Former Franklin, Tennessee Business Owner Sentenced To 31 Years In Prison For Fraud Scheme
Richard Olive Also Ordered to Pay Over $5.9 Million in Restitution to 190 Victims
Richard Olive, 49, of Vero Beach, Florida, formerly of Nashville, was sentenced today to serve 31 years in prison and ordered to pay $5,992,181.24 in restitution to approximately 190 victims for crimes related to his operation of National Foundation of America (“NFOA”), announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee. Olive was convicted by a federal jury on March 7, 2013, on charges of mail fraud, wire fraud, and money laundering.
“The sentence imposed by the Court today should send a strong message to those who would attempt to engage in any scheme sophisticated or otherwise, which may be designed to defraud elderly persons and others who are particularly vulnerable,” said Acting U.S. Attorney, David Rivera. “The U.S. Attorney’s Office and our law enforcement partners simply will not stand for such schemes to continue and will devote whatever resources are necessary to protect the elderly from such financial predators and bring them to justice.”
The evidence at trial showed that from January 2006 through May 2007, Olive represented that NFOA, which was headquartered in Franklin, Tennessee, was a charitable organization that had been recognized by the IRS as a 501(c)(3) organization. During the scheme, Olive solicited assets, including annuities and real estate, of over $30 million from elderly individuals and promised that, in return, the individuals would receive an “installment bargain contract” issued by NFOA that would give them a “guaranteed payout over a guaranteed period of time,” as well as a “generous tax deduction.”
Olive promised clients that in exchange for an NFOA “installment bargain contract,” they would receive a fixed payment for a number of years. However, the evidence at trial demonstrated that NFOA never had sufficient assets to meet these obligations. The majority of assets which Olive solicited were annuities, which incurred high penalties on their surrender. When Olive received these annuities, he surrendered them, incurring penalties, so that he could access the cash. He then used the cash to fund his lavish lifestyle, including paying for $153,000 of personal expenses on credit cards, funding a trip to New Orleans on a private jet with his family, settling a lawsuit against him for $250,000, and purchasing several properties with cash, including a $690,000 condominium in Las Vegas.
"Illegal activity involving the investment industry has brought financial ruin to many Americans,” stated Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation. “IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money. We are proud to work with our law enforcement partners by lending our expertise in these complex financial investigations.”
“Today’s sentence sends a strong message to those who would use investment schemes to devastate the financial standing of innocent victims and their families,” said A. Todd McCall, Special Agent-in-Charge of the Memphis Division of the Federal Bureau of Investigation. “It is especially cruel when frauds like these target senior citizens. In today’s challenging economic conditions, the FBI and its law enforcement partners will continue to target those who abuse vulnerable citizens in our community.”
Other evidence at trial showed that Olive made a series of misrepresentations about NFOA during the scheme. For example, in February 2006, just days after NFOA had been incorporated, he sent fabricated financial statements to a financial advisor that falsely represented NFOA had been in operation in 2003 and 2004 and held significant assets. In May 2006 Olive represented to a different financial advisor that the company had $35 million in assets, although the charitable tax returns he filed with the State of Tennessee indicated that from its inception to June 2006, NFOA had received only $2.8 million in revenue.
Although Olive held NFOA out to be a “charitable organization,” he donated to charity only approximately $108,000 – less than ½ of 1% of the $23.6 million NFOA received.
Further, throughout the scheme, Olive repeatedly represented that his organization had been recognized by the IRS under Section 501(c)(3) of the Internal Revenue Code, although the evidence at trial demonstrated that this statement was false. Olive continued to make this false representation even after his attorney told him on at least two occasions to stop.
Five states issued cease-and-desist orders during the scheme, based in part on their findings that Olive was misrepresenting NFOA’s 501(c)(3) status, and ordered him to stop selling NFOA’s product in those states. The company was seized and ultimately liquidated by the Tennessee Department of Commerce and Insurance in May 2007.
At sentencing, the District Court found and applied sentencing enhancements based on the large loss amount, Olive’s leadership role, the fact that he misrepresented that he was acting on behalf of a charitable organization, the sophisticated nature of the scheme, and the large number of vulnerable victims. Olive has remained in federal custody since the jury’s verdict on March 7, 2013.
The case was investigated by the FBI and the IRS– Criminal Investigation Division. Assistant United States Attorneys Kathryn B. Ward and Darryl A. Stewart represented the government.