CASE HEADING
SEC v. Dillie | 2:01cv02493
Summary of SEC Complaint (December 26, 2001)
1. Mid-America and its Executive Director, Robert Dillie, have swindled hundreds
of typically elderly investors throughout the country of an estimated $54
million. Preying upon the public's laudable desire to contribute to charities,
the Defendants claimed to sell an investment called a "charitable gift annuity"
("CGA"), that was to pay the investor a guaranteed rate of return, with the
principal paid to a designated charity at the investor's death.
2. In reality, instead of using the funds raised during the past four years to
purchase securities and produce income, Dillie used much of the money raised
from the sale of CGAs to make "ponzi" payments to investors and to support his
extravagant lifestyle and gambling habit.
3. In the sales literature used to promote his fraudulent scheme, Dillie touted
the safety, security and tax benefits of the CGAs as well as the charitable
aspects of the investment. The safety aspect of the investment was repeatedly
underscored by representations that Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), acted as manager of the CGA assets.
4. The claims that Merrill Lynch managed the investment were completely false.
5. The scheme is now collapsing, and Dillie has advised clients that
Mid-America has disbanded and "due to inadequate assets is unable to make any
further distributions of annuity payments."
6. By reason of these activities, the Defendants have violated Section 17(a) of
the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder. The
Commission, in the interest of protecting the public from any further
fraudulent activity, brings this action against Dillie and Mid-America seeking
temporary, preliminary and permanent injunctive relief, disgorgement of illicit
profits, plus accrued prejudgment interest and a civil monetary penalty. The
Commission also seeks an asset freeze against Dillie, Mid-America and
Mid-America Financial, an entity to which Dillie diverted investor funds, an
accounting and other incidental relief, as well as the appointment of a
receiver to take possession of Dillie's assets and control of Mid-America and
Mid-America Financial so that investor assets will not be further dissipated.
Quoted from
http://www.sec.gov/litigation/complaints/complr17290.htm
Additional information...
The entities named in this receivership are:
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Robert Dillie
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Mid America Foundation, Inc.
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Mid America Financial, Inc.
Click here
to read the SEC's litigation release #17290 regarding this case.
Click here
to read the SEC's litigation release #17986 regarding this case.
Click here
to view the Washington State's DFI Cease and Desist Order.
Click
here to view the Order Appointing Receiver Warfield.