Plan adviser Hutcheson facing 17 counts of wire fraud.
Renowned 401(k) fiduciary advocate Matthew D. Hutcheson's day in court began today when his federal criminal trial got under way.
Mr. Hutcheson, a plan adviser who appeared before Congress in 2010 to support applying the fiduciary standard to 401(k) advisers, is facing 17 counts of wire fraud from the U.S. Attorney's Office in Idaho.
Federal authorities claimed in an April 10, 2012, indictment that he was the fiduciary and trustee to three multiple-employer plans and that he pilfered close to $5 million in assets from them for his own purposes.
Mr. Hutcheson has pleaded not guilty.
Additionally, the Labor Department has pursued the 401(k) fiduciary advocate in a related civil matter in the U.S. District Court in Idaho. That case, which continues, was filed last May.
Mr. Hutcheson's attorneys, Dick Rubin, Melissa Winberg and Robert Schwarz, all of the Federal Defender Services of Idaho, were unavailable for comment.
Allegations surrounding a trio of retirement plan clients are at the heart of the case.
According to the criminal indictment, Mr. Hutcheson acted as a fiduciary and trustee to the G Fiduciary Retirement Income Security Plan, the National Retirement Security Plan 401(k) and the Retirement Security Plan & Trust.
Federal authorities claim that through 2010, Mr. Hutcheson allegedly directed G Fiduciary's record keeper to send via wire transfer a total of $2.03 million from the plan's account at Charles Schwab & Co. Inc. to accounts that were either controlled by the adviser or were for his benefit.
Authorities allege that while Mr. Hutcheson told the record keeper to note on the plan's participant account statements that the money from the transfers went toward a cash equivalent, the adviser had used the money to cover a number of personal expenses. Those expenses allegedly include the renovation of Mr. Hutcheson's home in Eagle, Idaho, including the addition of a swimming pool and hot tub, and the purchase of two motorcycles, among other things, the U.S. attorney alleged in the complaint.
In March 2011, employees in the G Fiduciary plan were told to move their plan assets into the national Retirement Security Plan 401(k), but there were insufficient funds to make the shift, the U.S. Attorney's Office claimed.
Federal authorities assert that Mr. Hutcheson set up an entity called Green Valley Holdings to invest in a golf course and a ski lodge at the Tamarack Resort in Idaho.
The U.S. Attorney's Office claimed that he set up false documents and a fake proof-of-funds letter supposedly from the president of TD Ameritrade Trust Co. that said that the firm had $40 million in accessible funds and could wire the money to Mr. Hutcheson to buy the resort.
But Green Valley had only $55 in its bank account, authorities said. They claimed Mr. Hutcheson allegedly used $3 million in plan assets from Retirement Security Plan & Trust to help purchase an interest in Tamarack, telling the plan's record keeper that the funds were going toward a fixed-income bank note, according to the complaint.
Federal authorities claim that during an audit of the plan, Mr. Hutcheson allegedly told the auditor that the $3 million in plan assets were loaned to Green Valley Holdings and did not go toward the bank note, according to the complaint.
Prosecutors are seeking $5.3 million in forfeitures from the adviser. Each count of wire fraud carries a penalty of up to 20 years in prison.
