Tennessee Arrests 4 in Alleged Multi-Million, Multi-State Insurance Fraud

Tennessee officials have charged the two owners of a former nonprofit company that was seized by the state in 2007, along with two others affiliated with the now-defunct firm, in what they say is a multi-million dollar, multi-state insurance annuities fraud case.

Attorney General Bob Cooper and the Williamson County District Attorney’s office have indicted Richard and Susan Olive, former owners of the Franklin-based National Foundation of America (NFOA, and Breanna McIntyre, an employee, and Kenny M. Marks, an officer with NFOA. They have all been charged with one count each of theft over $10,000 and nine counts of theft of over $60,000. They are alleged to have enticed several elderly people into trading in their valuable insurance annuities for worthless so-called “charitable gift” annuities. The case involved millions of dollars allegedly stolen from people in more than a dozen states, according to officials.

If convicted, the defendants face up to 12 years in prison and possible fines of up to $25,000 for each count.

Meanwhile, NFOA’s assets have been seized and the company has been placed into receivership. The separate civil receivership case has been ongoing since May 2007.

Officials alleged that from January 2006 until the state’s seizure of the company in late May, 2007, NFOA solicited, misled and coerced elderly consumers in Tennessee and several other states into surrendering legitimate income tax deferred annuities, securities, real estate and cash for the benefit of themselves and their heirs to NFOA. In exchange, they were given NFOA’s “installment plan,” which the defendants claimed would give the recipients a “generous tax deduction.” As a result, the Olives gained control of an estimated $31 million in assets, according to the complaint.

Officials allege that the defendants used the money taken from investors for personal expenses and luxury items, vacations and to pay off existing debt.

When legitimate insurance agents noticed so many people were surrendering their annuities to buy into the so-called charitable annuities with NFOA, they contacted officials with the Tennessee insurance department, who then worked with worked with investigators from the attorney general’s office, as well as insurance regulators from other states.

Ultimately, the state insurance department was able to work with banks and insurance producers to return about 78 percent of lost funds to Tennessee victims, some $15.4 million in total, officials said.

Topics Fraud Tennessee