South Florida Criminal Attorneys Blog
A married couple charged with swindling seniors mainly in Florida, Colorado and Texas, as well as more than 30 other states across the country were among some of the recent enforcement actions taken by the Security & Exchange Commission (SEC). The victims were told they were investing in a charitable organization based in Tallahassee, Florida by purchasing charitable gift annuities (CGAs).
Richard K. Olive and Susan L. Olive who are both in their forties were apparently principals of the organization named We The People Inc. that implemented the transactions. The Olives originally stated that they were hired by the company. Looking into the matter, the SEC determined that the CGAs issued by We the People were different in numerous aspects from CGAs issued legitimately. The Olives purportedly collected over $75 million from more than 400 naïve and elderly investors. Research revealed that the company was organized as a nonprofit and run from the Olives’ home at 1308 Buckingham Circle in Franklin Tennessee.
A CGA, (Charitable Gift Annuity) is a gift vehicle that falls under the category of Planned Giving. It encompasses a contract concerning a donor and a charity, where the donor hands over cash and/or property to the charity in exchange for a limited tax deduction and a lifetime sum of annual revenue from the charity. In the occurrence of the donor’s death, the charity keeps the remaining equity and all accrued interest of the original gift.
According to the SEC’s complaint against the couple filed in U.S. District Court for the Southern District of Florida, it is charged that the CGAs were issued primarily to benefit the Olives as well as additional third-party organizers and consultants, not the senior investors. Only a slight amount of the money that was raised was essentially guided to any charitable organizations. In the meantime, the Olives received in excess of $1.1 million in commissions and salary. They also tapped investor funds for their own usage. The couple has now been charged by the SEC with defrauding the seniors and dramatically overstating the amounts of the contributions.
The sentencing of an insider trading informant who succeeded in avoiding incarceration for his cooperation assisted in the SEC investigation.
We The People claimed that from June 2008 to April 2012 its operations were as a nonprofit organization however it was found that their CGAs were far from legitimate.
One example of public reports showed that it donated $21.8 million for the assistance of AIDS orphans in the country Zambia when in fact the supplies marked for that venture were donated by others, and the organization only donated a trivial amount of money to the third party that was the shipper of the supplies.
Their promotional materials were filled with several falsifications, omissions and oversights. They claimed that their CGAs were worth the “full” amassed value of the assets conveyed by investors when they weren’t. It appears that the method that they use to calculate the CGAs’ value were of substantially lesser than full value, since the organization skimmed off a substantial percentage of the actual value and retained it as a “charitable gift.”
It was also claimed by the organization that they had a 110% reserve of its total liabilities in trust in its continuing effort to “reinsure” its products through “highly rated” commercial insurance firms. As it turned out, this too was a falsehood. The organization had no restricted-access trust accounts, therefore any reserves at all. They never reinsured anything whatsoever.
Their marketing materials also failed to divulge that the Olives had been affiliated with several previous indictments and governing sanctions for retailing the equivalent type of phony products in the past. They were operating within an obscure Florida law that allowed them to sell CGAs in the state. The organization also neglected to reference the significant commissions that were paid to the couple as well as others, in the amount of several million dollars.
The SEC filed a separate complaint against the company’s in-house counsel William G. Reeves. The organization and Reeves both agreed to resolve the charges against them without admitting or denying the allegations. The settlements are contingent upon court approval.
We The People acquiesced to an ultimate judgment that will permit the selection of a receiver to safeguard the more than $60 million of donators’ monies still in possession of the company. Additionally, the final judgment also affords for repayment of ill-gotten gains and delivers injunctive relief under the antifraud and registration requirements of the federal securities laws.
Reeves agreed to a cooperation agreement with the authorities. The terms of his settlement demonstrate his assistance in the investigation and foreseen assistance in the imminent prosecution against the Olives. He also agreed to a suspension from practicing or appearing before the SEC for a period of no less than five years, and assented to a final judgment supporting injunctive relief under the requirements of the federal securities laws that were violated. It will be determined by the court at a later date if a monetary penalty should also be enacted against Reeves.
In the Denver Regional Office, Michael Cates and Ian Karpel conducted the SEC’s investigation. The proceedings against the Olives will be headed by the SEC’s Nicholas Heinke and Dugan Bliss.
Related Reading:
Definition a Charitable Gift Annuity: Click Here
SEC complaint against the Olives: Click Here
SEC complaint against the organization: Click Here
SEC complaint against Reeves: Click Here
It is important to note, that since securities fraud is a federal crime, even if someone lives in Florida, they will be charged federally and the United States Attorney’s Office will be the ones to bring forth the charges against them. This is why it is crucial that if someone is either being investigated or charged with securities fraud, that they immediately contact a reputable securities fraud lawyer who is admitted to the federal bar, and practices in Florida, with the proper knowledge and experience to defend the case to its fullest.
Mr. Cohen is a board certified criminal trial lawyer rated AV by Martindale Hubbel (pre-eminent) and a “Super Lawyer” recognized as being in the top 5% of his specialized field (criminal trial law) among Florida lawyers. He is considered a specialist by the Florida Bar in his field. Mr. Cohen has tried scores of cases over his 35 year career and is a member of the Florida and New York Bars. He practices in the counties of Dade, Broward and, Palm Beach as well as many other cities in and outside of the state of Florida. He is also admitted to practice in the United States Court of Appeals for the Eleventh and Second Circuit.