Securities and Exchange Commission
Litigation Release No. 17986 / February 19, 2003
United States v. Robert R. Dillie (U.S.D.C., District of Arizona) Criminal Action No. 03-CR-115-ALL
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)
On February 7, 2003, a federal grand jury indicted Robert R. Dillie, a 47-year-old resident of Fountain Hills, Arizona, on 193 counts of wire fraud, money laundering and transacting in proceeds from a criminal activity, in connection with a Ponzi scheme that took millions of dollars from mostly elderly investors. The indictment, premised upon conduct identified in a Commission civil action, alleged that between January 1997 and Oct. 12, 2001, Dillie's company, Mid-America Foundation, Inc., fraudulently raised at least $52.9 million through the sale of Charitable Gift Annuities; he had represented to investors that their funds would go into stocks, bonds and money market accounts. Dillie is accused of diverting $19.2 million of the monies raised to a hidden account that afforded him a luxurious lifestyle, including gambling away at least $10.2 million in Las Vegas, buying a $1.6 million Las Vegas home and a $52,000 Mercedes-Benz. Besides gambling money away, Dillie also wrote himself checks for over $600,000. To keep the Ponzi scheme running, the indictment further alleges, Dillie used $7.9 million of investors' money to pay earlier investors and spent $3 million in commissions to sales agents. When the plan collapsed in October 2001, Dillie told investors that Mid-America had "disbanded due to inadequate assets."
Previously, on December 20, 2001, the Commission brought emergency litigation before Judge James A. Teilborg of the United States District Court for the District of Arizona (Phoenix Division), seeking a temporary restraining order against defendants Dillie, Mid-America and relief defendant Mid-America Financial Group to halt the ongoing fraudulent scheme. At that time, the Court granted the TRO, and in addition, ordered an asset freeze and the appointment of a receiver. On June 4, 2002, Judge Teilborg granted the Commission's request for a judgment by default against the defendants and a relief defendant. The Court's order permanently enjoined 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 directed Dillie and Mid-America to pay disgorgement, plus prejudgment interest, and a civil penalty in amounts to be determined at a later date upon the Commission's application to the Court.