Fiduciary backer guilty of fraud

A federal court jury in Idaho has found famed 401(k) fiduciary advocate Matthew D. Hutcheson guilty of 17 counts of wire fraud.

The jury in the U.S. District Court for the District of Idaho reached the verdict last Monday. The U.S. Attorney’s Office initially pursued Mr. Hutcheson in federal criminal court last April, alleging that he had misappropriated about $5 million from retirement plan clients.

The financial adviser will be sentenced July 23.

A related civil case filed by the Labor Department in federal court in Idaho is in progress.

E-mails to Mr. Hutcheson’s attorneys, Dick Rubin, Robert Schwarz and Melissa Winberg, weren’t returned.

A call to Mr. Rubin wasn’t returned.

The first 12 criminal counts involved a dozen wire transfers out of the G Fiduciary Retirement Income Security Plan’s account in 2010, totaling $2.03 million, according to court documents.

Although Mr. Hutcheson told the plan’s record keeper to report on plan participants’ account statements that the money was invested in a so-called TDA Mid-Term Interest Bearing (Cash Equivalent), the money was being used to renovate his home, make payments on three cars and pay down two motorcycles and a pair of all-terrain vehicles, prosecutors said.

The other five wire fraud counts involved assets belonging to another plan client, Retirement Security Plan & Trust, and a series of transactions from 2010 to about 2011.

Mr. Hutcheson instructed that plan’s record keeper to liquidate about $3 million in assets, according to prosecutors.

The point of the liquidation was to buy on behalf of plan participants a bond bank note that was secured by an asset in foreclosure, he claimed.

However, Mr. Hutcheson used the money to buy an interest in a golf course and lodge in the name of Green Valley Holdings, an entity he had set up, prosecutors said.

During an audit of Retirement Security Plan & Trust, he admitted that there was no plan investment in a bank note, prosecutors said.

Mr. Hutcheson told the auditor that about $3.2 million in plan assets were loaned to Green Valley, which he has acknowledged was a prohibited transaction under the Employee Retirement Income Security Act of 1974, prosecutors alleged.

They seek some $5.3 million in forfeitures from him. Each count of wire fraud carries a penalty of up to 20 years in prison.

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