Securities Law | Expert Legal Commentary
August 24, 2009
Warfield v. Alaniz: Charitable Gift Annuities Found to be Investment Contracts for Securities Law Purposes
By
Josh Lawler and Joel B. Ginsberg of Zuber & Taillieu LLP
With investors on red alert for Ponzi schemes, the 9th Circuit found that the sales of certain charitable gift annuities (“CGA’s”) were part of one such scheme, and that those CGAs constituted investment contracts subject to securities laws largely because they were marketed as an investment rather than as philanthropy. In Warfield v. Alaniz, 569 F.3d 1015 (9th Cir. 2009), the Court held that the Philanthropy Protection Act of 1995 did not protect either the CGAs or the sales agents who had received commissions for selling the sham CGAs from registration or anti-fraud laws. Mid-America Foundation, the company that originated the sham CGAs, went bust, and the Court enabled a receiver for the defunct company to recover from the sales agents commissions they had received while participating in the scheme.
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About the Authors
Josh Lawler is a Partner of Zuber & Taillieu LLP, focusing on corporate law and securities and finance law.
Joel B. Ginsberg is an Associate of Zuber & Taillieu LLP, focusing on corporate law, and securities and finance law.
View a PDF of the judicial opinion