimmer, in joining with other elected representatives, in calling for an audit of the Division of Securities, after learning of the kind of behavior, was doing me a favor.  He was doing all Utahns a favor.  Mr. Wimmer and his associates were clearly vindicated when the independent audit – which declined to include my case in its review since it was then an ongoing investigation – documented abusive prosecutorial and enforcement tactics by the division, a lack of leadership and policy guidelines for how and when to bring changes, lying and deception in settlement offers with innocent citizens, and several other very serious problems.
I did not invent the results of the audit.  I did not influence the results of the audit.  I am only astonished that after Wayne Klein resigned (one month after the approval of the audit) the rest of the leadership of the Department (Ms. Giani) and the head of Securities Enforcement (Mr. Hines) where most of the audit’s documented abuses took place)-are both still employed by the State.  The results of that audit have to be the most under reported political and public policy event of the last year and a half.

I want to thank not only Mr. Wimmer and Mr. Shurtleff, but the other government officials and representatives who listened to my evidence.  Speaker Curtis, Rep. Dougal, Senator Stephens, and several others who all voiced agreement with me that Ms. Giani was known to be unable to effectively manage her department.  In our breakfast meeting Mr. Shurtleff told me that given what he had learned about Mr. Klien when he had worked for the AGs office, he was certain that Ms. Giani did not have the qualifications to reign in someone like Mr. Klien who was known even in his past employment as chasing down personal vendettas rather than focusing on the law.

I cannot believe that after Ms. Giani supported these activities, after Klein was forced to resign, after she unequivocally stood by him and publicly predicted that he and his department would be vindicated by the audit (which he most clearly was not) and after she herself was directly implicated in the audit results, and now after she has admitted that she (not being an attorney,  nor authorized by the law to do so) went against the advice of the Attorney General, went against the facts uncovered in her case – and after all that she still has her job.   Tuesday, was Ms. Giani’s ‘victory day’ as it was called, as she participated in the orchestration of that premature celebration (Tuesday’s press conference).  But, because of what happened leading up to it, the indictment announced Tuesday is not just troubling news for me, it represents an ominous precedent for all Utah business owners.

My statements today have not been to offer up any defense on my case whatsoever – I am satisfied to do that in court.  I am willing to be accountable for all of my actions.  I can only hope that with the release of this information, the governing authorities might take the necessary steps to ensure that Ms. Giani and her colleagues finally have to do the same.

–END

For Immediate Release
>>>.PDF of Rick Koerber’s Response
>>> Audio Records Released (w/transcriptions)
>>> Video of Mr. Koerber’s Response (watch video)

Contact: Jewel K. Skousen
jskousen@freecapitalist.com
801-808-7896

© 2009 FranklinSquires - FranklinSquires President C. Rick Koerber responds to the federal indictment of May 26, 2009 at a Press Conference held at the Grand America Hotel in Downtown Salt Lake City on May 29, 2009. Mr. Koerber is flanked by his wife and several Utah small-business owners and entrepreneurs. From right to left (Clyne and Ann Long, Brad Green, Jason Vaughn, Michelle Koerber, Jewel Skousen, Tom Broome, Sonny Jensen, Not Pictured - Steve Freestone, Not Pictured - Israel Curtis.)

SALT LAKE CITY  | 29 MAY 2009 | The following is taken from a statement delivered by FranklinSquires President & CEO Rick Koerber at a press conference held at the Grand America in downtown Salt Lake City, UT at 3:30pm on Friday May 29, 2009

>>>Rick Koerber officially responds to indictment (watch video)

“My name is Rick Koerber and I am the President and CEO of FranklinSquires.  In 2004 employees within the Utah Department of Commerce first contacted me and informed me that my business was being investigated for what the Division of Real Estate deemed “suspicious behavior.”  During an in person meeting with several Department employees I was told that “while there was not currently any evidence to support their suspicion” I was being investigated for fraud.  The investigation grew and expanded to last more than five years and it included the Division of Real Estate, Consumer Protection, Securities, Licensing, and the Division of Corporations & Commercial Code.  After failing to find any evidence that I was involved in breaking any “rule or law” and after failing to convince any state agency to take civil or criminal actions against me, and specifically after their own attorneys suggested there was not sufficient evidence to bring charges, Francine Giani continued shopping for a prosecutor until in January or February of 2008 when, as she recently admits, she had the files sent to the US Attorneys office.”

“As you all know, after several years of speculation, conjecture, and an extended whisper campaign of rumors and grand jury leaks, on Tuesday of this week a three count indictment was returned by a federal grand jury accusing me of certain crimes supposedly committed between 2004 and December 31, 2008 related to a purported “$100 million dollar Ponzi-Scheme.”

>>> .MP3 AUDIO – US Attorney Brett L. Tolman’s Tuesday May 26, 2009 Press Conference

RESPONSE TO INDICTMENT

“In response to this indictment I can only say that the allegations made therein are absurd and the charges are false.  Up until now everything done by the state and federal government has been done in the shadows, making it virtually impossible for me to fight to defend my reputation, my business, and my associates.  But, I can fight an indictment full of absurd and bogus charges and that is exactly what we are gearing up to do.  I am looking forward to having my day in court, to having the real facts at hand laid before an objective court, and trusting a judge and a jury of my peers to come to a fair and reasoned conclusion.  I am confident that I will be exonerated and that the allegations contained in the indictment will be shown to be patently false.

“Today I ask only that those concerned with this case exercise care in avoiding a rush to judgment and remember that, contrary to the behavior of our government officials on Tuesday, an indictment is not a statement of guilt, and it simply outlines the case for the prosecutor.  I am unsure as to why the United States Attorney and other agencies involved have decided to launch a trial of this case, first in the media.  However, I am confident that trying the case in court,  is a much better way to preserve my rights and to ensure that real justice is served.

“After witnessing the government’s odd, premature celebration on Tuesday, I also feel to remind Mr. Tolman, Mr. Fuhrman, Mr. Brito, Mr. Walz, and Ms. Giani that in our system of government an accused person is presumed innocent until a contrary finding is made by a jury after an opportunity to answer the charges and a full airing of the facts.

“Because this is a pending legal proceeding, it would be inappropriate for me to comment on the specific facts related to the charges or other matters that need to be decided during the future court proceedings.  But, I will ask if the government is now taking the position that when any businessman invests millions of dollars into legitimate businesses and industries such as restaurants and movie production, that this is considered a personal expense.  Are they suggesting that such sums are considered the same as admission tickets or meal expenses?  If so I think several Utah small business owners who work in the restaurant and film industries would like to know that.

“Nevertheless, I will repeat that I deny these allegations and declare, well in advance, that I will be entering a plea of “not guilty” on all counts and vigorously exercising my rights to bring a full defense.  I do this first and foremost for myself, and I also do this for my colleagues and fellow entrepreneurs like those individuals standing behind me today, each of which is a local Utah business owner or entrepreneur.  I also want to express my personal, deep felt appreciation for the patience, faith, support and strong efforts of virtually all of my colleagues, creditors, and clients.  Rumors and false charges can bring a heavy toll on the innocent, and the only remedy I know is to stand up, tell the truth, and have confidence in the good people on both sides of our justice system-whose efforts, when given a chance to make the choice, almost always outweigh the shady and misguided efforts of the few abusive and overzealous government workers.”

–END

Note: See “Records Released” for the audio recordings and documents referenced on Friday by Mr. Koerber.  At the Press Conference on May 29, 2009 a limited number of audio recordings and printed records were released as part of an ongoing effort, first announced via press release on FranklinSquires.com by Mr. Koerber on January 5, 2009, to inform the public as to the abusive, illegal, and overzealous behavior of certain government officials and employees.  The material released on May 29, 2009 is now available online at http://www.franklinsquires.com

>>>Rick Koerber officially responds to indictment (watch video)

ALPINE, UT | 5 January 2009 | FOR IMMEDIATE RELEASE– FranklinSquires Companies, LLC President C. Rick Koerber announces the release of more than 50 audio recordings and several pages of documentation related to the Utah Department of Commerce.

[This article was updated with links to new material May 30, 2009]

>>>.PDF VERSION OF THIS RELEASE RELATED TO THE UTAH DEPARTMENT OF COMMERCE

REMARKS BY FRANKLINSQUIRES PRESIDENT MR. RICK KOERBER

Beginning January 9, 2009 I intend to begin disseminating a substantial number of audio recordings, recorded telephone conversations and documents that reveal detailed behavior by Department employees such as Utah Securities Division Enforcement Director Michael Hines, Enforcement Analyst Jennifer Korb, Licensing examiner A. Gary Bowen, former Division Director Wayne Klien and former Division of Real Estate officer John Brown.

>>>UPDATE: Audio Selections Exposing Utah Department of Commerce Actions, released May 29, 2009 are now available.

Its no secret in Utah that the Utah Department of Commerce has been harassing me, FranklinSquires partners, FranklinSquires executives, and several other Utah businessmen and entrepreneurs over the last several years.  Today, I’ve decided that the evidence in my possession could better help reign in the rogue elements inside this agency.  I also believe this information could be valuable to other citizens who might be the target of these Department employees, members of the interested public, members of the legislature, and other government employees who might have been mislead or misinformed by individuals such as those listed above.

My first introduction to the Department was several years ago, when after introducing himself and his colleagues to me and assuring me that everyone in the room was a “capitalist”, a declaration I thought rather odd-especially considering the source, Mr. John Brown from the Department’s Division of Real Estate proceeded to inform me and all others present:

“Mr. Koerber, we haven’t yet identified any illegal or fraudulent activity on your part, but we do not like the way you are doing business and we have serious reservations and concerns.  We will keep looking, and for the time being let me put you on notice – We cannot touch you, because you are not one of our licensees, however I will use the full power of this office to come down with both of my feet squarely in the chest of any Utah licensee who does business with you or FranklinSquires.”

From that day to this I have been continually dealing with government bureaucrats like this who seem to be threatened by those free citizens who are unwilling to play by their rules of intimidation and coercion.  Rules which, by the way, are not the rules of the State or the rule of law.

It was several years later when, in February of 2007, I first met with another representative of the Department, Mr. Michael Hines, the Enforcement Director in the Securities Division. Mr. Hines began the conversation by calmly explaining:

“The Department has been investigating you and your companies over the last two years and at this time has no evidence that you’ve broken any laws, and I personally do not believe that you have been involved in wrong doing…but Mr. Bouchard [of Hunters Capital] is in a lot of trouble and could be going to jail…So, it’s in the best interest of his investors and the Division of Securities if you help him out by paying him back…”

The surprise came at the end of this statement when Mr. Hines smugly asserted,

“If you are not willing to help out in this situation I can put both him and you in jail!”

I had attended the ‘off the record’ meeting with two of my attorneys and we were, of course, all shocked by his out of context attempt at intimidation.  One of my attorneys quickly inquired how Mr. Hines believed he could put me in jail if he had just admitted that his department had not discovered anything in my behavior that was against the law.  Mr. Hines smugly responded,

“I could have your client in jail by dinner time tonight by swearing out a warrant for suspicion of securities fraud…it’s not hard to do.”

While this kind of arrogance might be hard to believe, and the gravity of this kind of intimidation being employed by a government employee might escape the average readers notice, but too any businessman who has been in any serious discussions with Mr. Hines or any one of his several colleagues in the Department-the shock, frustration and disbelief such a remark triggers, will easily be recognized with its disgusting odor of familiarity related to both his attitude and the practical consequence of this kind of treatment.

For the last two years, my associates and I at FranklinSquires have had no shortage of hardship or difficulty, which has seriously affected the lives of several of our partners, clients, former employees and creditors.  All of us have felt the very serious consequences of our financial short falls and long term uncertainty especially as the credit and real estate markets affect our businesses.  We have however, never given up in the face of the serious and challenging circumstances we face.

For the record, prior to Mr. Hines’ threat and a number of malicious and illegal actions subsequently taken by the Department of Commerce, not one of our creditors ever went unpaid, nor had one of our several hundred real estate investments or our real estate related creditors ever experienced a default for lack of payment from us.

Nevertheless, while much work remains to be done, given all of the economic difficulty and the Department’s overzealous and egregious acts against us, since these difficulties began, FranklinSquires has successfully repaid creditors and investors, through cash payments, asset transfers, real estate transfers and business equity, more than $67,430,000.  This number would, of course, be larger if the monies used to fund attorneys, accountants and other related expenses consumed by the government’s unfounded accusations could have been directed towards our repayment efforts.  Also, the amount repaid so far does not take into consideration the successes we had prior to the government’s activities or what additional success we might have had without the lost revenues, lawsuits, and soured relationships directly caused by government employees on an unholy mission.

Over the course of several years, when the Department didn’t find evidence that either FranklinSquires or I was responsible for any wrongdoing, and given that there were not complaints filed against us by those who had actually invested and/or loaned money to us, the Department concocted a strategy to systematically spread rumors and make misrepresentations to other supposed victims-though not actual FranklinSquires clients or investors-to convince them that they were indeed victims of some imagined Ponzi-scheme.  Wayne Klein even had a pet project, keeping a large poster-sized diagram of a pyramid structure where he would add, subtract, and rearrange names of businesses and businessmen who the Department wanted to summarily punish, often with Klein performing the roles (as cooberated by the official audit findings) of lead investigator, judge, jury and executive.

Of course, part of the reason the Department takes the course of action that it does, is because it knows the consequences of a business or a businessman being systematically discredited by a government agency, facts be damned.

All their rumors, allegations of schemes, and years of intimidation through endless investigations aside-they know they are the ones who have delivered the most serious blow to our business.

When the Department found out that my partners and I had begun collecting documentation that verified their agenda, their cover up, and their illegal activity they responded in force.  For example, in one document soon to be released as part of my announcement today, you’ll see that the now resigned Division of Securities Director actually demanded that I sign a personal affidavit stating in unequivocal terms that I will not “publicly or in court,” criticize the Division as having impeded my company’s efforts.

In addition, in the recordings that will be released this Friday, everyone will be able to hear, from Department of Commerce employees themselves that:

1. They intentionally set out to spread discrediting rumors about FranklinSquires.
2. They lied about what their investigations had uncovered and about financial disclosures we made to them related to assets and financial statements.
3. They chose their course of action because of my criticisms of their Department on the Radio and the legislative scrutiny they attributed to my political activities.
4. They were willing to compromise their activities against us if I signed a personal affidavit to state, among other things, that I would not criticize the division (in public or in any court) for the harm they were causing my businesses.
5. They were aiming at me and FranklinSquires from the beginning, even when they confessed they had no evidence of wrong doing.
6. They illegally distributed confidential information they obtained as a part of their investigation to private citizens, attorneys, and others.
7. They did not have all the facts before they had decided to make me and several others, prominent targets of the investigation.
8. They did not understand the “nuance” of securities law and believed most private sector attorneys didn’t understand the law well enough to protect their clients.
9. They consider private sector attorneys part of their law enforcement efforts.
10. They consider themselves (not a judge or a jury) the ones who decide in advance, who goes to jail and who gets special treatment-prior to making any charges or taking any action to prove their allegations.

>>>UPDATE: Audio Selections Exposing Utah Department of Commerce Actions, released May 29, 2009 are now available.

Over the last several years, I have shared some of this information over my radio broadcasts and I have shared selected pieces with legislators and with the Utah Attorney General’s office.  Some of the information, I believe, also helped to encourage the State Audit of the Department which confirmed this past July that much of what I and other businessmen had been complaining about was actually taking place.

Consider the following findings from the independent legislative audit, which looked at less than two dozen of the Division’s several hundred cases:

• “…In at least three of the twenty cases we reviewed, the division issued the same charges in an administrative action that had been dismissed or resolved in a civil and/or criminal hearing in district court… Successful defense in one venue can result in having to face charges in a second or third venue.”

• “The division’s use of intimidation to obtain information has been cited by both those being investigated and others involved with the division… In another case, investigators seized personal information by copying all information from the business owner’s computer without distinguishing business and personal information. The owner said that he complied with the investigator’s demands only because they threatened to immediately close him down if he refused.”

• “The division has, at times, violated the terms of its settlement agreements…[and in one case] the division planned to renege on its agreement…” ,

• “Many of those who talked with us requested confidentiality because they feared retaliatory action by the division if they were identified.”

• “Since the division director [Wayne Klein]’s resignation, staff believe that little has changed. Some employees have retained legal counsel to represent them because they distrust management, feel threatened, and fear reprisal for speaking up.”

This, for me, has never been about FranklinSquires or me, alone.  It is about a rogue government agency, led by prominent bureaucrats who seem to think that failing to treat small businessmen and entrepreneurs within the bounds of civil rules and laws, is acceptable in Utah.

I’m convinced that a large part of the reason people might believe that Utah is a “fraud center” has to do with systematic, abusive tactics perpetrated by bureaucrats who have literally built a career finding fraud and persecuting honest citizens where there was no fraud to be found.  Unfortunately, all of his other attributes aside, it appears that Utah’s governor doesn’t seem interested in leading the reform of this agency under his oversight, or righting the wrongs regularly being uncovered, when it might involve controversy or tough decisions.

I recognize that my perspective and my claims against the Department are hard to swallow for some.  This is why, although it further singles me out as a target for the likes of Giani, Hines and others, I have decided that it is in everyone’s best interest for the evidence in my possession to be laid on the table-so to speak-regarding the Department of Commerce, so interested parties can then judge the information for themselves.

My intention is to release a large amount of material in a series of individual information releases to the public, via the Internet, with downloadable audio clips and .pdf documents.  I anticipate making a new release every couple of days and that the total volume of releases will include at least ten separate releases, organized by category.

Some of the Department of Commerce insiders (who first heard about my conflict with the Department via my radio show broadcast on August 31 2007, and have offered to help because they “know what’s really going on”) have warned me that the media will not be on my side and that the Department somehow has connections in the local media outlets. I am choosing to release the information anyway.

Others have suggested to me that since the legitimacy of their own investigation has been called into question, the Department has enlisted the help of the US Attorney’s office to pick up where they left off.  Nevertheless, I am choosing to release the information anyway.

In spite of these warnings, and in spite of the fact that employees of the Department have already begun a process of intimidating my close associates, and have threatened to use my releasing evidence of government wrong doing as a pretext for arresting me or finally indicting me on some trumped up charges-as Mr. Hines has repeatedly bragged about to his colleagues-I still believe it is important to release the material.

In the mean time, I will continue to work with my best efforts to do all I can to help FranklinSquires and its related entities recover from the current market conditions affecting it, from the malfeasance of the Department, and the normal challenges of every day business.

My number one goal continues to be to ensure that all FranklinSquires creditors and investors (including all related FranklinSquires Companies) ultimately receive a full payment of what is owed to them, as previously agreed.  Given even the best of circumstances, this will take much effort and a significant stretch of time.

I believe my reputation and the reputation of those with whom I am associate, shows that persistence is one of our virtues.  Regarding the challenges both present and future, related to the allegations persistently advanced by the Department of Commerce and those who are influenced by them, I can only say that I have a firm trust and reliance on the basic principle that time is on the side of truth.

- END

MAY 30, 2009 UPDATE: The recordings which are the subject of this release were not immediately released when rumors of Mr. Koerber’s pending indictment prompted the counsel that he hold of on the records release until the government’s intentions related to a possible indictment were made clear.  On May 26, 2009 FranklinSquires President Rick Koerber was indicted on three counts (mail fraud, wire fraud, and tax evasion).  Mr. Koerber held a press conference on May 29, 2009 and announced his intention to fight the charges, declaring that the indictment was “bogus” and that he would be responding to the indictment with a formal plea of “not guilty” on all charges.  After making this statement Mr. Koerber began releasing the first selection of audio recordings exposing the Utah Department of Commerce promised in the above press release.  More recordings & documenets are intended to be released in regular intravals in the near future.

###

>>>.PDF VERSION OF THIS RELEASE RELATED TO THE UTAH DEPARTMENT OF COMMERCE

At the beginning of 2009, Founders is still in business and is still working to protect assets and to realize a return to our investors.  While many of our anticipated plans for 2008 did not come to fruition, the current plan is to keep working to accomplish many of these same goals.

Individual members/stockholders of the company who would like to receive regular updates and invites to monthly company members meetings can now subscribe to the Founders Capital “Members” email list.  By submitting your name and basic contact information (including email address) you will begin receiving these regular updates and more detailed information related to the company and its activities.

At the beginning of this new year Founders wants to express sincere appreciation for the patience and effort put in by so many members, creditors, and employees over the past year.  Our goal is to make 2009  a productive year despite the current market challenges and extreme difficulties.

The new business activity of the company is expected to be modest and oriented towards facilitating FranklinSquires accomplishing the following priorities, 1) Resolve all outstanding financial concerns 2) Resolve all outstanding obligations of a non-financial nature 3) Build a foundation for long-term progress and achievement.

To give you just a brief description of the situation – this member of my family had taken the “Preferred Buyer / Retail Investor” real estate training once offered through FranklinSquires and had subsequently purchased an investment property from Hill Erickson, LLC (a FranklinSquires related entity).  After the home was purchased it was subsequently leased (with an option) to New Castle Holdings, LLC (also a FranklinSquires related entity).  New Castle paid a decent option consideration fee – in cash, up front, and while the home was never successfully re-leased to a new prospective buyer or tenant, New Castle did make full and timely payments on the home for quite some time.

However, in late 2007 when the real estate/credit crisis really started to affect the marketplace, New Castle was unable to sustain its cash flow needs.  FranklinSquires, previously the major financial investor in the company was both unwilling and unable to invest more capital to keep operating expenses current.  The practical consequence of this economic reality was that my family members, along with several other New Castle creditors were left to experience the very unpleasant situation of having investment homes (and in this case a empty home with no rental income) and steep mortgage obligations without the benefits offered by New Castle, which benefits had long been taken for granted.

Of course I never pressured this family members into taking the real investor training (I wasn’t even their trainer), and I never sought to have them purchase a home from Hill Erickson or to lease it to New Castle.  But, as many people understand – things were very exciting with FranklinSquires related companies for some time, and through their own ambition my family members had sought out the opportunities, worked with my staff, and consummated the related transactions.  I was aware of the situation from a distance and was happy that members of my family had reached their own independent conclusion to do business with these companies.

During this liquidity crisis and continuing thereafter, New Castle sought to aid the great majority of its real estate Lessors by freely abandoned its lease option claims without a fight, to enable creditors (such as the case with my own familiy members) to take an immediate active hand in the situation.  It should be noted, that frame the beginning of this crisis until the present day New Castle has never abandoned its financial responsibility to repay its debts.

While it is true that every student who participated in the “Preferred Buyer / Retail Investor” training received substantial instruction as to risks and risk management related to real estate investing – the hard reality of economic difficulty is always a challenge to fully anticipate or to endure emotional and/or mentally.   None of us, for example, adequately anticipated the details of the current market environment or the specific situation related to New Castle.

So, this Christmas season, after spending several months investing more money into the home in an effort to make it more “rentable,” my families investment home still sits empty and like many others, my family members have exhausted their financial resources trying to manage their responsibility.  To their credit, they’ve been great.  They’ve taken 100% responsibility for their actions and have been more than patient in working with New Castle (and with me).   The current strategy with the home is to try and get the bank to accept a “short sale” since the real estate values in the area (both resale and rental) have plummeted.  If the bank won’t accept this solution—which given the track record of this particularly brain-off institution is very likely—foreclosure looms and coupled with the serious financial losses already sustained, the damage to my family member’s credit will also be quite substantial.  This is the situation faced by an untold number of investors all over the country – most unrelated to me or my businesses, but nevertheless experiencing a very common difficulty.

So, after Christmas dinner, as my kids were busy picking up their toys—before we headed home to beat out the snowstorm—there I stood, in the middle of the living room, discussing these very difficult circumstances with my family.  I personally feel horrible about their situation.  Even though I was not personally involved in any part of the transactions related to this property, I have an unquestionable feeling of compassion and responsibility.  Even though these investors are doing everything that they should be doing – and are expressing none of the childish, temper tantrum like emotional Nihilism of so many other similarly situated Americans – I can’t help but feel a strong desire and internal commitment to do everything in my power to “not give up” on their situation and to ensure that I leave no stone, that is reasonably within my power, unturned, in ensuring that New Castle makes good on its finanical obligations.  And, lest I be misunderstood, I don’t mean to suggest that these feelings are unique because the situation involves my family.  I have these same feelings for almost all those similarly situated who chose to do business with New Castle, Hill Erickson, and/or Founders Capital.

These feelings of sympathy and commitment on my part don’t exist because I have personal, legal or contractual obligations to the creditors or investors in these comanies, because I don’t.   I remain steadfastly opposed to those emotionality juvenile members of society who seem to think that all business executives should shoulder all of the legal and contractual responsibility for every investor’s decision when it results in a loss.  Those who have done business with any company where I’ve been affiliated, associated, or in any way involved as an executive, have done so as adults.  They have made their own best judgments, while they pursued their own desire for the possible benefits.   Just as neither I, nor any of these companies would have ever asked for an unearned handout from the upside profits of any such transactions (and for years there were many), I would never except such “unearned” responsibility for those who are now experiencing the unforeseen consequences of their own choices.  Just responsibility is a virtue, and in our culture it is in short supply.  Likewise, I refuse to indulge in the nonsensical hysteria so prevalent today which demands of  all businessmen that they give way all profits and at the same time assume all responsibility for all of the risks associated with choices made by informed, mature adults – despite the nature and terms of the actual business agreements involved.

Steve Forbes put it well, recently, in his article entitled, “How Capitalism will Save Us” when he wrote:

A chilling result of the [current] crisis will be furthering the deadly process of criminalizing business failures. In the old days when an enterprise failed, the proprietors often ended up in debtors’ prison. One of the significant advances of civilization and economic progress was the idea of limited liability, which took hold in the 19th century…Limited liability thereby set off a positive explosion of risk taking. Our standard of living today would be where it was in the 1850s were it not for the wide use of limited liability. But in recent years…corporate scandals, federal and local prosecutors began actively pursuing evidence of fraud whenever a big business went bust. Yes, there has been corporate wrongdoing, and miscreants have been tried and jailed. But many noncriminal individuals have been pursued….[and]the itch to indict remains.”

>>>Learn more about capitalism

Just because someone has lost money does not mean “fraud” has occurred nor does it automatically mean that anyone has done something wrong or that the government should have a prima facia reason to suspect as much.  Yes, there may have been, what in hind sight looks to all involved like miscalculations.  Yes, there may have been under-performances, and in some instances outright bad decision making.  But, these are human elements that we all understand and deal with on a daily basis—in our personal and professional lives.   So, too – in situations like the one where I was discussing the present difficulties facing my family members because of a real estate investment they made, in relation to businesses with which I have been closely associated – we are all faced with the good old fashioned notion of adopting a dose of “dealing with it.”  We can deal with it.  If we work together, we can probably deal with it much better than we might initially anticipate.  But, to “deal with it” requires that we give up the pursuit of the “unearned” in both benefits and guilt.

It was shortly after my conversation with family this past Christmas day that I realized I had a message I wanted to publish.

My message is for both those who remain optimistic and confident, and for those who are looking for someone to blame – related to the economic difficluies faced by creditors and investors of FranklinSquires related real estate companies.

Some have asked me if I feel any sorrow or any regret.  My answer is no.  I do not feel personally sorry or regretful for the actions I’ve taken.  Do I feel sorrow when I see the difficulty faced by those who have lost money.  Of course, I’m human and most of these people are my friends and associates.  I too have lost quite severely during this difficult time.  But, I do not and cannot accept the unjust demands of any victims feeling an entitlement to my feelings of sympathy or sorrow.  Unlike most businessmen similarly situated, I have not given up.  I am not a person who quits easily.  I am a not a person who turns the other way when the path ahead looks difficult, even extremely difficult.  This is why I have not given in to the financial advise of many lawyers and accountants who suggested early on that I simply put all these businesses into bankruptcy.  While I acknowledge legitimate reasons to do so – I resist such action to the best of my ability – so long as I believe there is a better way.

I am not a person who finds satisfaction in being sorrowful.  I look at the present situation as a motivating force.  With hindsight I can see clearly where better decisions could have been made.  But, who hasn’t had that same experience.  In business (as with all meaningful areas of life) leaders are not afforded the benefit of hindsight—in advance.  This is why the personal attributes of fortitude, conviction, relentlessness and tenaciousness are so highly prized among those investors with “eyes to see” and so impossible to be pretended away by the amateurs, the insincere, and the glib.

I have an impeccable reputation for repaying debts, for sticking something through for the long haul, for meeting legal and financial adversity in a way that makes long term success possible.  While I have gained a small, almost insignificant choir of critics during these very trying times – their judgment is worth less to me than the trust and respect given by so many loyal and respectable friends, associates, clients and creditors.

A friend once said to me, observing that I spend so much time defending myself and FranklinSquires, that he’d “like to hear” me apologize to investors and creditors for the economic losses they’ve experienced.    My first response was to point at that most investors and creditors, at least the ones who actually did business with FranklinSquires or related companies, have been paid and/or repaid in full.  My second response was to point out that those calling for such apologies are usually not deserving of them.  Most of the Internet critics, for example, are cowardly anonymous posters whose association with me or my companies cannot be substantiated.  In several cases over the last few years we’ve discovered that it is often the same individual posting under multiple pseudonyms.  One case the person turned out to be a 15 year old son of someone who had been misinformed, and was someone who had never done any business with me or any of my companies.  Also, regarding the small hand full of so-called “media sources” – these have also been people who’ve in most cases never done business with me, with FranklinSquires, or with companies where I had any decision making influence whatsoever.

Most people, longing for such admissions by me or businessmen like me, are simply second-handers, life long victims, looking for any place to hang the blame for their own frustration and unhappiness and who have almost not chance of improving their own life – unless and until they take a good long look in the mirror.    Sensing my frustration as expressed through these answers, my friend quickly changed the conversation topic.  What he didn’t know, what he couldn’t know, was that his remark (though made over six months ago) would not be forgotten.   I have thought a lot about his question.  I’ve thought about it mostly, as I’ve watched a seemingly endless stream of businessmen, corporate executives, small business entrepreneurs, and even small “mom and pop” business operators being paraded across even news stories, newspaper headlines and Internet news releases talking about the current economic climate, their regrets, their apologies, and their feelings of guilt and desperation.   No matter how I try, I find it very difficult to identify with these people.

I do not feel guilt.  Nothing associated with FranklinSquires or any of my partners or any of “my businesses” has come to my attention where I feel anything similar.  Yes, I wish we had done better job in many instances.  But, the game is not over.  I set out to create FranklinSquires and the several businesses associated with it to be successful.  We’ve had an extremely difficult year, (actually its been almost two years now) but I have not given up on this objective and I intend to continue earning the reputation I spoke about earlier.

In the middle of our current crisis, I don’t think its time for apologies.  Its time for mental toughness and fortitude.  Its time for courage and conviction.  These are virtues that few seem to value today.  But, these are the virtues that will survive the current crisis (financial and cultural) plaguing almost every aspect of our lives.

Of course I have an emotional reaction to those whose own actions have brought them into financial hardship.  Even when I see those who went against my advise and did not follow the principles I teach – now experiencing hard times, I feel sympathy.  For the clients, creditors, and investors in FranklinSquires and our related companies – I feel more than sympathy, I feel a desire to keep at it.  I, unlike so many others, remain committed.  To be candid, I’ve been surprised at how many of my close friends and associates have essentially “given up” in the face of our current adversity.   I’m surprised that all of the original FranklinSquires partners have sought to satisfy their own obligations by looking elsewhere and in the same spirit  I’m surprised at how many people seem to fall prey to the “grass is always greener” syndrome and can’t stick through long, difficult struggles.

Perhaps even more to the point, I am surprised at how many people can’t seem to understand how government corruption, unjust regulation, eradicate professional oversight and malicious regulatory pressure – has created the current economic climate in America where we are so ripe, as a people, for disaster.  It is true with FranklinSquires, it is true with all business in Utah, and it is true across the United States and beyond.  These things, the implements of tribalism, socialism, and victims turning relentlessly to government, are the enemy to progress, peace and a healthy society -  not the American businessman.  It is the American businessman who has so much to offer.  It is an entrepreneur who looks at a difficult situation and strive to create more value than he consumes.   It is the lover of freedom who resists that temptation to seek the unearned – or to distribute the unearned in either benefits or guilt.  Yet, it is now the American businessman who so many want to see behind bars.

I have had innocent friends arrested and charged with criminal wrong doing over the last year, and many – many government agencies of threatened me repeatedly with the same treatment.  This is all part of the package deal.  An American can’t expect to really stand up for freedom, for opportunity, and for the fruits of personal liberty – and cower when such threats come.   There are many strategies to fight the tyrants, and I am no expert on all of them.  But, one things that is certain with me is that the fight is inevitable for all who refuse to cowar.  For some it has already begun, for some it is looming on the horizon, and for the great majority (thankfully) we still have some time to fight back the nonsensical, albeit hysterical calls for businessmen to be put in jail.

If the standard for jail time – is poor judgment, bad decisions, or economic failure – perhaps those who were calling for such unjust treatment of entrepreneurs and businessmen would take a second look.  I do not mean to defend the guilty, the actual fraudsters, or those who prey on the innocent through deception.  But, there are not nearly as many of these kind as there are innocent men and women who are now being accused.

The present economic crisis all boils down to the essential way we each view money.  Some – talk endlessly about how unimportant money is, how success is measured by so many other things, and yet when they loose a dollar (or a million dollars) through their own speculation and greediness – start looking around for the lynch mob or at least the federal grand jury.  Others, love money so much that they refuse to consider that it is the ability to create value -  for self and thers, in this life that ultimately brings happiness, not merely the power to consume.  Finally, there are those few who understand the principle underlying my message – and who love life in a way that is essentially foreign to the professional victim classes.  Losing money, time, credit and reputation – are all indeed tragedies in their own sphere.  But the far deeper tragedy is to loose this sense of life – to loose touch with the idea that no economic loss can compare to the loss of personal character.

To those who are willing to look into the days ahead with optimism, I think 2009 has much to offer and am still up to bat myself, (standing a the plate so to speak) in a game that has several innings left to play, despite the frustration of those who might have already left the stands (or who might be tempted to quit prematurely).  I am thankful for those remaining, committed friends.  I am excited for those students, clients, and associates who have embraced the basic principles that lay at the core of this organization and of my personal philosophy.  I am even anticipating the return of many who might have become entangled in webs of bitterness, frustration and victimhood but who will eventually see that the way forward is the best option available for each of us.

We have huge challenges ahead (speaking for both FranklinSquires and as an American).  There is a turbulent wind ahead – and ugly challenges.  This is true all across America – and beyond.  Nevertheless, FranklinSquires is setting out again.  The secret to our success (and to the success of anyone bold enough to resist modern trends) will be to hold fast to that which is immovable, to set our faces like flint, and to keep a hold of that eternal anchor which binds men’s souls.  It is with eyes wide open, and with my own face firmly set – that I can say to friends, associates, clients, creditors and all other interested – I hope you’ve had Merry Christmas and with you look forward to the New Year.

In Prosperity; despite any current adversity, I sincerely wish for you a very Happy New Year.

C. Rick Koerber
President & Founder
FranklinSquires Companies, LLC
Email: rkoerber@franklinsquires.com
Web: www.rickkoerber.com

• Question: Is FranklinSquires Still in Business?

Answer: Yes. The company has downsized, reducing expenses and overhead but is still conducting business and intends to continue so to do.

• Question: Is Rick Koerber still managing the company?

Answer: Mr. Koerber and several owners and partners have continue to manage the affairs of the company.

• Question: Has FranklinSquires (or any of its related companies filed for bankruptcy protection?

Answer: No.

• Question: How has the downsizing of FranklinSquires affected other FranklinSquires related companies?

Answer: FranklinSquires has had a substantial influence over many of its subsidiaries over the last several years. As such, with FranklinSquires downsizing during the first quarter of the year, other companies in the FranklinSquires portfolio have had to be self-reliant financially and with staff. This has been a difficult transition but no serious changes or announcements are forthcoming.

• Question: If FranklinSquires, Hill Erickson, or NewCastle, owes me money, will I get paid? When should I expect payment?

Answer: In the estimation of management the company has sufficient resources to ensure that all creditors will be paid. Cash flow remains inadequate, but more than half of all creditors have been paid in full, others have been paid partially, and many have been scheduled for payments over the last several weeks. While the company can not project with any degree of certainly how long it will take to finish paying remaining creditors, it is confident that all will be paid.

• Question: What is the status of FranklinSquires and Founders Capital related to State Securities Regulators?

Answer: To the best knowledge of the company, state regulators have not made any official allegations, filed any administrative actions, or made any civil or other charges against Koerber, company, or the company itself.Admits the controversy surrounding the State of Utah’s Department of Commerce, particularly the Securities Division, the companies position is that it was a very positive development to see the resignation of Securities Division Director Mr. Wayne Klein in February. Mr. Klein, in the judgment of the company, and his division have done more harm than good to the citizens of Utah. Unfortunately, members of that same Division have lied, deceived, and continue to behave recklessly in the pursuit of their duties and Ms. Giani fails to take seriously her appointment – having appointed Mr. Thad LaVar as the interim Division Director. Mr. LaVar has no background in securities yet has been put over the interpretation, enforcement, and supervision of all legal matters related to administrative rules and statutory compliance. From recent evidence it seems that Mr. LaVar is simply rubber stamping the same types of actions for which Klein was so adamantly criticized. This is an embarrassment to the State of Utah. FranklinSquires lends its support to the numerous other businesses and members of the State Government hoping that the ongoing State audit of the Division results in a complete reformation of the entire Department of Commerce and the elimination of individuals who are incompetent, unqualified, or corrupt.In the mean time, absent action by the regulators, the company continues to focus on actually doing business.

• Question: What is being done about Mr. Robert Paisola?

Answer: Mr. Paisola and several others have recently been sued by FranklinSquires for their conduct, namely spreading false and slanderous information, defamation per se and other related charge. The company is also currently reviewing appropriate legal responses to others whose conduct has become criminal in nature. The company is confident that those who are interested in the facts will consult reputable sources of information rather than the unprofessional, sensational, and factually irrelevant efforts of Mr. Paisola and others like him. The company also wishes to warn individuals against taking advice from Mr. Paisola and other similar “internet posters’ who “claim” to be able to help in matters related to FranklinSquires but in the end simply seek to exploit legitimate concerns for their own gain.

• Question: What is the status of Founders Capital?

Answer: Founders Capital continues in operation. Founders Capital has regular meetings with its owners/investors and is participating in the real estate liquidation plan described previously.Sadly, FranklinSquires has learned of still more incidents where individuals loosely associated with FranklinSquires or FranklinSquires partners have misrepresented their relationship to their own investors in an effort to seek to avoid responsibility for their own actions. Having received almost 50 inquiries during the first quarter of the year from individuals who were presumably “told” that they were investing in FranklinSquires or Founders Capital – none of them had actually done so. All explanations aside, the best indication of where a person’s “money went” is first and foremost the person who took the “investment” money and secondly the paper or note documenting which entity was “issuing” such an investment opportunity.While it is true that many of the FranklinSquires and Founders Capital creditors themselves have investors (meaning, many people have invested in companies that subsequently loaned money or other value to FranklinSquires or Founders Capital) those investors are misinformed and mistaken if they believe that FranklinSquires, Founders Capital or partners in these entities are responsible for their investment. It is quite simply impossible for FranklinSquires or Founders to be responsible for agreements that they were not a party to or in any way directly involved in setting up terms or conditions of the transaction. Those who are suggesting otherwise, in the experience of the company, are those who are seeking to escape their own responsibility for what they promised and what they communicated to their investors. NOTE: FranklinSquires is working with all persons who make honest inquiry to identify the rightly responsible parties. Where FranklinSquires has influence or relationships it continues working to assist all creditors and investors of creditors to receive repayment as soon as possible.

• Question: What is FranklinSquires response to the recent statement issued by The Church of Jesus Christ of Latter-day Saints related to investment opportunities?

Answer: FranklinSquires has always taught individuals to avoid unprincipled speculation and has cautioned individuals against mortgaging their personal residence for possible investment gain under almost all circumstances. FranklinSquires has never taught or advertised than any investment was devoid of serious risks, on the contrary one of our core values is “self-reliance” which includes the responsibility for ones financial decisions, and making appropriate due diligence. In this light and for this reason the company completely and heartily endorses the recent announcement and advice made by The Church of Jesus Christ of Latter-day Saints and is working to verify and ensure that all of the teaching and training materials distributed by any of our related companies is in harmony with the principles outlined.

• Question: What is the best manner or method of communicating with FranklinSquires?

Answer: The contact information for the company listed on the franklinsquires.com website is the best method. In addition, the following statement issued by Mr. Koerber in a recent public meeting may help:

“I want to personally thank all of our clients, creditors, students, partners, past employees and colleagues who have been kind and supportive during this period in our business. With the exception of a few incomplete news articles the support we have received from our friends, associates and the community has been exceptional. To the extent that I or FranklinSquires and our companies have failed to pay our bills or meet our obligations I recognize we are out of integrity and are making it the highest of our priorities to rectify the situation as quickly as we can. I extend my personal apology and our collective apology to all who have been injured by our failure to live up to expectations and agreements. I understand something about financial difficulty and its consequences and that is what drives me and my team to continue rather than just ‘give up’ and walk away. We are all human. Looking back, I’m sure there is much that I might have done differently knowing what we know today. The one thing I am confident of is that my partners and I along with the members of our team have dealt honestly and fairly with our clients and creditors to the best of our ability and where we are out of integrity at present I am confident that with hard work, lots of faith, and the pass of time, we can fully rectify the current situation. To those who are trying to assist us, I also personally thank you. For those who are trying to contact me and/or others related to FranklinSquires I ask that you be as patient as possible. The volume of phone, voicemail, email, and written correspondence is something we are still having difficulty managing. The best method of communication is email or written letter – though I understand both of those are not as timely as a simple phone call, often it is more reliable for both parties. We are doing all we can to stay in constant communication with all who sincerely inquire. I believe we are doing better, and I believe we can do better still – we will continue to work at it.”

It is the responsibility of a reporter to ensure as far as possible that parties to a story are given adequate opportunity to respond. In this case, Mr. Koerber provided many hours of interview and open access to company records to Salt Lake City Weekly reporter Eric Peterson who choose not to avail himself of the opportunity to either a) verify the facts related to his story or b) allow Mr. Koerber the courtesy to respond to any of the specific allegations contained in his article. Instead, Mr. Peterson deceptively represented that he was doing a “feature” on Mr. Koerber and asked no specific questions related to the allegations irresponsibly advanced in the article.

Mr. Peterson’s journalistic technique and the publishing of his story by the Salt Lake City Weekly without even the most basic fact checking procedure is outrageous and only further complicates a very important story related to real individuals in the Utah community. Spreading misinformation and rumor in the manner of this article actually hurts those most affected by the issues discussed.

There are too many factual errors in the story to address all of them in detail here, however, the following clarifications and corrections are offered to the public:

Related to Founders Capital:

• As of the present date none of the Founders Capital, LLC investors have filed any lawsuits against the company or its majority partner FranklinSquires Companies, LLC.

Related to Mr. Steve Skuba:

• Mr. Skuba is not now and never has been an investor or creditor of Founders Capital or any related entity.

• Mr. Skuba unilaterally decided not to go forward with the sale of his home to FranklinSquires subsidiary Hill Erickson, LLC, which transaction was originally made possible by Koerber at Mr. Skuba’s request following his call in to Mr. Koerber’s radio show on August 31, 2007.
• Mr. Skuba subsequently explained that it was his decision not to follow through with the transaction for his own personal financial reasons and a recording of his conversation with Mr. Koerber indicating as much was played for Mr. Peterson who neglected to accurately report the matter.

• Skuba has never spent “months” trying to reach Mr. Koerber or any of the employees of the companies involved. Mr. Skuba was in almost weekly contact with Mr. Koerber personally and his employees.

Related to Mr. Koerber

• Mr. Koerber founded FranklinSquires Companies, LLC with seven other partners in 2004.

• As a separate business venture Mr. Koerber helped organize the creation of Founders Capital, LLC with his partner Mr. Les McGuire in 2005. Mr. Koerber was the initial person responsible for the day to day affairs of Founders Capital and continues in that capacity today.

• Mr. Koerber began his real estate investing career (which is and has been unrelated to the business of Founders Capital) teaching people how to invest with no money and no credit. However, since that time his real estate classes now include subjects such as how to invest with money and credit.
• The term “Equity Milling” is the intellectual property of Mr. Koerber and while it is often misused in the marketplace Mr. Peterson was given a full description of the process and therefore has no reason to suggest that it involves such irreputable behavior as inflated appraisals or “straw buyers.” Equity milling, as taught by Mr. Koerber, is a method and strategy to profitably invest in real estate, minimizing and managing the related risks and capitalizing on the concept of “being the bank” when it is difficult to sell property. Students who follow this strategy have an increased ability to combat the present difficulties in the marketplace related to falling prices and difficult access to the secondary mortgage market.

• Neither Mr. Koerber nor any of his companies have ever offered a “year long real estate course for $7,500.” The most expensive course presently offered is $2,000.

Related to Mr. Bible

• Mr. George Bible never did business with FranklinSquires, Mr. Koerber or any of Mr. Koerber’s companies.

• Mr. Bible’s story and his related representations, as reported in the story, are almost entirely false fabrications.

• In late 2004, in the only encounter between Mr. Bible and Mr. Koerber, Mr. Bible did in fact walk away from the supposed transaction in question. The circumstances however are much different than what is reported. Mr. Bible did indeed walk away from a potential transaction after a meeting in Mr. Koerber’s personal office where it was pointed out that what Mr. Bible was in fact suggesting be done to facilitate his receiving a large commission on a transaction was highly questionable. After Mr. Koerber confronted Mr. Bible and Mr. Bible’s title attorney about the questionable nature of Mr. Bible’s suggestion, Mr. Bible in a rash action defamed Mr. Koerber and FranklinSquires to many real estate professionals and unilaterally ceased any attempt to rectify his contractual obligations. No business ever ensured between the two parties and Mr. Bible has no first hand knowledge of any transaction actually done or completed by Mr. Koerber or FranklinSquires. It is important to note that the journalist offers no factual verification for any of the details contained in Mr. Bible’s sensational story.

• Mr. Bible’s insinuation that Mr. Koerber or FranklinSquires has ever engaged in practices such as shopping for “14 different appraisals” and choosing values that were “more than double” the market value of homes is slanderous and ludicrous. The transactions of Mr. Koerber and his companies have been regularly scrutinized and there has never been an attempt by Koerber or his associates to “artificially” inflate values as implied in the article.
• Mr. Koerber and his companies use independent 3rd party appraisers and never require other participants in a transaction to rely solely upon any specific appraisal or appraiser as a condition of any transaction. The journalist, Mr. Peterson, was also made aware of these facts and was personally invited by Mr. Koerber to review any company records to verify these facts.

• Mr. Koerber and his programs do not involve “straw buyers” as suggested in the article.

Founders Capital and FranklinSquires consider Mr. Peterson’s article full of inaccuracies such as those corrected or clarified above. Among the many other items either deliberately misstated by Mr. Peterson or simply reported without the generally acceptable journalistic standards, the following corrections are important to clarify:

• Rachelle Taylor was never an accountant for FranklinSquires. Mrs. Taylor was a human resources employee who assisted with bookkeeping until December 2007. Mrs. Taylor’s decision to invest with Hunters Capital was unrelated to her position with FranklinSquires and was done without the knowledge of any FranklinSquires executive. Her decision to do so complicated her professionalism and was only discovered by company management after problems began between Hunters and Mrs. Taylor. The charges made against Mrs. Taylor by the Utah Division of Securities were launched after Mrs. Taylor’s employment with FranklinSquires ended and have nothing whatsoever to do with the business of FranklinSquires or Founders Capital.

• Free Capitalist Radio producer Israel Curtis has since been cleared of the false charges filed by the Utah Division of Securities. Mr. Peterson neglects to reference that Mr. Wayne Klein, the former Division of Securities Director making these charges recently resigned amid controversy related to his reportedly over aggressive prosecution and “misuse of authority.”

• Gabriel Joseph was never an executive officer, employee or “right hand man” with Founders Capital. Gabriel is one of eight current partners in FranklinSquires. Gabe’s company Annuit Coeptis, LLC is an entirely independent company that has no common ownership, management or employees related to FranklinSquires or Koerber.

• There are no controversial transactions involving Koerber, Founders, or FranklinSquires as implied by Peterson in his article. All of the actual transactions referenced by Peterson or with unrelated companies. The representation by the Salt Lake City Weekly that there are such transactions without providing any reference to any facts only contributes irresponsibly to the rumors and false perceptions in the marketplace. This is not appropriate conduct by professional journalists and FranklinSquires encourages Salt Lake City Weekly and other media outlets to encourage the highest standards of professional reporting from their journalists.

• The representation of Vonco as a Founders Capital investor is inaccurate. Vonco is not a Founders Capital investor and Mr. Peterson was clearly explained as much and did not ask for clarification or response to this untrue allegation during his multiple interviews with Mr. Koerber.

• Vonco’s lawyers not only received a response from FranklinSquires and Founders Capital but it was made clear that Vonco’s lawsuit against Founders and Mr .Koerber was unfounded, full of legal problems, factual inaccuracies and outright fabrications.

• Neither FranklinSquires nor Founders Capital has been shut down. FranklinSquires elected to cease operating out of the Eastbay location as part of its efforts to downsize and refocus resources on ensuring the company survives and satisfies all its debts and obligations. This decision is in no way directly related to Founders Capital, nor does it affect the operations of Founders Capital.

If the Salt Lake City Weekly would have asked for a response from Mr. Koerber or the companies on the several allegations advanced in his story, it would have allowed many of these inaccuracies to be corrected in advance. Instead Mr. Peterson’s article simply contributes to the unfortunate volume of rumor and gossip (most of which is unfounded) in the present marketplace, none of which helps the innocent and honest citizens of Utah.

FranklinSquires and Mr. Koerber are happy to respond to serious inquiries from interested persons related to matters having to do with the subject of this article. The best method for obtaining information is to send written request via email using the companies “Contact Us” webpage.

According to Mr. Shipley, he has become interested in the operations of these companies after reading certain online discussion boards and being asked about FranklinSquires and Founders from several of his clients. FranklinSquires CEO Mr. C. Rick Koerber granted the request for an interview to be aired over broadcast radio via “Free Capitalist Rado” and Mr. Koerber also agreed to answer Mr. Shipley’s questions in writing to be posted online for the public. At 5pm this evening Mr. Shipley is being hosted as a guest on Mr. Koerber’s “Free Capitalist Radio” program to conduct his interview. In addition, the following questions were delivered via email by Mr. Shipley. The answers are from Mr. Koerber.

Shipley #1: How are you unaffiliated and affiliated with multiple investment companies? How is it that on one site you claim them as part of your group of companies, and then on another claim no affiliation or interest? Do/did you have ownership interest in the investment companies (Hill Erickson, Founders Capital, Hunters Capital, etc.)? If you had any ownership interest, and claim them as Franklin Squires companies, how is it that you have no (even partial) responsibility for their actions?

Koerber: The question itself broad, and without context it could be easily misleading. Depending on how you use the term “affiliated” I am affiliated with hundreds of companies in the United States. However, to answer what I think you are asking its important to start with FranklinSquires Companies, LLC. I started this company with several partners (Gabriel Joseph, Steve Freestone, Sonny Jensen, Jason Vaughn, Peter Hansen, Mike Ballard, and Mark Craner) back and 2004. Since that time we’ve added two additional partners (Lindsey Dayton and Clavell Anderson). These partners each represent ownership of the company. They are in essence our “shareholders.” It’s also important to note that not all of these partners have a managerial role or even employee relationships within the company today. For example Mike Ballard, Peter Hansen, Sonny Jensen and Mark Craner no longer work as employees of FranklinSquires or any of its subsidiary entities, they simply hold ownership like shareholders of any company.

FranklinSquires was organized as a business development company. The purpose of FranklinSquires was to create other businesses and it has done just that. These businesses are generally called FranklinSquires subsidiary companies.

In addition, over the last several years FranklinSquires has invested in a number of other businesses. These businesses are most often referred to as FranklinSquires portfolio companies. FranklinSquires has varying degrees of managerial influence with its portfolio companies – ranging from no influence whatsoever to a high degree of day to day influence.

I am the founder of FranklinSquires and am the current President & CEO of the company. As such, I represent FranklinSquires and make many decisions on a regular basis as I relate with, advise, manage, and/or direct subsidiary or portfolio entities. I am not however personally an owner in the company. The members/owners of FranklinSquires are not individuals they are instead all private Utah based companies. Each owner is represented by a partner. I am not only an executive in the company but I am also a founding partner representing one of the owning entities.

Now, related to the specifics in your question.

• Hill Erickson, LLC is a wholesale real estate acquisition company that is a FranklinSquires subsidiary. FranklinSquires has a significant degree of managerial control over this company and I personally am the CEO of Hill Erickson, LLC so in that capacity I am very responsible for its affairs and its conduct in the marketplace.

• Founders Capital, LLC is a private equity firm. The late Les McGuire and I founded this company together. It is not a FranklinSquires subsidiary company. FranklinSquires is the single largest investor in the company having invested more than $50,000,000. While it was our effort that founded the company, neither Les nor I are personally owners in the company. I am employed by CRK Central Management (the manager of the company) to be the CEO of Founders Capital and in that capacity I am responsible for the overall management of the company and the use of its resources.

• Hunters Capital is a creditor of Founders Capital. It is an unrelated company in terms of ownership and management. Hunters is not a portfolio company or a subsidiary of FranklinSquires. I have had nothing to do with its founding or its operations.

Let me offer some explanation however over some confusion that has entered the marketplace about my relationship with Hunters Capital because of irresponsible statements made by others including media, government employees and Hunters’ attorneys.

Responsibility. Hunters Capital was founded, organized and operates without any direct involvement of me, any of my partners or employees. The only relationship between Hunters Capital and any business that I’m directly involved with is that Hunters Capital is a creditor of Founders Capital, meaning that Founders Capital has borrowed money from Hunters Capital in the past and currently has an outstanding balance with them.

Relationship. I personally know Paul Bouchard who is the primary and perhaps only principal in that company. He was a student of mine, he is a professional colleague of mine in the Utah County business community, and he and his brother in-law leased office space and resources from the FranklinSquires Center (office complex) in Provo, UT for a number of years to run their own mortgage company. Paul and his brother-in-law have also purchased advertising on my radio show. I consider both of these men friends and despite any weaknesses or mistakes they may have made I believe them to be honest, and honorable. However, I have no responsibility whatsoever for their businesses, and other than what I’ve described here, I have had nothing directly to do with their business operations. I have no direct say in their business decisions and they do not generally keep me informed of their internal business operations.

Shipley #2. How did so many rogue investment companies come into existence and claim you as their lead? They all started independent of any influence on your part? You knew nothing of their promises (legal and investment) that were unfounded and unsustainable?

Koerber: It is unfortunate when anyone falsely represents an association with me or my businesses to advance their own business. I speak at seminars. I teach classes. I’m on the radio daily, and in all these venues I talk a lot about how I do business. Many people take the knowledge they learn from me, add it to their own agenda and take their own action.

As far as rogue investment companies – I’m not exactly sure what you mean. I will say that I have taught a class (I think two times in the last couple of years) on how to create a “holding company.” That was just a term I made up to describe setting up a small business, setting aside a certain percentage of financial reserves that can be used for investing and managing that money as a self-reliant small business owner rather than giving it over to a third party. I have been disappointed to see other people use that same phrase “holding company” to describe their companies and then do things that are very much in contradiction to what I teach, what I believe and what I support.

I should also say that there are may of my students who I think have done a very good job of creating their own business and managing it, growing it, learning as they go and blessing the lives of many people in their communities. It’s the bad apples that seem to get most of the attention and make it very difficult for everyone else.

Now, as to how these companies start and what influence I have with them – it is different on a case by case basis. For example I think I have a lot of personal influence on my partners. They each have their own independent businesses. Many of them have created businesses that have loaned money to Founders or to FranklinSquires. I have encouraged these partners to set up their businesses with good legal counsel, to obtain good advice about their operations, and to operate their businesses to the best of their ability to be in harmony with the principles that I teach. To a large extent I believe they’ve followed my advice.

On the other hand, over the years I have seen people who come to me directly or through my seminars or classes and have heard about the extremely “high” returns I have made on my investments and they’ve asked me if they can invest with me. I’ve occasionally seen people get discouraged when I tell them that they cannot invest with me or with Founders Capital and they go off and look for someone else who “talks like I talk” and uses the same words and phrases and promises them the moon. Perhaps the person they eventually find to do business with even associates with me in some capacity. So there are assumptions that play into the equation that I certainly disagree with and have spoken openly and publicly about to warn people against being misled by their own assumptions.

I have been shocked and surprised to learn that even close friends of mine have invested with others under questionable circumstances – evidently thinking (and being seriously mistaken in their assumption) that there was no difference and that investing with someone who’s in “some way” associated with me means that they are essentially investing with me. This is absurd.

Over the last several years I’ve learned of circumstances where some people believe they are “investing with me” because they were apparently being told that the money they were investing would be loaned to Founders Capital. In some instances this was the case – though the assumptions are still misguided, but in other cases this was not the case and the money was directed to other places by people who I have no control over whatsoever.

When I hear about cases like this I do all I can to make sure my position is clear. In the past I have gone on the radio, I have spoken openly and repeatedly at seminars, and I have published press releases on the Internet to ensure anyone who wants to do an examination of the issue can learn that I was not involved in such companies or efforts.

I have even had employees tell me that they invested with someone’s “holding company” because they thought that I was a “partner” with the company they invested with. In such cases, when I ask what they have done to verify that I was in fact a partner with the person or company making that claim – the response has been as if I happened to be the first person to suggest that what had been told to them in order to part them from their money might not be true.

Now, how did all this happen? Well, I think in a very important regard, too often people don’t want to be responsible for their own actions. Its very common for each of us to make excuses, tell stories, and when things go south – we tend to want to get help from someone else like the government or from attorneys because “it’s not our fault.” I have recommended for years that it is NEVER a good investment to give money to someone else unless you have done a substantial amount of due diligence, unless you are willing to be personally responsible for loosing 100% of your principle invested, and unless you understand how the return on the investment is being generated. Even more specifically, my advice has constantly been that you are never investing with a company – you are always investing with people. In my opinion it is only appropriate to invest with those people who you feel like you’re willing to sit down across the table with if something were to go south, and put a plan in place to work together to recover your investment. These are strict standards that are easy for people who want to “look” like they are doing what I teach – to simply ignore. Those who ignore these recommendations do so at their own risk.

Regarding how these “holding companies” seemed to start springing up all over Utah, I also believe the government played a huge role in creating the situation. Let me explain.

First, government regulations require that if I want to have an investor (and I do have some investors) I have to be very careful about how I arrange that relationship, what information is disclosed, what kind of person can invest, etc. Because of this, both Les McGuire and I – in creating Founders – sought to keep ourselves on the right side of the law and rules. You might be interested to know that, despite all of the rumor to the contrary, whenever I have talked with government regulators they regularly confirm that they have yet to discover any evidence that I have broken any law or rule.

However, because of the extreme degree of regulation, it has been common practice for us to turn people down who wanted to invest with us. This created an interesting situation. Others, usually not associated with us, who were willing to be less diligent, perhaps even without any legal counsel whatsoever evidently seemed to think they could just go “do what Rick and Les were doing” and pick up all this money that everyone wants to invest without taking the precautions that seemed prudent to us.

Secondly, I think that people have a tendency to hear what they want to hear when you start talking to them about investments and money. This is part of what I have repeatedly called the “Brain-off Conspiracy.” So, I think there have been a lot of people who liked to talk like they were part of my “cause” but they were really just doing what they could to make money (on both the borrowing and on the lending side of things). When things don’t go well financially, it’s my experience that people who have done this like to attack me and my partners and point to us as the problem. That’s fine, we’re willing to be responsible for our actions and are confident that in the end, the facts will speak for themselves.

In reality the facts are pretty clear and the people who I’ve dealt with directly, with only a few exceptions over the last few years, are still very satisfied and happy with our business and personal relationships. I have weaknesses, of course. My businesses have a lot of growing and maturing to do – that is obvious. However, if and when you stumble across negativity in the marketplace about me and/or my companies in this regard it’s been my experience that you’ll notice it comes from three primary sources.

Source #1 – Most of it is just plain rumor. There is a lot of, “Well I have a friend who said” or “I have a family member who” and the problem with these stories is they are removed from the actual facts and literal chain of events.

Source #2 – Disgruntled Customers. These are people who knew what they were doing when they entered into an agreement with my companies or me, but if things don’t go as planned – they tend to want to tell a different story. Often, there are also those who are not actually FranklinSquires related customers but they want to be seen as “related” so that their victim story seems more credible.

Note: Such is the case with the infamous Robert Piasola who continuously tells people that he “almost lost a million dollars” with FranklinSquires. Notice how important the “almost” is. The reason Mr. Piasola never lost money with FranklinSquires is the same reason he never made money with FranklinSquires – we’ve never done business together.

Source #3 – Government Employees. It is sad to say, but over the past year we have documented a number of situations where government investigators who have made up their mind in advance about what they “think” is going on – tell inquiring members of the public, attorneys, and investors in other companies – things that are supposedly true about FranklinSquires – but that in fact are not true. Then this information gets spread around the Internet, the break rooms at work places, etc. This is unfortunate because it tends to create the perception that because the rumors are so prevalent – they must be true. Just because a lot of people are repeating inaccuracies, does not mean what is being said is true, and its unfortunate that in some cases this kind of behavior really leads people down very damaging paths and hurting very important relationships. Let me give you one startling example of how this has happened.

==> In mid-2007 Founders Capital, LLC delivered a copy of its balance sheet to Utah State regulators in an effort to demonstrate that contrary to rumors being spread by malicious individuals such as Mr. Paisola, our business was legitimate and that there were assets behind the company that exceeded all of the companies liabilities. Our balance sheet showed that Founders was in an equity position and that while there were many assets that were secured by real estate (not a liquid asset portfolio) there were indeed assets exceeding liabilities.

==> In late 2007 an inquiring member of the public, not an investor of mine (none of Founders or FranklinSquires investors have complained to any government agency to my knowledge) called the Utah Department of Commerce to inquire about a separate matter all together. Little did the government regulator know – but this person was a student of mine who had heard my radio show in August of 2007 talking about the corrupt regulators. So, this student recorded the conversation and delivered a copy of the recording to me. Here is a portion of that transcript to demonstrate my point lest it seem like I might be exaggerating.

Regulator: “If [your friends have] invested in FranklinSquires they’re going to lose their money. FranklinSquires is putting the buzz out that the division is going to lock them up, that’s not so. We’ve seen their balance sheets and they’ve got a shortfall of about $60 million dollars so it’s just a matter of time before that collapses. So if you know anyone that’s invested, bye-bye they’ve lost their money… this secrecy concept, and that’s part of the FranklinSquires model, is fraud. Its just, it is.”

==> Being thoroughly flabbergasted at this regulators statement – which was a complete falsehood – and considering that it was being told in an unsuspecting member of the public, I decided to call the regulator myself. I recorded the telephone call and here is a portion of the transcript documenting his answer to me.

Regulator: “Rick, I have not seen your financials. I don’t know that you’re going bankrupt. I don’t know where these people are getting that information… They’re not getting it from me… I’m not in the loop on investigations and so forth…I understand that you are in the process of dealing with either Mike or Wayne but I haven’t seen it…”

==> Still not satisfied, I called this regulator’s boss who had personally seen Founders balance sheet and had agreed to keep the contents of that balance sheet confidential and I also recorded that phone call. Here is a portion of what his boss said in response to my inquiry.

Chief Regulator: “To my knowledge [name extracted] does not have access to any of your financial information.”

==> The conversation goes on, but the point is clear, much of the information in the marketplace is coming from lazy, dishonest and/or corrupt government employees who want the public to believe some of the stories that are circulating because it helps them accomplish their own private goals. Unfortunately, the consequence is that it makes it more difficult for I and my companies to do business, it makes it more likely our business difficulties will be exacerbated and the end result is too often that the egregious behavior by people such as this regulator end up hurting innocent citizens.

Shipley #3. How is it, that with your real estate knowledge, you advanced the idea in your seminars that flipping homes would provide great rates of return in good times (the only time it got tested) and bad (now, when all the groups have stopped interest payments)? In all fairness to what you said or did not say, I never attended any of your seminars – this is what people told me that attended. It seems on some postings, you admit to a failed investment model because of economic circumstance – and yet it appears that you were telling people to not listen to the people out there saying what if real estate slows?

Koerber: I have simply never said that. Thankfully, all of my events are recorded and this is easy to document. What I teach related to real estate is basic principles, not how to “flip” homes. Now, I have developed a real estate investing model that I call “Equity milling” but it is another term that many people first hear from me and then use it to describe activity quite different than what I teach. For example, I have not and do not teach:

==> Equity Stripping – some people now use my term “equity milling” to incorrectly imply they are doing what I teach when they strip equity.

==> Borrowing money against a personal residence to invest in holding funds or any other kind of investment. I teach the opposite. I teach that borrowing money should only be done under a strict stewardship where “debt is avoided” and where the money borrowed can be secured (100% of the principle) if it is invested. It should be noted that I do teach there is a big difference between borrowing against an investment property and borrowing against a personal residence. I would agree that in some, very few instances, it might be appropriate to borrow against a personal residence for investment purposes, but it would have to be done according to the other qualifications I regularly make about insuring principle, understanding value creation, ability to withstand loss, etc.

As far as my admissions of a failed business model, I’m not sure what you are referencing. What I have admitted in the past and what I freely admit is that my real estate businesses have not performed as well as they could have if we (all owners, employees, managers, etc) would have adhered more strictly to the principles I teach. Knowing the principles and effectively living by them are two different things entirely. Often, as is the case with most of us, the expedience of the day interferes with our most noble ambitions and we often fall short of our ideals, not maliciously or negligently, just as a matter of practice.

Businesses grow and mature just like human beings. Young businesses, like mine, often fall short of the ideals of their leaders. The real challenge is not to take a snap shot in time and form permanent judgments, but to evaluate progress over time. Principles govern, and as we adhere more closely to principle through diligence and persistence, we improve. I do not consider my business model a failure. I think quite the opposite is true. But, I can certainly admit that I hope to do better in the future in actually building my businesses more effectively in line with the model I see in my mind. I’m confident that I have improved in my skills as a business man over time, and have much improvement left to accomplish.

Shipley #4. If it is proven that Paul, Wade, and others were taking investor money for personal use – after representing the investment as all going toward investment property, will you still defend them and their actions? Regardless of whether you were behind/with these people or not, will you defend them if they lied to their investors?

Koerber: I will not defend dishonesty. No. But, when friends behave dishonorably it doesn’t mean we should necessarily abandon them, sometimes that is when they could use our help the most. We have to be careful not to enable our friends in such situations, but I do not believe in abandoning friends because they are struggling. I believe friendships and relationships should be a resource that helps each of us correct our errant behavior.

Related to your question specifically, I would be surprised if, as you suggest, “it is proven.” I know these men, and believe they are good men. But let me reiterate, I will not defend any person’s actions that amount to lies to investors. I would be careful however not to believe any allegation just thrown about, it would have to be clearly proven or admitted.

Shipley #5. In your seminar on life insurance on the 27th, would you be willing to give the proceeds to the family of the late Les McGuire, since they are his ideas?

Koerber: No. Your assumption is very incorrect. What I will be teaching is a) not something I learned from Les, b) not his original ideas as you suggest and c) Les acknowledged that much of what I had learned about “human life value” and life insurance was the result of mutual association. I acknowledge Les McGuire as a great influence in my life, and that I would not know and understand much of what I now understand about life, finance, and many other subjects but I do not owe Les or his estate anything from the proceeds of my teaching. To suggest otherwise is ridiculous.

Shipley #6. Did you ever pressure any of the investment groups, affiliated or not officially, to obey state security laws when selling their notes?

Koerber: Yes, of course. It is in my curriculum to obey the law. It is in my curriculum to get good legal counsel. I use my past experience in Wyoming where I was pressured by regulators to agree to things that today I would not agree to – to demonstrate the importance of having a good legal team and to make adequate preparations in advance. Additionally, when it was brought to my attention that someone I knew or had influence with may be doing something that was questionable I confronted them on the matter and reiterated my points just described.

Shipley #7. Why have the investment groups stopped interest payments over the past 6 months, but failed to return principle to the investors? I understand that economic conditions can dictate timing, but why where some of them accepting new monies when it had to be apparent that interest would not be paid? Perhaps this is not a question for you as much as the leaders of these invest groups – but you seem to be close enough to them to know?

Koerber: I don’t know about these “investment groups” you allude to. I can only speak for me and the companies I’ve already described that I’m affiliated with. To the best of my recollection, most of the investors in FranklinSquires and Founders Capital who have ever requested to be repaid their entire principle were paid as agreed.

About the rest of your question, in 2007 things got very difficult with the actions of the regulators. Their behavior was making it very difficult to conduct our business and with the collapse of the secondary mortgage market things only got worse. The reason the secondary mortgage market affects Hill Erickson, Founders, and New Castle is that secondary mortgage money enables people to buy higher end homes with easier qualification and less cash down. When that market dried up, a lot of the real estate that was part of our portfolio or that was in process of our “equity mill” was high-end real estate that is hard to sell in today’s market to capture any significant portion of the value of our investment. Today, my real estate related companies are struggling, and are having huge cash flow difficulties. Many experienced professionals are suggesting that this is the most difficult real estate crisis in modern history. Nevertheless we continue to try to manage our asset inventory, liquidate the real estate holdings we have, and I am confident that though it may take much more time than we originally anticipated every one of our creditors can be made whole if we all keep our heads and stick to civil, reasonable, behavior. It would also help if the regulators would stop spreading misinformation and would stop lying to the public.

Shipley #8. I applaud your candor with respect to the securities issue in Wyoming. I understand what you claim to be the issue there, and what I read as two separate issues, though. You say that due to economic conditions, you were a victim of common practices- just bad timing. I read that you were supporting security selling without a license there – something that you are now being accused of here. Why do your principles put you at odds with the law? Why not just get licensed and act within the laws of the land? Plenty of investment groups get licensed and fail, but do not face legal action.

Koerber: My principles do not put me at odds with the law. Part of the problem is that the law is not clear and regulators can act arbitrarily. So, a business owner has a very difficult time knowing in advance what is against the law in the mind of a regulator. Also, sometimes the regulators are dead wrong about the law – but the cost of resisting the regulators is high.

Now, about me “being a victim of common practices”. I do not see myself as a victim. One of the reasons I talk so freely, so openly, and so regularly about my past and present difficulties is because I am willing to be responsible for the situation. Like all business owners I make mistakes all the time, but they are not usually the mistakes people would imagine. My mistake in Wyoming was based largely upon two problems of mine. First, I was very naïve about what the law actually said. Second, I was very naïve about how bad the regulatory bureaucracy in the United States and even at the State Government level has become.

About the accusation of “selling without a license,” I do not believe that any accusations have been made against me. I am aware of the rumors and speculation, but that is different. It is quite obvious to anyone who looks at the facts that such an allegation about my conduct would be misplaced.

Additionally, regarding why I don’t get a license, I simply have no interest in selling securities for others and I have no desire to sell or issue securities that require either licensing or registration. I am interested in business models that steer clear of this kind of entangling relationship with regulators.

Shipley #9. You claim to have made investors whole in WY. I applaud that, if that was the case. Here in UT, there are many creditors that claim you owe them money. In many cases these are common folk that are financially impacted by what you or one of these investment groups owes them. Does your apparent integrity on the WY issue, force you to put your own family’s possessions for sale to recover other’s losses? Seems that you should really inconvenience yourself personally until people are repaid- seems like that would be the moral high ground, not just paying them as it becomes convenient over years and allow they and their families to be inconvenienced financially.

Koerber: I disagree with the idea behind your questions. On a regular basis my businesses have outstanding balances to thousands of vendors and creditors. My track record of timely payment over the years has been almost impeccable. Therefore, many of the people you reference in your question are simply wrong or mistaken. There are very few people in Utah who are creditors of my businesses or mine who are not being paid as agreed. I owe very few people any money, and my businesses with only a few exceptions these past several months are almost always current on their obligations.

The biggest challenge today is with my real estate companies. For the past year it has become increasingly difficult to cash flow these businesses. We are currently working to liquidate assets to repay our creditors. It is a difficult market, liquidating real estate generally means some buyer getting a loan. All across the country this is a very difficult challenge. However, I’m confident we’ll make this happen, even though it will take time. I regret the difficulty that carries through to our creditors in the present situation. Regarding those individuals and families who are suffering because of the real estate related problems my businesses and I are experiencing – I am empathetic, my family is also suffering. However, I and my core team are not giving up, we are taking responsibility for the present difficulties and I believe in the end these people will be glad it was me not someone else who they were counting on to pay them back. I personally wish I would have done a better job in anticipating the present situation, however, in the end I believe everything will be square.

Now, regarding personal sacrifice and inconveniencing myself – your question is based upon the same naïve ideas in the minds of too many people today. American entrepreneurs and small business owners often go to great lengths to pay their employees and creditors in a way that few understand. It is often said that small business are the backbone of America, but few appreciate what they really means. In my current circumstances I have personally reinvested almost everything I’ve ever made back into these businesses including money previously set aside for my children, for future adoptions, for my own families financial reserves and I have leveraged all the substantial assets that are in my control. I don’t expect sympathy, none is requested. I simply make this point so that something that is all too obvious to the small business owner in America can be made more obvious to the person who thinks that jobs and paychecks seem to spring magically into existence.

There are no more inconvenience being felt by clients and creditors of my businesses than are also being felt by those of us who are working every day to succeed. The upside is that all of us will also benefit at the same time when we do indeed triumph over the present circumstances.

I should add, that America is headed for a very serious economic down turn, and it will likely become very apparent this year. We’ve only just seen the beginning of it in my opinion. I’m trying to make every one of my businesses solvent and all of these creditors whole prior to the major crisis that is yet to come.

Shipley #10. Why the talk about possessions not being important- just people, but then everyone I hear about that is following you feeling like an extravagant home and cars are important to show. On the Franklin Squires website, someone is making the point on the home page of making sure people see the fancy cars. Why? Do you believe that this extravagance reflects poorly on their owners? Does it not reflect gluttony that represents someone else suffering? Don’t these things represent pride and an unwillingness to treat them as a stewardship to benefit their fellow man?

Koerber: People are assets. The material things of this world have no intrinsic value, and the only value ever appropriately described to things such as houses, cars, etc. is the value made possible for other people through the utilization of these things.

There is nothing like what you are referencing on the FranklinSquires home page. However, I would suggest that the beautiful homes and automobiles were created and engineered by other men and women using the talents that God has given them. I do not think that it is evil to design, develop, built, sell or utilize these nice things. What is evil, is to think that value exists in the material things themselves. Craving or coveting material things cankers the soul. But, using such “fancy” things, if done in proper order, can be a great experience in life.

In terms of the “show” I would simply suggest that in the collectivized culture I often reference as the consumer condition, those looking for answers to some of life’s most important questions are often distracted by the material luxurious of life to the point of neglecting the far more important matters of character, relationships and service. To attract the attention of those I want to teach, often the nice car or nice house is precisely the lure that works most effectively. Or to put it another way, if I were a doctor – I would like look for clients among the healthiest men and women but I would spend time among the unhealthy. To attract their attention I would not preach to them about how to live differently, though that might be the longer-term answer to their difficulty, I would attract them by demonstrating my ability to cure their illness at hand. When someone thinks the problem in their life is that they do not have enough money (which is almost never the case) it is most effective to attract them by demonstrating in terms they understand – that money is not a problem.

None of what I’ve said above however, excuses sacrificing principle for the attainment of material luxury. Often, people use arguments such as the one’s I’ve begun to lay out here as rationalizations of their unprincipled conduct. That is unfortunate, but it does not persuade me to therefore wallow in the relics of poverty. Righteousness is no more demonstrated by a fancy house and a sports car than it is by a small house and bicycle. Ironically, those who spurn luxury are often as guilty of living an unprincipled life as those who rationalize covetousness.

Finally, I’ll conclude with one of my favorite axioms. The successful capitalist feeds more hungry and clothes more naked in his success than the man who bestows all his goods upon the poor. From a religious context I suggest reading 1 Corinthians chapter 13 to practice distinguishing real charity from the material world, and a talk entitled the “Use and Abuse of Blessings” by Brigham Young – to understand the proper role of material abundance and luxury in the life of a righteous Christian.

Unlike the ideas underlying your questions, I do not despise prosperity. I do not think the development and advancement of the quality of man’s material life on earth is evil or loathsome. I recognize God as its source and author and seek to live my life in harmony with those eternal laws that bring about prosperity’s blessings. Rich or poor, our attitudes about the material world surrounding us, affect how we make the deeper decisions about how we live each day. I reject entirely the idea that for a man to live by principle he must live in poverty and material depravity to demonstrate his piety. Can a man live in poverty and be a good and honorable man, yes. So to can a man live in material abundance – and thank goodness for him, if he serves more than he is served and creates more value for his community than he consumes, for he elevates all around him.

Shipley #11. Why are you focusing energy on missteps of the department of securities, and not the missteps of these investment groups? I encourage government to audit themselves and find fault within and take care of their problems. How does that change whether or not you or your organizations were doing wrong? How does that change that common people are left holding the bag(debt) of other unscrupulous actions? Should not the energy be spent to try and right some of the damage, as opposed to attacking regulators? Are they not trying to protect consumers from the problems that we see now? Lack of disclosure, lack of scrutiny of systems, lack of transparency, improper security representation, improper return promises, and so on hurt all consumers and seminar and education gurus like yourself alike. People will not trust without some law and order, and then no one takes risk or advances themselves financially. Should we not support the regulators effort, at the same time keeping them accountable for their own misdeeds when applicable?

Koerber: The ideas implicit in your questions are the same ideas that upheld feudal society and serfdom. The idea that government authority has anything to do with integrity and trust in the marketplace is frightening to me and those who love liberty. I agree with good government, defending and protecting our rights. However, abusive regulatory practices are a greater threat to personal freedom and prosperity than the most egregious conduct of any businessman or any con artist. More money has been lost and more families futures hurt by government approved and sanctioned investments than any small business failure or elaborate scam in local communities. I highly recommend you read Alan Greenspan’s 1963 excellent essay entitled “The Assault on Integrity” where he clearly makes the case I’m alluding to. Consider, for example, his statement that:

Regulation – which is based on force and fear – undermines the moral base of business dealings. It becomes cheaper to bribe a building inspector than to meet his standards of constructions. A fly-by-night securities operating can quickly meet all the SEC requirements, gain the inference of respectability, and proceed to fleece the public. In an unregulated economy, the operator would have had to spend a number of years in reputable dealings before he could earn a position of trust sufficient to induce a number of investors to place funds with him. Protection of the consumer by regulation is thus illusory. Rather than isolating the consumer from the dishonest businessman, it is gradually destroying the only reliable protection the consumer has: competition for reputation. While the consumer is thus endangered, the major victim of “protective” regulation is the producer: the businessman.

Consider, my businesses and I have now been the subject of unofficial government investigations by the State of Utah for over three years – and they still regularly admit they have discovered no evidence of my having violated any rule or law and they have taken no action against me formally. However, they spread misinformation in the marketplace, they defame me openly to colleagues and attorneys and they have cost me hundreds of thousands of dollars in attorney and accounting fees that would have otherwise gone to employee salaries, investor returns, or the payment of creditors. Ironically, they still do not have, as far as I have been informed, even one of my investors who has filed a formal complaint.

Now to answer your questions specifically.

Shipley #11A: Why are you focusing energy on missteps of the department of securities, and not the missteps of these investment groups?

Koerber: I am focusing on illegal and unjust behavior on the part of government officials because it is wrong, it is harming me, my investors, and my creditors, and corrupt government is the greatest threat to personal liberty American’s face today – and most of us seem oblivious to it.

I have also focused considerable energy on warning investors about investment groups who are unscrupulous, deceptive, or misinformed. I have published, broadcast and spoken openly about this. I have also offered to cooperate with government officials in the just carrying out of their duties to protect citizens from fraud.

Shipley #11B: How does that change whether or not you or your organizations were doing wrong?

Koerber: My focusing on government abuse does nothing to change what I have or have not done. I am willing to be accountable for and defend my behavior and the activities of my company. I have not asked any government official or agency for any favor – other than to restrict their behavior to the confines of the law.

Shipley #11C: How does that change that common people are left holding the bag (debt) of other unscrupulous actions?

Koerber: All of us are “common people.” Your vague attempt at creating class distinctions is morally repugnant to me. Right is right and wrong is wrong. If someone investment money, and lost it – there are appropriate remedies, but these do not include abusive and illegal actions by the government. Someone who had, for example, $50,000 to invest in a speculative venture should certainly be willing to be accountable for their own decision and hire a lawyer if they were deceived. Going to the government is a poor substitute for arbitration of a dispute unless it is in a court of law. Ironically, it is the regulatory action of the Utah Department of Commerce that has hurt more investors in the present situation.

Shipley #11D: Should not the energy be spent to try and right some of the damage, as opposed to attacking regulators?

Koerber: No.

Shipley #11E: Are they not trying to protect consumers from the problems that we see now?

Koerber: No. They are using these “consumers” as an excuse to exercise power and broaden their domain. For example, if they were protecting consumers they would not act without a complainant. However, this is not the case. In one case, as they have attempted to sway a potential witness, we have a recording where the witness protests saying he “does not want the government’s protection” and that he is “perfectly happy” with his situation and taking care of his financial matters himself. The government regulators present respond by simply laughing at him and insisting they are right to keep protecting him.

Shipley #11F: Should we not support the regulators effort, at the same time keeping them accountable for their own misdeeds when applicable?

Koerber: The regulators efforts, in this case, have been dishonest and illegal and beyond the scope of the authority given to them by lawmakers. This cannot and should not be supported. I do agree however, with helping the government legitimately protect the rights of its citizens. This would require many substantial changes in the Utah Department of Commerce.

Shipley #12. For the average investor, you say that you always have been consistent in saying that they should invest 10% a month toward their future. You say that you support a separate entity and some investing inside of it. You say that people should not gamble with stocks, and avoid volatile market instruments. Please, tell me how the average investor, making 30 to 150k a year, and a loyal student of yours, was supposed to take 10% and ever have the chance to make decent returns without these investment groups that would take smaller denomination investments? How can they afford to set up entities and then invest in anything consistent with your teachings with 10% of their money? How can they afford to buy whole life insurance, as you would suggest on that budget of 10%? If I tell people that hard money lending, buying and selling homes, and direct business investment is the answer- and then in the same seminar that people should do that with 10% of their income, am I not indirectly advising them to take equity from their own home, invest in these invest groups, and buy property for the sake of leveraging it for more than it is worth- all things you now denounce ever supporting? Please tell me and your followers how on 10%, the family making 40k is supposed to invest? If you do not clarify what they should do specifically, are you not supporting what you now denounce?

Koerber: I strongly suggest that if you are really interested in what I teach, that you actually attend some of my training. However, to answer your questions in summary – let me simply say this. Your questions set-up a straw man argument. They are based upon assumptions that a) it takes money to make money and b) being a successful investor involves earning a large amount of money. Both of these assumptions are errant.

When I started following the principles and strategies I teach, in 2003 I had no money and I had a credit score that was below 500. Yet, in a very short time I accomplished amazing results. In your scenario (which is not my example) a family investing $400 a month could accomplish amazing results. The first place to invest the $400 would likely be in education. It is possible to “labor” as an investor to put together opportunities that produce substantial returns without investing a lot of cash. For example, I once purchased a home for $132,000 with no credit and with less than $600 cash. This was a very successful investment that enabled me to move out of a very poor, run down home into a home in the neighborhood of my wife’s family where we were more comfortable, had more opportunity and better enjoyed life.

Finally, a family that is living on less than $4,000 a month should strive first to be self-reliant and second to become economically independent. I would guess that if they followed my teachings this would mean that after becoming self-reliant (living within their means) they would require about $3,200 a month in portfolio income to be financially free. I’ve seen my students accomplish that within a years time using creative real estate techniques without investing any substantial cash and without any speculation that would endanger their self-reliance.

Shipley #13. Let’s talk whole life insurance. Talk to me about the type of policy, and company that sells it, that fulfills all the benefits you state the coverage will fulfill. I have heard Les, and now you speak about life insurance. I agree with some of the precepts that you state (Huebner states) to make the case for life insurance, I just think it irresponsible to tell people that trust you a concept without backing the concept up with a real life example product that fulfills the benefits you state. For some time, I worked in the life insurance industry, and as you can imagine there was no shortage of salesmen selling the same concepts you speak of. Most of them failed to mention the tax risks, illiquidity, and inefficiencies inherent to whole life insurance. Then, they failed to help clients understand that most of the whole life sold is architected to benefit the agent and not to benefit them. This is why the Les story was to discredit the value of choosing a product wisely- his comment was always that most whole life companies are similar- and as long as you find a good one- the results are similar- something that to this day Garrett and others will state. This is untrue and ridiculous. An agent can (usually does not) architect a contract to pay themselves the least amount possible, and benefit the client in the greatest way possible. Some companies are and products are far superior to others. Once again, if you propagate ideas, and then give no direction on specific ways to execute the strategies, are you not indirectly supporting the loudest(in many cases most unscrupulous) parties?

Koerber: None of this is specific to me. I have never taught the class I’m not advertising on life insurance. The first class I will teach on the subject is in a few weeks. I am charging $1,000 for tuition. I am offering anyone a full refund of that tuition when they walk out the door if they are not satisfied. I will not be teaching about specific companies. I do not get paid commissions for selling life insurance. I am not a licensed agent with any company. I am teaching concepts that illustrate fundamental wealth principles. My students will be free to apply them as they see fit. You and I differ in a basic approach. I do not seek to teach students by “telling them what to do.” I seek to teach them true principles and then let them be responsible for their own decisions and own actions in governing their own lives.

Shipley #14: How is Engenuity a related Franklin Squires company, but yet you benefit in no way by selling the ideas of life insurance to people that read and learn and buy from companies you put your name with?

Koerber: You are simply mistaken. I was friends and associates with Les McGuire and Ray Hooper before they died in a tragic plane crash in June of 2006. Les and I partnered on seminars together between 2004 and 2006 and we also founded Founders Capital, LLC and McGuire Group, LLC together. I am also friends and associates with Michael Isom, Garrett Gunderson, and Wade Sleater. These were the partners of Engenuity before the plane crash. Following the crash, I was approached by the remaining partners in Engenuity and offered an invitation to be a partner in the company. After almost a year of meeting, planning and arranging we never solidified an agreement. I have never earned a penny as a partner of Engenuity nor have I ever earned a referral fee or any other type of compensation from Engenuity.

David Shipley is a financial services professional in Utah County, Utah. He has a number of professional certifications including: Certified Life Underwriter, Chartered Financial Consultant, Certified Financial Planner, and Chartered Adviser in Philanthropy. Mr. Shipley is a partner in Acquire, Wealth Advisors at 1145 South 800 East Suite 111 in Orem, Utah. He can be reached at 801-494-8398 or via email at dave@aquireadvisors.com. His companies website is http://www.aquireadvisors.com