United States v. Richard Olive
804 F.3d 747
6th Cir.2015Background
- Richard Olive founded National Foundation of America (NFOA) in 2006 and marketed "Installment Plan Agreement" annuity exchanges through commissioned financial advisors, often surrendering annuities early and paying above‑market commissions.
- Grand jury indicted Olive on nine counts (three mail fraud, four wire fraud, two money laundering) alleging misrepresentations (including claiming 501(c)(3) tax‑exempt status, fraudulent financial statements, and concealment of state cease‑and‑desist orders) and diversion of funds for personal use.
- At trial, the government admitted state cease‑and‑desist orders (limited to those issued while Olive operated NFOA) and excluded an IRS "no change" letter offered by Olive to show good faith; brokers testified they would have acted differently if aware of the orders.
- Jury convicted Olive on all counts; district court sentenced him to 372 months imprisonment, three years supervised release, and ordered ~$5.99 million restitution.
- On appeal Olive challenged indictment sufficiency, admission/exclusion of evidence (cease‑and‑desist orders; IRS letter), merger of a money‑laundering count with fraud, and three Guidelines adjustments (loss amount, role enhancement, vulnerable‑victim enhancement).
Issues
| Issue | Plaintiff's Argument (Gov't) | Defendant's Argument (Olive) | Held |
|---|---|---|---|
| Sufficiency of indictment | Indictment alleges multiple fraudulent misrepresentations and permitted liberal construction on appeal | Alleged misrepresentation about 501(c)(3) status was legally ambiguous (application vs. determination) and should be dismissed | Affirmed — indictment sufficient; allegations beyond 501(c)(3) claim supported charges and factual disputes go to trial, not indictment sufficiency |
| Admission of state cease‑and‑desist orders (Rule 404(b)) | Orders were admissible to show Olive's knowledge, intent, and lack of mistake; brokers said orders would have affected sales | Orders were prejudicial/misleading because states cannot decide federal tax status and orders implied tax‑exempt denial | Affirmed — orders admissible for knowledge/intent (limited scope); not admitted to prove state law violations |
| Exclusion of IRS "no change" letter | Letter had limited relevance to Olive's intent in 2006 because it postdated events and did not adjudicate 501(c)(3) status | Letter showed IRS effectively accepted the 2006 deductions and corroborated Olive's good‑faith belief | Affirmed — district court did not abuse discretion excluding the letter for lack of relevance |
| Merger of money‑laundering count with fraud (Santos issue) | Money‑laundering did not merge because it was a separate transaction and Santos/Kratt framework applied; no statutory‑maximum merger problem here | Payment of commissions were essential operating expenses of the fraud; under Santos proceeds means "profits," so laundering count merges with fraud | Affirmed majority — applied Santos/Kratt framework, found a merger problem but held Santos relief not warranted because comparing statutory maximums (mail fraud > money laundering) defeats Santos‑based reversal; concurrence would have vacated and remanded for resentencing |
Key Cases Cited
- United States v. Santos, 553 U.S. 507 (2008) (Supreme Court plurality and controlling concurrence interpreting "proceeds" in money‑laundering context; merger problem discussion)
- United States v. Kratt, 579 F.3d 558 (6th Cir. 2009) (adopted Santos‑based multi‑factor framework for defining "proceeds")
- United States v. Crosgrove, 637 F.3d 646 (6th Cir. 2011) (applied Santos/Kratt framework and discussed merger and essential‑expense issues)
- United States v. Gibson, 409 F.3d 325 (6th Cir. 2005) (standard for de novo review of indictment sufficiency and liberal construction when challenged post‑trial)
- United States v. Halstead, 634 F.3d 270 (4th Cir. 2011) (holding money‑laundering not available for paying essential operating expenses of the underlying crime)