Economic News, Savings & Investment, Smart Spending, Taxes

Husband and Wife Charged with Fraud in Florida

For every news story that we hear on the topic of fraud and scams, there are many more that get by without being noticed.  Fortunately for those involved, and the potential future investors, this couple was caught.  Richard and Susan Olive were selling in Florida what many senior citizens thought to be Charitable Gift Annuities (CGA’s).    But what it turns out the couple was doing was swindling them out of their hard earned money ($75 Million worth of hard earned money), and unfortunately, probably much of the money the victims needed to live on.

A Gift Annuity is a legitimate investment product.  You have probably seen ads for them, or at least heard of them.  The annuitant buys an annuity, and the lump sum of money goes to the charity.  That charity pays back the annuitant, systematically, for the rest of their lifetime (usually there is a third party, like an insurance company involved to help mitigate the risk to the charity).  When the investor dies, the charity keeps the remainder of the money.  What the retirees that were hit with this scam thought they were buying was an annuity that not only would give them an income for life, but also help the less fortunate.  What they were actually paying for was hefty profits for the husband and wife duo, as well as We The People Inc. the purported humanitarian company behind the product.  This company, that claimed to be giving money to charities, never actually gave anything substantial to anyone.  Unless, of course, you count the $1.1 Million paid out to the Olives in commissions and salaries over the 4 years they were scamming senior citizens.

When most people read these stories, they think something along the lines of, “Oh, I would never get caught up in something like that.”  But those running the frauds are good at what they do.  They know just how to market their product (or lack thereof) to convince many people into buying what they are selling.  In fact, when something comes along that looks like a good deal, people jump on board without doing their research.  I know it has happened to me.  I was looking for penny stocks, and found one that advertised an upcoming dividend.  The stock bounced around between $.001 and $.002, and I thought I could invest, collect the dividend, and flip the stock making some money.  Fortunately for me, I only had $500 to put into the “investment.”  Unfortunately for me there was no dividend, and the fluctuations in stock price were due to false PR statements put out by the company to lure investors in.  In the end, I sold the stock back to the brokerage for $0.00.  My only consolation was I got to write $500 off on my taxes the following year.

The old adage, “If it seems too good to be true, it probably is” holds true in almost every situation.  If you see an investment that promises guaranteed returns, lacks prospectuses or other sales material, and the individual selling the product seems to be hiding something or is not fully transparent with the details, walk away.  You might miss out on a great deal here and there, but more often than not you will miss out on being swindled out of your hard earned money.

Unfortunately, there are too many people that are not careful with whom they trust their money.  Or, in many cases, the individual scamming others has made the deal look so legitimate that people do not know they are being swindled.  In this case, as well as many like it, the victims are elderly.  They do not have years to recoup the losses they incurred.  They might recover some of their losses when the SEC imposes their final judgment, but much of the money is already gone.  If you recognize the signs of fraud, do not hesitate to contact the SEC’s fraud department right away.  You might save someone from losing everything.