401(k) advocate Hutcheson gets 17 years for stealing client cash

$5M in wire transfers went to home repair, stake in golf resort, prosecutors charged

Jul 31, 2013 @ 4:49 pm

By Darla Mercado

Matthew D. Hutcheson, a famed 401(k) fiduciary advocate, was sentenced to more than 17 years in prison today for making off with more than $5 million from his retirement plan clients.

In April, after an eight-day trial, a federal court jury in the U.S. District Court for the District of Idaho found Mr. Hutcheson guilty of 17 counts of wire fraud. The criminal case is running alongside a related civil case filed by the Labor Department, also in the federal court in Idaho.

Mr. Hutcheson received the 210-month sentence that federal prosecutors had recommended. He will also be required to repay his victims $5.3 million in restitution. The U.S. Attorney's Office said 250 individuals were affected by the scheme.

Mr. Hutcheson's attorney, Ryan Henson of Gulstrom Henson & Petrie PC, did not immediately return a call for comment.

The court proceedings took an interesting turn.

In a July 17 sentencing memorandum, prosecutors said that during trial, Mr. Hutcheson distributed an 83-page “manifesto” to friends, associates and the media.

The document described the adviser as a “political dissenter who was attacked by the Department of Labor and Department of Justice after he threatened to expose a scandal within the Department of Labor,” according to the government's sentencing memorandum.

“Indeed, he claims that he was such a patriot that he was willing to risk going to jail just to expose the DOL,” prosecutors wrote in their sentencing memo.

Mr. Hutcheson on June 12 turned in to the Probation Office a second batch of documents that were “of the same tenor,” criticizing the judge who issued an order setting conditions of release. The order prohibited Mr. Hutcheson, but not his counsel, from contacting prosecution witnesses and victims during his pretrial release, according to the memorandum.

“Nonetheless, the defendant claims that Judge [Candy] Dale's order was 'a blatant violation of his rights' that 'denied him a fair trial, which directly resulted in a false conviction,'” prosecutors said in their sentencing memo. “He concludes: 'If Matthew Hutcheson goes to jail, it will be one of the most significant miscarriages of justice in our nation's history.'”

On July 1, Mr. Hutcheson's lawyer, Samuel Richard Rubin of Federal Defender Services of Idaho, filed a motion to withdraw as the adviser's attorney. The two were “embroiled in an irreconcilable conflict,” according to the motion.

“The motion is based upon conflicts that have arisen and continued between counsel and defendant with respect to case strategy and presentation,” Mr. Rubin said in the motion.

The initial 12 criminal counts against Mr. Hutcheson pertained to 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.

Prosecutors said that while Mr. Hutcheson told the plan's record keeper to report on participants' account statements that the money was invested in a “TDA Mid-Term Interest Bearing (Cash Equivalent),” the money was actually being used to renovate Mr. Hutcheson's home, make car payments and pay down two motorcycles and a pair of all-terrain vehicles.

Five wire fraud counts were related to assets belonging to Retirement Security Plan and Trust, another client, and transactions that took place from 2010 to 2011. Prosecutors said that Mr. Hutcheson told the plan's record keeper to liquidate about $3 million in assets. Supposedly, the reason for the liquidation was to buy, on behalf of the plan participants, a fixed-income bank note that was secured by an asset in foreclosure.

But prosecutors said that Mr. Hutcheson used the money to buy an interest in a golf course and lodge at the Tamarack Resort in Idaho in the name of Green Valley Holdings LLC.

Federal authorities also said Mr. Hutcheson set up phony documents and a fake proof-of-funds letter supposedly from the president of TD Ameritrade Trust Co. that said the firm had $40 million in accessible funds and could wire the money to Mr. Hutcheson to purchase the resort.

The fake documents also had a phony screenshot of Green Valley Holdings' bank account, which showed a balance of more than $40 million, prosecutors said. In reality, the account had just $55 in it, prosecutors said.

Amid an audit of Retirement Security Plan and Trust, Mr. Hutcheson admitted to the auditor that there was no plan investment in a bank note, prosecutors said. Prosecutors said he told the auditor that about $3.2 million in plan assets were loaned to Green Valley, which Mr. Hutcheson has acknowledged was a prohibited transaction under the Employee Retirement Income Security Act of 1974.

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