Spyros Dermatas knew Gary Hutcheson for more than three decades before he invested in Hutcheson’s Georgia Ionics hedge fund.
For Chuck Darsey, a close friend of Hutcheson’s in-laws, a sense of trust coupled with signs of Hutcheson’s past successes influenced him to invest $25,000, his children’s college savings.
“I never saw anything in Gary I couldn’t trust,” said Darsey, of Albany. “It seemed like everything he did turned to gold.”
Gary Sheldon Hutcheson, 56, and Saundra McKinney Pyles, 52, are accused of defrauding more than four dozen investors out of an estimated $2.11 million in an alleged Ponzi scheme, according to federal and state court records.
The list of investors reads as a who’s who of Macon business leaders and professionals. It includes business owners, doctors, accountants, a retired Superior Court judge and many other successful and prominent residents.
Hutcheson and Pyles were indicted April 22 on five counts of mail fraud and five counts of money laundering, according to federal court records.
After disappearing for more than seven months, Hutcheson and Pyles are scheduled to appear before a federal magistrate Monday to face the charges.
A federal judge released Hutcheson and Pyles from custody on their own recognizance after their April 28 arrest in Colorado.
Because investigators seized Hutcheson’s and Pyles’ belongings, including money, a federal judge has ordered that they be given “an amount of money for subsistence expenses” to pay for their travel back to Macon and living expenses until Monday, according to federal court records.
Investors say they’re in a state of shock.
“You never think it could happen in your own hometown” said Dermatas, co-owner of Nu-Way Weiners.
Robert Hughes, retired head of the U.S. Probation Office in Macon, described Hutcheson as a “sharp businessman, ... good father” and a good friend.
“It’s so out of character it’s intriguing,” said Hughes, who knows Hutcheson as a fellow member of his Sunday School class at Vineville United Methodist Church.
Darsey said Hutcheson was a likable, jovial man who laughed a lot.
The two often kidded each other about their alma maters — Darsey’s Georgia Tech and Hutcheson’s University of Georgia. They had a friendly rivalry game of who had the most money in his pocket at any given time, Darsey said.
“If I had a list of people who might be in a Ponzi scheme, he’d be last on my list,” Darsey said.
While some investors say Hutcheson approached them in person, others say he sent a prospectus for the fund either by e-mail or in the mail along with a letter asking them to invest.
Hughes and several other members of his church and Sunday School class invested in the fund after receiving a prospectus in the mail.
After thinking it over and talking with other friends Hutcheson solicited to invest in the fund, Hughes invested $10,000.
Some investors received dividend checks from the fund, leading them to believe that the fund was successful. Federal records show that $457,000 was paid out to investors.Darsey said Hutcheson led him to believe the fund was achieving an 18 percent to 25 percent return.
“It was better than the market at the time,” Darsey said.
For Dermatas, suspicions started to rise when he got an e-mail from Hutcheson in September saying he’d be out of touch for a while — not reachable by phone or e-mail.The e-mail was the last time he heard from Hutcheson, Dermatas said.
Hughes also got an e-mail, but it came from his wife while he was working as a private contractor in Iraq last fall.
“I got an e-mail saying ‘we’ve got a problem,’” he said.
Darsey said he knew something was wrong about two days after he heard that Hutcheson and Pyles had left town.
In October 2008, four of the fund’s largest investors — TAS Investments and Bryant, Brent and Byron Pyles — filed suit in Bibb County Superior Court against Hutcheson, Pyles and securities brokers they used.
Brent Pyles, chief executive officer of Pyles Plumbing and Utility Contractors Inc., and Bryant Pyles, the company’s chief financial officer, declined to comment. Byron Pyles could not be reached for comment.
Alfred Sams, owner of Macon Cigar and Tobacco Co. and TAS Investments, also declined to comment.
In response to the lawsuit, a judge appointed a receiver, a lawyer to research the status of the fund and safeguard the investments.
In December, the fund still held $12,964.15 plus accrued interest, according to court records.
Information uncovered by the receiver showing potential criminal activity and his report were forwarded to the district attorney in Macon and the U.S. attorney for the Middle District of Georgia for review.
Darsey said he knew his investment was “highly risky business,” but with the trust he had in Hutcheson he didn’t see any red flags.
Court records associated with the investors’ civil suit show that Hutcheson invented a chemical process that he had patented and sold for a “large sum of money.”
He entered the day-trading business in the late 1990s and exhausted the money he earned from selling the patent through “a combination of huge trading losses” and personal expenditures, according to the Bibb County Superior Court records.
Saundra Pyles, also identified in court records as Sandee Pyles, was day trading as early as 2000. The two sustained substantial losses between 2000 and 2006, according to the records.A review of Hutcheson’s bank statements and portfolio by an accountant shows that by May 2006 he had no means to provide for his family, according to the records.
He’d learned enough about day trading to prepare a prospectus and speak “the lingo” to potential investors, according to court records.
In a report prepared for the court, the accountant wrote that it appeared as though Hutcheson had organized the Georgia Ionics Fund “to create an asset from which he could withdraw monies to continue the lavish lifestyle he had grown accustomed to.”He then transferred about $15,000 per month to his personal use to pay for living expenses.
Among the living expenses were payments to the University of Georgia Athletic Fund, the Brickyard Country Club and Freelotto.com, according to the accountant’s report.Beginning in June 2006, checks also were issued to Pyles.
The report shows Hutcheson never made a profit while managing the fund, but he paid quarterly profit distributions to investors using money invested by new members of the fund.
Authorities allege that Hutcheson invested only about a third of the $2,110,000 investors deposited into the fund and pocketed the rest.
Bibb County court records show that Hutcheson disappeared in September and was thought to be traveling with “his mistress,” identified in the records as Pyles.
Pyles was once married to Bryant Pyles, one of the largest single investors in the Georgia Ionics Fund, according to Superior Court records.
The couple separated in February 2003 and divorced in 2004, according to the records.When Saundra Pyles disappeared with Hutcheson, she was Hutcheson’s former sister-in-law due to his then-marriage to Brenda Pyles Hutcheson, according to divorce records.
Brenda Hutcheson filed for divorce Sept. 16, 2008, following the couple’s separation on Sept. 5, 2008. The records list adultery as a cause for the divorce filing.
A motion to freeze financial accounts filed by her divorce lawyer on Oct. 3 mentions the alleged defrauding of Georgia Ionics investors and Gary Hutcheson’s disappearance with Pyles.
While investors heard nothing from Gary Hutcheson for months, his wife received several e-mails from him and notice from a pharmacy in St. Louis about a transaction conducted by her husband, according to the motion.
At some point, Brenda Hutcheson was informed her husband and Saundra Pyles were headed to meet her brother in San Antonio, according to the motion.
The records also allege that Saundra Pyles had inquired about selling a vehicle, obtaining a copy of her birth certificate and had requested information about Belize, Taiwan, Mexico and Canada.
Gary Hutcheson did not attend the divorce proceedings. The divorce was finalized in a nonjury trial on Dec. 15, 2008, according to the records.
Court records pertaining to the divorce allege that Gary Hutcheson was “actively concealing his whereabouts.”
Gary Hutcheson and Saundra Pyles were arrested at their home in Pueblo, Colo., on April 28. Investigators seized their money, identification, computer equipment, family photos and other items, according to federal court records.
Both Hutcheson and Pyles were determined to be indigent by the federal court system and were appointed public defenders.
They were released on their own recognizance May 4 and were ordered to appear in Macon on Monday afternoon for a hearing.
At the hearing, the judge will review the bond set for Hutcheson and Pyles, and the two defendants are expected to enter a plea of guilty or not guilty.
The government’s criminal case is being prosecuted by David C. Stephens, a special assistant U.S. Attorney working out of Greenville, S.C., to avoid any conflict of interest.Stephens said several of the alleged victims are friends with employees in the U.S. Attorney’s Office in Macon, and it is normal practice for a case to be transferred to another office to avoid “even the presence of a conflict of interest.”
Information from The Telegraph’s archives was included in this report.
To contact writer Amy Leigh Womack, call 744-4398