FORT MYERS, Fla. (CN) - A married couple in Vero Beach "hijacked" a dormant charity and used it to defraud hundreds of elderly people of $75 million, the SEC claims in court.
Richard Olive, 47, and his wife Susan Olive, 48, skimmed more than $1 million from the scheme after they "essentially hijacked We The People-which had been largely dormant for years-and used it as a vehicle to raise money, not for charity, but for themselves," the SEC says in its federal complaint. "Throughout the relevant period, We The People did minimal charitable work, but paid the Olives more than a million dollars. Indeed, the Olives took far more than that, misappropriating hundreds of thousands of dollars in investor funds without the knowledge or approval of anyone at We The People. The Olives funded their scheme through the sale of bogus investment products: the CGAs [so-called 'charitable gift annuities']."
In the same complaint, the SEC also sued Susan Olive's LLC, We're Not Alone.
In a separate, similar complaint in the same court, the SEC sued We The People Inc. of the United States. All citations in this article are taken from the SEC complaint against the Olives.
"Richard Olive and Susan Olive defrauded hundreds of senior citizens by taking their hard-earned savings with inflated promises of value and safety, while luring these investors by falsely claiming to donate millions of dollars to charity," the SEC says in its complaint. "The Olives were the key executives at We The People, Inc. of the United States ('We The People'), a purported charitable organization based in Tallahassee, Florida. We The People, through Richard and Susan Olive, perpetrated their fraudulent scheme by making false and misleading statements in connection
with the offer, sale, and purchase of securities. Enticed by the scheme, investors transferred assets - stocks, annuities, real estate, or cash - to We The People in exchange for an investment product that We The People called a 'tax-deductible gift annuity' or 'charitable gift annuity' ('CGA'). From June 2008 through April 2012 (the 'Relevant Period'), We The People raised over $75 million in assets from approximately 400 investors in over 30 states, including Florida, Colorado, and Texas. Almost all of these investors are elderly.
"The Olives essentially hijacked We The People - which had been largely dormant for years - and used it as a vehicle to raise money, not for charity, but for themselves. Throughout the relevant period, We The People did minimal charitable work, but paid the Olives more than a million dollars. Indeed, the Olives took far more than that, misappropriating hundreds of thousands of dollars in investor funds without the knowledge or approval of anyone at We The People. The Olives funded their scheme through the sale of bogus investment products: the CGAs."
Along the way, the Olives sold the scam by lying about a nonexistent trust account and reinsurance; failing to disclose that We The People paid "several million dollars" in commissions to so-called third-party promoters-the Olives; and "hiding from investors the indictments and regulatory sanctions issued against Richard and Susan Olive for fraudulently selling similar products at a company they ran known as National Foundation of America (NFOA)," according to the complaint.
The scam was not an innocent mistake, the SEC says in its 25-page complaint: "At the time they joined We The People, Richard and Susan Olive were subject to numerous adverse legal proceedings related to their previous business, NFOA. Richard and Susan Olive ran an investment program at NFOA, a purported charity based in Tennessee, which involved having elderly individuals transferring assets to NFOA and, in exchange for the transferred assets, NFOA would issue investors a product similar to We The People's CGAs.
"By the time Richard and Susan Olive joined We The People, regulators in several states, including, but not limited to, Alabama, California, Florida, Iowa, Tennessee, Texas, and Washington had determined that NFOA's products were not properly registered, or that NFOA made misleading statements to investors in connection with the sale of the products. For example:
"In April 2007, the State of Florida determined that Richard Olive and Susan Olive were engaged in unauthorized and illegal transactions through NFOA and presented 'an immediate danger to the public health, safety or welfare of Florida consumers.'
"In May 2007, the Texas State Securities Board issued a cease and desist order which found that NFOA's products were 'securities' and that the securities were sold illegally both because they were unregistered and because NFOA and Richard Olive 'intentionally' failed to disclose 'material facts' in connection with the sales of those securities.
"Also in May 2007, the State of Tennessee brought a civil suit against NFOA and Richard and Susan Olive, among others, for selling products without the proper licenses and registration. Shortly thereafter, the court appointed a receiver to wind down NFOA's affairs.
"Richard and Susan Olive's conduct at NFOA also resulted in criminal charges. In February 2010, while they were employed by We The People, a Tennessee grand jury indicted Richard and Susan Olive on multiple theft charges in connection with their sale of investment products at NFOA. Then, in March 2012, a federal grand jury in the Middle District of Tennessee indicted Richard Olive on several fraud counts arising out of his actions at NFOA."
So it goes, for 19 more pages.
The SEC seeks disgorgement of ill-gotten gains, with interest, accounting, injunctions, and penalties for fraud, unjust enrichment, sale of unregistered securities in violation of the Exchange Act, and aiding and abetting fraud and securities violations.