Defense attorney Marcus Mumford and a trial judge grew testy Thursday during testimony from a man who said he and his brother lost $450,000 invested in businesses run by former Utah County real estate guru Rick Koerber.
Mumford unsuccessfully tried to prevent Garth Allred from testifying at Koerber’s fraud trial, arguing that Allred had not invested directly with Koerber and that his testimony would amount to hearsay or would be irrelevant to the 18 charges Koerber is facing. Allred said he invested in Koerber’s operation by providing the funding through a neighbor’s business.
When Allred took witness stand, Mumford began peppering his testimony with objections to the prosecutors’ questions, almost all of which U.S. District Judge Robert Shelby denied. Mumford then started his cross-examination of Allred aggressively and his voice rose in volume as he asked questions in rapid succession.
At that point, Shelby jumped in and told Mumford to conduct himself in a professional manner and act respectfully with witnesses.
That has been the only flare-up involving Mumford in two weeks of testimony. The defense attorney has had recent run-ins with judges in Utah and Oregon over his courtroom conduct. He was tasered in Oregon after his client, Ammon Bundy, was acquitted of charges in a trial over the armed occupation of a wildlife refuge.
In his cross-examination, Mumford tried to draw a line between Allred’s investment and Koerber.
Allred testified that he attended seminars where Koerber explained his “equity mill” strategy of investing in single-family homes. After one such event, Allred said, he ran into one of his neighbors outside the hotel, and man said he was getting 5 percent interest per month from Koerber.
But, the neighbor said, “You can’t give money directly to him. You have to give it to me,” said Allred. Both he and his brother used the neighbor’s company, called Vonco, to invest in Koerber’s companies.
Mumford hammered away on the point that Allred’s contractual relationship was with Vonco and not Koerber.
A January indictment accuses Koerber of running a Ponzi scheme that took in $100 million from investors and gave them back about half that money as interest, misleading them to believe the payments came from profits.
Former bookkeeper Forrest Allen returned to the witness stand Thursday. On Wednesday, he testified that Koerber had told him that Ponzi schemes were not illegal under Utah law.
Under cross-examination, Allen said Koerber wasn’t trying to justify running such a scheme. Allen also testified that he didn’t believe the operation was a Ponzi scheme because “we did have products and services in what I considered legitimate business transactions in an effort to make a profit.”
Mumford asked whether Allen had observed Koerber doing anything dishonest or deceptive. “I can’t recall anything that was dishonest,” Allen said. “Deception to me can be defined in a number of ways.”
Asked about what he meant by deception, Allen pointed to Koerber’s lifestyle and luxury cars but wouldn’t elaborate.
Mumford, however, did not question Allen further about financial records used by prosecutors to show that money from one investor went to pay the interest owed to various other investors. The trial ended its second week on Thursday and could last as long as six more weeks.
