Federal Jury Indicts Ariz. Charity Head

A federal grand jury in Phoenix has indicted the former head of a defunct Arizona charity on 193 counts of wire fraud and money laundering, alleging that he operated a Ponzi scheme that stole millions of dollars from elderly investors who thought they were putting their money into charitable gift annuities.

Robert R. Dillie stole at least $19-million of the $52.9-million he raised, the grand jury charges. He ran a charity called the Mid-America Foundation, in Scottsdale, Ariz., which sold the annuities mainly to elderly people, who thought their money was being invested in stocks and other securities. In exchange for their donations, the people buying the annuities typically expected to receive fixed payments until their deaths, at which time the remainder of the gifts would go to charities of their choosing.

But in October 2001, Mid-America ceased functioning, sending donors just a brief letter stating it had “inadequate assets” to make further payments (The Chronicle, November 1, 2001).

Instead of investing the money and using the interest it generated to pay what was owed under the annuities, the indictment alleges, Mr. Dillie diverted millions of it for his personal use, including gambling away more than $10-million in Las Vegas, buying a $1.6-million Las Vegas home, writing himself checks for more than $600,000, and purchasing a $52,000 Mercedes-Benz.

Mr. Dillie’s lawyer, Craig Orent, could not be reached for comment on the grand-jury indictment.

Mr. Dillie is also a defendant in a civil lawsuit brought by the U.S. Securities and Exchange Commission, alleging that he committed fraud in soliciting donations for Mid-America.