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)

I can’t tell you how many times a week people see the car I drive and ask me what I do for a living.  For a Producer, this is the golden question.  It creates an ideal situation for me to create value for a stranger, with whom I would not otherwise be talking to.

In addition to these questions, I also have people who know me outside of business or who meet me through a friend, and who know my religious convictions, regularly ask me why I’m so materialistic, driving such expensive cars.

Its actually a really simple concept.  Can you imagine yourself at a gas station filling up your 1999 Camry, walking over to the guy pumping gas at the next pump and saying, “Hi. My name is Les McGuire. Let me tell you what I do for a living. I help people learn and apply the principles of prosperity.”

How to you think that conversation might go over? How do think it might change if the guy says to me, “Hey man, that’s a sweet car, what do you do for a living?”  Now, here’s the perspective shift.  Do you think my opportunity to create value for him has been increased?

This is the point.  Material wealth is never an end in and of itself for a Producer.  It’s all about what is going on in the mind of a man, that determines the deeper issues of morality, responsibility, intention, and the true condition of his heart.

The most obvious principles in the examples I’m going to share here, about cars, are 1) People are assets (and in the most strict sense of the meaning of this phrase, cars are not.) 2) Exchange creates / expands wealth.

Here is a question to ponder: As a tool of production, how is a billboard on the freeway different from an expensive car?   What is the main purpose of a billboard? My answer is: To start a conversation with someone you otherwise might not have been able to reach.
What is the main purpose of my car, as a resource of production? The same.

Let me illustrate my point with a few examples.  When I first thought of this concept, it was only a hypothesis, but my idea was, “I wonder what would happen if I bought a car that caused people to ask me what I do for a living?”

I suspected that it would create opportunity for me to create more value, build new relationships, and teach more about fundamental principles.  But, I wasn’t positive. So I tested out that idea by buying my first Mercedes.  It was a white S class.

Wow. What an immediate impact it made. In a macroeconomic view, that car never cost me a penny.  Why?  Because, from the moment I started driving the car, I found new opportunity to immediately begin creating more value in the marketplace than I had been doing before.
I think that car made me at least an additional $5000 per month from the day I bought it. My payment was $622. How’s that for a return on investment? The bummer was that now I had to drive around in a sweet Mercedes. Tough life.

Of course there is another side to the story.  Not all opportunity has come through positive responses to the car I drive.  Some of the most important opportunities I’ve had to teach fundamental principles, have come in much more frustrating circumstances.

Some people, because of scarcity, chose to believe that by purchasing this new Mercedes, I had actually just become a bigger consumer and was indulging my selfish, materialistic desires.  People with this mentality, also have a very difficult time accepting my “billboard” analogy.

When I started driving around in the Mercedes, several people felt justified in their scarcity frame of mind, because they also knew that when I bought the car I didn’t actually have much money.  The people in scarcity just saw me as if I were putting on a big show.  There is some truth to that idea; my intention was to put on a type of show.  What I was actually doing was what I call guerrilla marketing, or taking value to the marketplace in a unique and innovative way.   On a side note, businessmen who live in scarcity, often find their businesses struggling because they can never seem to find their way past their own scarcity mentality to engage in successful marketing.  They often view marketing and sales as an undesirable side of business, they neglect it, and when their business fails to grow like they hope, they justify their position to themselves by becoming bitter and condemning the world that doesn’t reward them appropriately.

Now, to get back to my experiment, man did it pay off.  I found that even though I was still talking to people about the same concepts and principles that I always had been, they were suddenly listening to me like they never had before.

Interestingly, before people would assume-perhaps because of my age or the car I drove, etc.-that I didn’t know what I was talking about.  Now, after I start driving around in a nice Mercedes, suddenly everyone seems to be listening to me, and responding as if I probably do know what I’m talking about. I was no smarter.  I wasn’t saying anything different.  But, now I was attacking the kind of attention that enabled me to create more value, and in one-on-one conversations, people were listening in a way that allowed me to create value for them like never before.

This is when I first started to really understand the principle that “Exchange expands wealth”, because I found that as a direct result of my car experiment, I found more and better opportunities to exchange with people than ever before.  As a result, my wealth started to grow exponentially.

In case you are still struggling with the concept, imagine this scenario.  A friend of mine wants to introduce me to his other friend who is very wealthy and successful. So, he sets up a lunch meeting. While they are waiting for me, I pull up in a high-end Mercedes. I get out of the car, walk over to them casually, my friend introduces me and says, “This is my friend Les, he knows more about money than anyone I’ve ever met.”

How do you think this goes over in the mind of the successful person I just met? How might his mindset be different if he had seen me pull up in an S-10 pickup? I admit it’s not the biggest deal in the world, but if you think the messages you are sending, even with the kind of car you are driving, makes no difference-you aren’t thinking.

I met another guy who was 35 years old, had almost 500 employees and was worth over $35 million. He is regularly hit up with supposed opportunities to meet people constantly. Most of the people he meets in situations like that, kiss up to him because they are all trying to get something from him, and its usually money.  This is the life he is used to.

He and I met casually and struck up a small conversation.  As it turned out he had a sweet Mercedes SL55 AMG. I told him that I had one as well. He asks me about it and I briefly described my SL65 AMG.  Surprising to me, he then told me he’d never heard of the SL65.  I explained to him that it was the same car as his, but instead of a supercharged V8 mine has a Twin-Turbo V12. His response?  “Cool. I’d love to see it sometime.”

Now, does this make him want to do business with me? No. But does it help the conversation move forward in a productive way, and does it affect how he views me and how he listens to what I have to say in the future? You’d better believe it.

If you think it makes no difference, I just suggest you ask someone who has a car like this and understands this principle and you might be surprised at what you’ll find.

If you think “a car is a car”, it gets you from point A to point B and has no other influence on productivity at all, you may well be right-as far as a description of your potential.  However, if you think you are making a statement that is true for all of us, then you are seriously mistaken.  Remember, it isn’t about the car. It’s about the people you have the opportunity serve.

Don’t let scarcity mentality cause you to fall into the common trap of judging people negatively because of the car they drive-or don’t drive. At the same time, also recognize that in the world in which we live, many people are already in this trap and the question is, “How will you use this knowledge, now that you have it?”

I don’t criticize or judge people for not driving expensive cars, and my friends who drive nice cars don’t judge those who don’t, either.   Pretty much all of the judgmental, spiteful attitudes I’ve seen, relating to cars, come from those who criticize others for driving nice cars.  It’s easy to call people with nice cars selfish, greedy, foolish, egotistic, and all sorts of other bad names.  But, I would suggest to you that its not productive, and more importantly, its not a virtue. Be careful of judging people too quickly based on appearances. Things are not always as they seem.  Once you realize this you are empowered to do two things.  First, to see past material considerations and actually build relationships with people (who are the real assets in exchange) and second, to use this knowledge to attract the attention of others who might be so judgmental-or those who have learned the lesson you’ve now learned.

I love Ayn Rand’s statement that there are no contradictions, only false premises. If you hear a guy speaking the language of producers, teaching principles, running multiple successful businesses, and you think that person must be inherently selfish, greedy, materialistic, judgmental of others, and prideful, because of the material wealth that surrounds him, I invite you to question your premises. Something is not adding up.

If you believe that principles govern, dollars follow value, exchange expands wealth, people are assets, etc, yet you see others apparently violating these principles and prospering-you should question your assumptions.  Either they aren’t as prosperous as they appear, or they aren’t as bad as you are judging them to be.

I love driving $200,000+ cars because it invites people to come to terms with this dilemma early in their relationship with me.  They either think I’m a jerk and go away, which is fine because it probably spares me a lot of wasted time and headache working with a person who it is highly unlikely would be open-minded to principles of abundance-regardless of the car I’m driving.  Or, they recognize it (sometimes learn from it) and we are able to produce amazing results together. I have literally dozens of unbelievable producers in my life, right now, as a result of this basic idea.

I hope this has been helpful. Now, you might have a better understanding of why, when I met Rick and saw his ‘93 Honda Accord, I told him I thought he should buy an expensive car.  He resisted this idea for a short while, but then had some experiences that helped him see what I’ve been explaining.  Once Rick grasps a principle, you can count on him to take it all the way.  When he finally saw what I’d been trying to show him, I think he went out and bought something like five cars all within a day or two!

Remember, it’s not about cars. It’s not even about the people who drive them.  It’s really about the thousands of people who might be able to serve, if you could simply attract their attention in a productive way.  If you are a producer, a car is not just a car.  It’s a resource of production, like everything else. The real fun is finding what you enjoy and are passionate about anyway, then figure out a way to go produce with it.

End Note:  Even after reading the examples I’ve illustrated, people are constantly asking me questions that reveal to me that they are still not grasping the concept.  It is not about the car, the kind of car, the details of the car, or anything like it.  In order to try and reach those who are still not grasping the concept-I want to tell you the story of the Glick.

When I was 22, I lived in Hawaii for 4 months.  I was driving limos for Japanese tourists, using my language skills as a newly returned missionary from Japan. Upon first arriving on the Big Island, my buddy and I (”Stu” from Mesa, AZ)  realized we were in trouble without a car.   So, I called my dad and begged for some cash (socialist). He sent us $500 and we bought the sweetest 1977 Mazda GLC Station Wagon you’ve ever seen.  It was cleverly named, “The Glick”. It ROCKED.

The Glick was a total rust bucket. Every morning on our way to work, our daily routine was to pop the hood and add a quart of oil (it leaked about a quart a day.) We bought oil by the case.

The gas gauge didn’t work either.  So, we bought a one-gallon gas can, filled it up and kept it in the car. We would just drive until we ran out of gas, then put the extra gallon in and drive to the gas station. We once actually ran out of gas between the ordering microphone and the pickup window at the McDonald’s drive through. That was sweet.

That car was a total tool of production for us. In Kona, the locals seemed to look down at tourists. But our car was a quintessential surfmobile (it even had an old, beat up bumper sticker that said “Proud parents of a Kamakai Elementary School student”). So everyone treated us like locals, not tourists. Within about a month, we’d drive down the road (Alii Drive) and all the guys hanging out on the side of the road would “shaka” us, etc. We were “in”. The car was perfect.

Because we were hitchhikers when we first got there, we had a policy of always picking up hitchhikers once we had the sweet ride. They thought we were exceptionally cool. And we had no fear of loss because 1) who would want to steal the Glick, and 2) if they did, where would they go?

That was the perfect car for our situation, which proves the point again…it’s not about the car.  When we left Hawaii, we sold the Glick for about $500.

The Glick is a great example because it illustrates the same idea as my Mercedes S class experiment.  It’s not about the car, its about how you can use the car for productive purposes.  This is true of all material “assets.”  The question is not, “Should I purchase this or that?” The more valuable question is, “How can I produce with this or that?”

Now, make not mistake-the billboard analogy doesn’t mean that this is the only purpose a car serves, it’s just one of the many productive things cars can do.  In my current situation I have more cars than drivers at my house.  So, I lend my cars out to people all the time. It’s nice when a friend’s car is in the shop or having problems to just be able to say, “Hey, come drive mine for a few days.” It’s always about creating value…people are assets.

Let me share one final observation.  I invite you to consider that stewardship grows and increases as it is used productively.  If this is true, and I suggest that it is true, what does this imply about money or other forms of material “wealth”?

If you are a wise steward, your stewardship will grow, until eventually you receive, “all that the Father hath.”  (This, by the way, is a lot.)

There is no virtue in poverty, and no sin in prosperity. The sin is in where your treasure is, and I don’t believe you can tell where a man’s heart is just by looking at how much wealth he has-or doesn’t have.  You can’t tell such an important thing about a person without more information.  So, being slow to judge is a wise approach, lest you be judged as you judge others.

>>>Learn more about capitalism

* This essay is a compilation of several online posts made on the FranklinSquires discussion boards prior to his death in the tragic June 2006 plane crash in Utah County, UT. Some edits and revisions have been made for clarity and continuity. Almost all of the language, however, is still in the form first written by Les.

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.

With such obvious success, the current downward trend of the dollar and the uncertain economic times ahead FranklinSquires President Rick Koerber recently announced that FranklinSquires intends to embark an a new minting program for 2009 1/2 oz. Franklins, 1 oz. Franklins, and 1 oz. Squires.  Individuals interested in participating in this minting project or who would like to purchase 2009 Franklins and Squires are encouraged to contact the company by emailing info@franklinsquires.com.

The company anticipates selling “Franklins” according to the following schedule:

1/2 ounce Franklin, Quantity 1
$450 ea. pre-purchase beginning January 2009
$460 ea. purchase real-time beginning June 2009

1/2 ounce Franklin, Quantity 10
$445 ea. pre-purchase beginning January 2009
$455 ea. purchase real-time beginning June 2009

1/2 ounce Franklin, Quantity 20
$440 ea. pre-purchase beginning January 2009
$450 ea. purchase real-time beginning June 2009

1 ounce Franklin, Quantity 1
$895 ea. pre-purchase beginning January 2009
$915 ea. purchase real-time beginning June 2009

1 ounce Franklin, Quantity 10
$885 ea. pre-purchase beginning January 2009
$905 ea. purchase real-time beginning June 2009

1 ounce Franklin, Quantity 20
$875 ea. pre-purchase beginning January 2009
$895 ea. purchase real-time beginning June 2009

The company anticipates selling “Squires” according to the following schedule:

1 ounce Squires, Quantity 1
$ 15.95 ea. pre-purchase beginning January 2009
$17.95 ea. purchase real-time beginning June 2009

1 ounce Squires – Quantity 10
$14.95 ea. pre-purchase beginning January 2009
$16.95 ea purchase real-time beginning June 2009

1 ounce Squires – Quantity 20
$13.95 ea. pre-purchase beginning January 2009
$14.95 ea purchase real-time beginning June 2009

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.”