The art of the deal Long before making deals with Rickey Peete, developer Rusty Hyneman had to cut one with the Feds. by Jim Hanas On February 5, 1990, two new inmates arrived at the Federal Prison Camp in Millington. Both arrived from the Federal Prison Camp at Maxwell Air Force Base in Montgomery, Alabama. Both were moving closer to home to serve out their respective sentences, from which each would eventually be granted time off for good behavior. That was the first of several dates on which the paths of once and future city council member Rickey Peete and once and future real estate developer Rusty Hyneman intersect. On May 22, 1997, Hyneman transfers a house on McLean Avenue he has agreed to buy to Peete. On November 3, 1997, Peete sells his house on Maury Street to a company called LePera Investments, owned by long-time Hyneman associate and business partner Hank Weaver. On December 19, 1997, Peete, who had declared himself a pauper in circuit court as recently as 1993, takes out a $119,000, 30-year-loan to finance the house on McLean with Community Mortgage Corp., a company that was then Hyneman's "lender of choice" according to Community Mortgage senior vice president Kevin Ruby. On January 22, 1998, LePera Investments sells the house on Maury in a sale financed by Hyneman. And on April 11, 2000, the Memphis City Council abruptly votes, with Peete in the majority, to rescind a special zoning ordinance in Cordova that had sparked litigation from neighbors and put a Hyneman deal worth almost $1 million in jeopardy. On April 29th, The Commercial Appeal begins its reporting on all of the above in what Peete later describes as a "smear" campaign. But this series of dates suggests, at the very least, rampant cronyism -- the more so the closer one looks. LePera Investments owner Hank Weaver is not only a partner with Hyneman in Turfco Pest Control of Germantown, he was also arrested with the developer and his brother Kevin in 1985, when all were charged with assault and battery following a fight involving plain-clothes policemen at the Mid-South Coliseum. And last August, Hyneman's cordial relationship with Community Mortgage Corp. again became evident when he was instrumental in getting the lending company involved in a down payment assistance program -- Memphis Plus -- sponsored by Revelation Corporation of America, a for-profit organization with ties to the Fords and backing from African-American church leaders. It wasn't for mere cronyism, however, that Peete and Hyneman were checked into a federal prison on the same day 10 years ago. Peete's path to a 30-month term for extorting a $1,000 bribe from a developer is as well-known as it is civically humiliating. But what about Hyneman? He, like Peete, has bounced back impressively from incarceration and become a real estate wheeler-dealer, ushering elected officials around on a private jet, contributing generously to their campaign coffers, and receiving sometimes miraculous approval of controversial projects. These may be the ways deals are forged in the development game, but they can't compare -- either in stakes or intrigue -- to the deal Hyneman made with the U.S. Attorneys Office 12 years ago. On February 7, 1988, law enforcement authorities arrested Gustavo Lira, Freddie Hurtado, and Juan Carlos Pacheco on I-240 east of Lamar as they were leaving Memphis International Airport. The trio was carrying 12 kilograms of cocaine worth $6.2 million, and all were charged in what was then the largest drug-related arrest in local history. Pacheco, like Hurtado, was a Bolivian national with ties to Roberto Suarez Gomez, a drug kingpin a Miami prosecutor once described as "the biggest cocaine producer in the world." He had picked up the cocaine in Los Angeles and the three were on their way to deliver it to an informant who had cooperated with the government in setting up the deal. The informant, the 23-year-old son of a prominent DeSoto County home-builder, was Rusty Hyneman. Hyneman himself had been set up by the Shelby County Sheriff's Metro Narcotics unit a month earlier, when he was arrested for selling two kilos of cocaine to another informant. After his arrest, Hyneman quickly agreed to assist the government. According to the transcript of Hyneman's sentencing hearing, he helped set up the Bolivians and aided authorities in the arrest of a Gulfport, Mississippi, steroid dealer known as "Doc" on suspicion of murder and possession of five kilograms of cocaine For his offense, which carries a possible sentence of 5 to 40 years, Hyneman pleaded guilty and received 24 months in federal prison, thanks in large part to the assistance he provided the government -- a reduction that assistant U.S. Attorney Tim DiScenza, who prosecuted the case, describes as "very typical." A review of records and transcripts following Hyneman's 1988 arrest reveals that this was not his first brush with the law. He was arrested for assault and battery in 1985 following a fight at the Mid-South Coliseum, a fight in which LePera Investments owner and Hyneman's partner in Turfco, Henry "Hank" Weaver, was also charged. An expunged juvenile charge for malicious mischief also surfaced during the case, although it was not considered a factor during sentencing. Hyneman also had been convicted in Miami for attempting to purchase 374 grams of cocaine. According to the statements of his attorney at his sentencing on the Memphis charge, he had done so at someone else's request and was paid $500 for his services. When asked by Judge Ordell Horton if the government considered Hyneman a drug dealer, assistant U.S. Attorney DiScenza hemmed and hawed but found it difficult to deny. "Frankly, considering his background and his financial background, I doubt it," DiScenza said. "But clearly he has been involved at least in that two-kilo deal and another deal down in Florida that he got caught on. So I just can't say that he, at least for those two occasions, was not a dealer in drugs." By the time of sentencing, authorities were not the only ones who had become interested in Hyneman's background, however. Nine months after his arrest, the U.S. probation office received an anonymous letter warning about a possible attempt to bribe a federal judge. The note alleged that Hyneman was a major cocaine dealer who bragged about it "to everyone who will listen" and who claimed to have a fix in with the judge in the case. "Rustys [sic] father is very rich and gets him off all the time so I expect he will get him off again," the letter concluded. Hyneman denied making the sorts of statements alleged in the letter and testified that he had received nothing but "moral support" from his father, home builder John Hyneman. The defense further suggested that the note was written by someone close to Hyneman's in-laws, who they alleged had hired a private investigator to look into Hyneman's background. That investigator was later identified in an appeal filed by the defense as Gene Petrakis, who allegedly sent documents to Hyneman's future in-laws about his criminal history a month before the anonymous note was received. Petrakis says he may have worked on the case but cannot recall doing so. The prosecution, meanwhile, did not put much stock in the anonymous allegations and supported the defense motion for a reduction in sentence. "I don't think any big deal ought to be made out of the anonymous letter," DiScenza told the court. At his sentencing hearing in March 1989, which was held in judge's chambers, Hyneman testified that there had been no other occasions on which he had been involved with drugs and that he had never used cocaine or marijuana. He said the two-kilogram deal for which he had been arrested was a spur-of-the-moment transaction stemming from his acquaintance with Gustavo "Gus" Lira, whom he had met at a local gym. Then-Lieutenant C.R. Swain of the Shelby County Sheriff's Department detailed the cooperation Hyneman had provided to the government and acknowledged that he knew Hyneman's grandfather, Phillip Poat, when the latter was a chief with the Shelby County Sheriff's Department. "No sir, I had no idea," Swain says today when asked if he realized Hyneman's connection to Poat at the time of the arrest. "Didn't care who he was." Both Hyneman's father and his grandfather, the former sheriff's department chief, also offered testimony, and his attorney asked for consideration for all the assistance his client had provided at possible danger to himself and his family. Hyneman reported that he had been threatened since his cooperation with the government, and according to the transcript, a relative of one of the suspects in the Bolivian bust was present in the courtroom when the hearing was moved into chambers. Despite defense pleas for probation, Judge Ordell Horton handed down a sentence of 24 months. "Mischiefness, maybe a kick or something," Hyneman replied when asked to explain his involvement with the drug trade, "but it definitely wasn't the money situation." After several appeals to his sentence were denied, Hyneman reported to Maxwell Air Force Base on June 16, 1989. Eight months later he was transferred to Memphis. On March 12, 1991 he was released from a halfway house to three years of supervised probation. In 1991, Hyneman Homes -- vice president, Rusty Hyneman -- became the largest home builder in Shelby County for the first of three consecutive years by registering 434 new home sales. Local authorities have no record of any subsequent arrests. Hyneman did not respond to several requests to be interviewed for this article. Rickey Peete did not return phone calls. Shelby County Mayor Jim Rout, who acknowledges that he accepted a trip from Destin, Florida, to Memphis on Hyneman's corporate jet in 1998, said through a spokesperson that he was not aware of Hyneman's drug convictions. Asked how Hyneman's criminal record reflects on the cordial relations he seems to enjoy with elected officials such as Rout, the mayor's office issued the following statement: "Mr. Hyneman is a well-known businessman in Shelby County and the mayor has cordial relationships with business leaders in all industries. However, this never results in special treatment, as demonstrated by the recommendations against Mr. Hyneman's projects by the mayor's staff in the Office of Planning and Development."