Lenders who put up money for a series of housing projects in Canyon County say the owner of the business walked off with $5.6 million of their money.
Ten individual lenders, most of them from Southern Idaho, went to U.S. Bankruptcy Court in Boise last month with a petition to force Nathan Ward Pyles and his company, Shiloh Management Services, into involuntary bankruptcy. The company is based at Pyles’ home in unincorporated Ada County, near the Canyon County line.
Judge Jim Pappas appointed a trustee to take possession of any personal and business assets and to operate the company.
Pyles, 45, was arrested Tuesday and charged in Ada County with four felony counts of writing bad checks on a business account. The checks, paid to four lenders, totaled $28,437.
Boise attorney Jeffrey Kaufman, who represents Pyles in the bankruptcy, said Shiloh Management owes creditors about $13 million.
Pyles’ business had been grossing $7.5 million a year before it suffered “a serious business reverse,” said Boise attorney David Leroy, who represents Pyles in the bad-check case. Anticipated funding was either withdrawn or not forthcoming, he said.
One lender is Boise resident Roger Button, a retired counselor who worked with prison inmates. Button told the Idaho Statesman that he made short-term loans to Pyles for five years. He said he received a monthly interest payment and larger sums when the properties he invested in were sold. Pyles paid between 14 percent and 16 percent interest, Button said.
Pyles at first bought homes, rehabilitated them and flipped them, and later had homes built that he could sell, Button said. Problems began in June when Pyles quit making payments.
Pyles owes Button $650,000, according to a claim filed in the bankruptcy case.
“In most cases, he paid regularly, until, he said, his money sources dried up,” Button said. “Well, he ran out of victims. He couldn’t generate victims fast enough to continue to pay the debts that he owed and had to service on a monthly basis.”
Shiloh Management had 51 properties titled in its name in Canyon County in October, according to a bankruptcy case filing from Boise lawyer Gery Edson, who represents Button and other investors. Liens from contractors were filed against 11 of the properties, Edson wrote.
He said Pyles sold some properties earlier that month but put the proceeds toward personal use instead of debt repayment. Kaufman disputes that. He said any money from the sales went into the company’s business account.
Another lender is Janelle Nelson, a retired teacher in Nampa. She said she had invested with Pyles since 2011, meeting him through his mother, a childhood friend. Nelson said she had more than a business relationship with Payles, inviting him to her home for family gatherings and going target shooting with him. Her family swam in a pool at Pyles’ home and viewed exotic animals he kept.
“He was a likeable guy,” she said. “We trusted him.”
Nelson and her husband, Jody, started by lending $40,000 to $50,000 at a time before increasing the amounts over the years. In spring 2016, the couple lent $581,314 in three transactions. They have not recovered that money.
The Nelsons provided $200,000 to build a home on a 4-acre parcel in Sand Hollow that was to be subdivided. The property had an existing home, which the Nelsons learned was sold by Pyles. They said they didn’t get anything from that sale because the deed of trust that was to hold the property as collateral was not filed until months after they provided Pyles with the money.
The contractor for a new house being built on the property quit work a couple of months ago after he hadn’t gotten paid, the Nelsons said.
A creditors’ meeting has been scheduled for Jan. 5 at the U.S. Trustee’s Office, at 720 Park Blvd. in Boise.
Button and the Nelsons said they’re not sure they’ll ever get back what they invested.
“This is the most frustrating thing I’ve ever dealt with,” Janelle Nelson said.
Magistrate Daniel Steckel released Pyles from custody on his own recognizance after his arraignment in the checks case. He ordered Pyles to surrender his passport. Pyles is scheduled to return to court Jan. 8 for a preliminary hearing, also before Steckel.
Leroy said the checks Pyles wrote were undated or post-dated, and the people who were given them were asked to hold onto them but cashed them anyway.
“It’s our view that all of the people to whom those checks were delivered were advised in advance that they were either undated or post-dated or where there was a specific agreement that they be held until funds cleared,” Leroy said.
It’s a defense to a criminal charge, Leroy said, if there was an understanding that a check was not good at the time it was delivered. He said he would try to convince an Ada County prosecutor that such an agreement was in place on all four checks.