$75 Million Florida Charity Scam at We the People is Target of SEC Charges
Richard K. Olive and Susan L. Olive raised $75 million through the sale of fraudulent charitable gift annuity (CGA) investments, according to the SEC. More than 400 investors in Florida, Colorado, Texas, and other states thought they were making contributions to We The People Inc., a purported charitable organization in Tallahassee, Fla.
Most of the investor money actually went to the Olives and other third-party promoters and consultants. Only a small amount of the money raised was actually directed to charitable services. The Olives also received more than $1.1 million in salary and commissions, in addition to siphoning off funds for their personal use.
The SEC further alleges that the Olives lured elderly investors with limited investing experience into the scheme by making a number of false representations about the purported value and financial benefits of We The People’s CGAs. The Olives also lied about the safety and security of the investments.
“The Olives raised millions from senior citizens by claiming that We The People’s so-called CGAs provided attractive financial benefits and were re-insured and backed by assets held in trust,” said Julie Lutz, Associate Director of the SEC’s Denver Regional Office. “Investors were not given the full story about the true value and security of their investments.”
According to the SEC’s complaint against the Olives filed in U.S. District Court for the Southern District of Florida, investors were coaxed to transfer assets including stocks, annuities, real estate, and cash to We The People in exchange for a CGA. We The People claimed to operate as a non-profit organization while it was offering the CGAs from June 2008 to April 2012.
However, We The People was not operating as a charity but instead for the primary purpose of issuing CGAs and using the proceeds to pay substantial sums to the Olives, third-party promoters, and consultants. On rare occasions when We The People did actually direct money raised toward charitable services, it was insignificant. For instance, the organization made public statements that it donated $21.8 million in relief aid to AIDS orphans in Zambia, but in fact the supplies were donated by others and We The People merely made a small payment to the third party that was shipping the supplies.
We The People consented to a final judgment that will enable the appointment of a receiver to protect more than $60 million of investor assets still held by the company. The final judgment also provides for disgorgement of ill-gotten gains and provides injunctive relief under the antifraud and registration provisions of the federal securities laws.
Reeves entered into a cooperation agreement with the SEC, and the terms of his settlement reflect his assistance in the SEC’s investigation and anticipated cooperation in its pending action against the Olives. Reeves agreed to be suspended from appearing or practicing before the SEC for at least five years, and consented to a final judgment providing injunctive relief under the provisions of the federal securities laws that he violated. The court will determine at a later date whether a financial penalty should be imposed against Reeves.
History of Fraudulent Transactions
In March of 2010, Insurance & Financial Advisor reported that Richard and Susan Olive, owners of Franklin, Tenn.-based National Foundation of America (NFOA), were indicted for similar investor scams, according to the Tennessee Attorney General’s Office and Williamson County District Attorney’s Office. The assets of NFOA were seized and placed into receivership. The company had been involved in a separate civil receivership case dating back to May 2007.
Fort Lauderdale Securities Litigation and Arbitration Attorney
Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.