An Alleged Fresno "Ponzi" Scheme Unravels | ABC30 Fresno

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By ABC30

Thursday, May 28, 2009

Fresno, CA Gary Hutchinson invested more than $500,000 in a company operated by John Otto. Now Hutchinson believes his investment evaporated. Hutchinson said, "I think your first feelings are that you are in shock. You don't believe it could happen. Then you are a little bit in an anger stage- like somebody has stolen several hundred thousand dollars from you."

Those feelings stem from a class action lawsuit. The document states investors like Hutchinson gave Otto money. In turn, Otto secured the investment with a fake lease. Attorneys believe the scheme operated out of a West Fresno Business: Heritage Pacific Leasing. Hutchinson said he was getting a 9-percent return, "11 years, one hundred 30 something payments. They were never a day late. They were right on time."

Then last month, Otto sent a letter to investors saying the payments dried up. Attorneys believe Otto made pay outs not with lease revenues but with money from other investors. It's called a "Ponzi" scheme. Hutchinson said, "Your dreams are readjusted. That was a big chunk of money that went to a lot of things I planned. I am not upside down. I still have a job. I still have a 401k."

Just a few days after the letter, Otto committed suicide. Now attorneys want to get money from his estate to pay investors for their loss.

We attempted numerous times to get a comment from Otto's employees, but no one responded. The FBI is also investigating.