Free Notice of Appeal - District Court of Arizona - Arizona

ATTACHMENT "A" BRIEF DESCRIPTION OF NATURE OF ACTION AND RESULT BELOW: Mid-America Foundation, Inc. (MAF), a charitable corporation, under IRC § 501(c)(3), sold Charitable Gift Annuities ("CGAs") through commissioned sales agents, all of whom were independent contractors. The Plaintiff is a Federal Court Receiver appointed to take control of MAF. Purchasers of CGAs ("Annuitants") made an irrevocable gift of cash, securities or other assets to Mid-America, which in turn promised to periodically pay the Annuitant a fixed sum based upon tables established by the American Council on Gift Annuities. At the Annuitant's death, Mid-America agreed to pay the remainder of the gift to one or more charities designated by the Annuitant. Robert Dillie, the principal officer of MAF, converted 50 Million of MAF's money to support his lavish lifestyle, which resulted in MAF closing its doors. Prior to that MAF paid its Annuitants in a timely manner from 1996 until October of 2001. The Plaintiff has filed this lawsuit to recover the commissions, which were paid to the sales agents of the Mid-America Foundation, amounting to about 8% to 9% of the money raised by them through the sale of CGAs. . PRINCIPAL ISSUES PROPOSED TO BE RAISED ON APPEAL: Defendant/Appellants appeal the following specific findings of the District Court in the Amended Order Supersedes August 1, 2006, Order, (1) CGAs at issue in the case are securities not subject to any exemptions; (2) The CGAs in this case did not shift the risk of investment from the investors to Mid-America; (3) The annuitant "investor" funds were pooled in a "common enterprise" with the expectation that MidAmerica's management of the funds would result in profits to the annuitant "investors" and the GGAs were in fact investment contracts; (4) Mid-America is entitled to seek return of the commissions for the benefit of the receivership, so that the Receiver may reimburse its creditors and/or victims of its tortuous actions; (5) The Receiver has standing to bring state law claims; (6) The District Court has personal jurisdiction over the non-resident Defendant/Appellants pursuant to 15 U.S.C. §78aa (§ 27 of the Securities Exchange Act) from the Judgment awarding damages for "Negligence Per Se" and Federal and State securities violations and state law claims; (7) The verdict was the result of compromise; (8) An Allen instruction was improperly and unlawfully given by the Court when the jury reached an impasse; and (9) The Court released two jurors already engaged in debating the verdict.

Case 2:03-cv-02390-JAT

Document 588-5

Filed 03/30/2007

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