Accusations against suburban couple latest in line of alleged scams

Monday, July 21, 2008 at 3:29am
State officials say a couple ran an unlicensed annuity scheme from this Franklin home. Matthew Williams/The City Paper

Despite its sturdy and reassuring name, the Franklin-based National Foundation of America went under last year. Now, court filings are seeking to recoup millions from a suburban couple that allegedly bilked people in at least a dozen states out of millions of dollars.

Before the venture was declared insolvent, the company and its founders, Richard and Susan Olive, had received control of more than $31 million in assets from customers in exchange for issuing at least 327 illegal annuities, according to allegations in a lawsuit filed in Davidson County Chancery Court.

The alleged scheme convinced elderly investors to surrender their existing annuities and life insurance policies in order to buy a charitable annuity issued by NFOA. According to the lawsuit and multiple consumer alert Web sites, the heart of the fraud lay in duping customers — who averaged 76 years of age — under the guise of a nonprofit charitable organization.

The allegations against the Olives are not unique in Middle Tennessee. The ranks of financial fraudsters proven and alleged in the area has grown rapidly in recent years with the likes of Bob McLean, Barry Stokes, Larry Cherry and the more recently accused Michael Park. Though an exact figure is hard to nail down, the total amount of money that may have evaporated at the hands of these men looks to have eclipsed $100 million.

Unlike some of the other cases, NFOA still had a fair amount of cash on hand when the liquidation ordered. Some of that cash already is being redistributed: A state order from May of this year approved the dispersal of some $12.6 million to certain claimants.

Attempts to reach Richard and Susan Olive for this story were unsuccessful. A call to the Franklin address of the couple listed in court filings revealed a disconnected telephone number.

Since its founding in 2006, NFOA had sold contracts in more than 20 states nationwide and, according to the Tennessee Department of Commerce & Insurance, was soliciting prospects in its home state. Complaints began piling up with the TDCI in early 2007, leading to an investigation and the department’s taking control of the company’s assets.

Organizations selling charitable annuities are not uncommon, but two things make NFOA unique. Edicts and consumer alert notices from several states show the enterprise was not licensed to sell annuities. In addition, the Internal Revenue Service did not designate it as a 501(c)(3) nonprofit.

The company was organized as a Tennessee nonprofit and run from the Olives’ residence at 1308 Buckingham Circle. In a letter obtained by The City Paper, the IRS turned down NFOA’s application for a federal exemption due to insufficient charitable giving.

When the annuity or life insurance policy was received, NFOA would then surrender it for the cash value. In exchange, the Olives promised to pay those making donations a stream of tax-free installments, the suit maintains.

Instead of being managed separately, as promised by the company, all of the money was pooled in an NFOA operating bank account the lawsuit claims the Olives used regularly for personal expenses that included paying credit card bills, leasing a $50,000 Mercedes, chartering a private jet to New Orleans for a family trip and buying a nearly $700,000 condominium in Las Vegas.

Another large expenditure listed in the filing was $250,000 in NFOA assets that went to settle litigation filed against Richard Olive by his former employer, New Life International. That Brentwood-based organization had accused Richard Olive of soliciting for NFOA contracts while he was still employed with the evangelical outfit.

While much of this had gone unnoticed, Internet searches show that state after state — from Kentucky to Kansas to New Mexico — began issuing consumer warnings about NFOA and its activities. At least four — Washington, Texas, Illinois and Florida — also issued cease-and-desist orders to the company.

Given the fragmented state of insurance oversight — each state handles its own licensing and regulation — it seems the Olives were able to keep operating even as those orders piled up. But last August, the TDCI filed to liquidate the company after declaring it insolvent.

During the ensuing proceedings, the company listed total assets of $18.7 million, including $13 million in cash, and liabilities of more than $23 million. In its petition, the TDCI said that further attempts at rehabilitating NFOA would “substantially increase the risk of loss to creditors, policy holders, and the public, and would be futile.”

“The department, special deputy receiver, and special counsel will pursue all means necessary to ensure that those elderly persons who invested with NFOA will have the best chance of having their investments returned to them,” TDCI Commissioner Leslie Newman said.

Since last September, assets have begun being liquidated. Last month’s court filing indicates the Olives’ condo in Las Vegas was sold at a nearly $300,000 loss. Filings also show that an unimproved Franklin property the couple bought for more than $530,000 was sold for about $455,000 once related costs and expenses were accounted for. Likewise, another property NFOA bought — valued at the time of purchase at more than $971,000 — is currently under contract to be sold at a loss.

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1 Comment on this post:

By: kpillay on 11/16/11 at 3:52

Richard and Susan Olive are operating a non-profit group in Tallahassee called'We THE PEOPLE' and are apparently doing the same things that they did under the National Foundation of America'
Please check the following websites: www. wtpus.org
www.wearenotalone.org

you may contact me at : krishpillau@comcast.net