Indictment: Foundation chief sought to defraud customers of $20 million

1:50 AM, Apr. 2, 2012 

http://www.tennessean.com/article/20120402/NEWS03/304020010/Feds-charge-Franklin-man-with-fraud-money-laundering

The man who once ran the now-defunct Franklin-based National Foundation of America is facing federal charges as part of an alleged scheme to defraud customers of $20 million.

In early March, a federal grand jury returned a nine-count indictment against Richard Olive, the foundation’s former president and executive director. He is accused of mail and wire fraud along with money laundering.

The Williamson County district attorney’s office and the Tennessee attorney general first brought state charges against Olive in 2010. Those charges have been dismissed as the federal government pursues its case against Olive, Williamson County District Attorney Kim Helper said Friday.

Helper said the federal charges are based on the same set of allegations and circumstances that led to the state charges two years ago. The federal government has broader reach and jurisdiction, Helper said.

Olive, who was arrested March 9, is out on a $20,000 bond. He has pleaded not guilty.

James Nesland, a Colorado-based attorney representing Olive, declined to comment Friday.

The federal charges stem from a scheme that started in 2006, according to the indictment. Olive offered investment contracts labeled as the foundation’s “installment plan agreement,” records allege.

Customers could buy the plan with cash or by transferring existing annuities or other assets. Although not referred to as charitable gift annuities, the foundation’s installment plans were marketed to provide the same type of benefits, according to the indictment.

As part of a charitable gift annuity, a charity receives cash or other assets from a donor in exchange for paying out a fixed rate of return. The donor can also receive a federal tax deduction.

But Olive lied about the foundation’s status as a tax-exempt nonprofit organization, according to the indictment. The foundation had a pending application for nonprofit status, but the application was denied in February 2008.

In addition, Olive failed to inform customers that the company was subject to cease-and-desist orders in several states, according to the indictment. Tennessee authorities seized the foundation’s assets and put the company into receivership.

$20 million received

Through the scheme, the foundation obtained $20 million, a portion of which Olive intended use for his personal gain, according to the indictment. In one of the two counts of money laundering, it says, $641,051 was withdrawn from the foundation’s bank account to purchase a condo on Dean Martin Drive in Las Vegas.

According to the indictment, Olive knew that the foundation could not pay the fixed payments to customers. The foundation paid above-average commissions to brokers and diverted a portion of the funds for his personal benefit, the indictment says.

The indictment does not specify how many people got caught up in the alleged scheme. But in announcing the state charges in 2010, authorities said people in more than a dozen states had money stolen.

Officials in the U.S. attorney’s office in Nashville could not be reached for comment Friday.