Sellers of Fraudulent Annuities Ordered to Pay $4.4-Million

An Arizona judge has ordered a Scottsdale company and its two principals to pay $4.4-million in restitution to elderly investors to whom they sold fraudulent charitable gift annuities.

The two — Michael A. Diaz and Michael A. Maksudian — failed to appear for a court hearing last month, and arrest warrants were issued charging them with contempt of court.

The state court found that Wealth Management Resources recruited sales agents to sell the annuities, and kept approximately 30 percent of the investors’ money as commissions without disclosing that fact to the investors, in violation of Arizona law.

People who buy charitable gift annuities usually receive an annual payment from the money earned on investments in stocks or real estate, with the remainder going to charity when they die. The funds are supposed to be placed in stable investments, but the court found that the annuities sold by the company were invested in high-risk, speculative deals, including leases of time shares at a resort in Yucatan, Mexico, that totaled more than $1-million.

Most of Wealth Management Resources’ annuities were sold in behalf of One Vision Children’s Foundation, an Arizona nonprofit organization that agreed in February to settle a case brought against it by the state over the same fraudulent sale of gift annuities. The court appointed a receiver to manage the charity and help the state secure the return of investors’ funds. So far, the state has recovered $1.3-million of the $4.4-million invested.