UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17556 / June 11, 2002
SECURITIES AND EXCHANGE COMMISSION v. ROBERT R. DILLIE and MID-AMERICA FOUNDATION, INC., Defendants, and MID-AMERICA FINANCIAL GROUP, INC., Relief Defendant (U.S.D.C., District of Arizona, Phoenix Division, Civil Action No. CV-01-2493-PHX-JAT)
The Securities and Exchange Commission announced that on June 7, 2002, Judge James A. Teilborg, United States District Judge for the District of Arizona, granted the Commission's request for a judgment by default against defendants Robert R. Dillie ("Dillie") and Mid-America Foundation, Inc. (Mid-America) and relief defendant Mid- America Financial Group ("MAFG"). The Commission's Complaint accused Dillie and Mid-America of fleecing hundreds of mostly elderly investors out of an estimated $54 million, since 1997, from the sale of Charitable Gift Annuities (CGA). Dillie and Mid-America claimed, among other things: that the CGA investment scheme offered a safe, steady income, tax benefits, and a means to effect charitable donations; and that a CGA was fully backed by funds invested in stocks, bonds, money market funds, and federal obligations. Rather than investing the funds as promised, Dillie misappropriated the investors' funds and used the proceeds to pay personal, and often extravagant, expenses, including aircraft charters, gambling debts, personal residences, a ranch and child support.
The Court's order permanently enjoins Dillie and Mid-America from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and directs Dillie and Mid-America to pay disgorgement, plus prejudgment interest, and a civil penalty and MAFG to pay disgorgement, plus prejudgment interest, in amounts to be determined at a later date upon the Commission's application to the Court.