REPRESENTING ALEX SINK CHIEF FINANCIAL OFFICER F i L E D STATE OF FLORIDA JUN 12 2008 IN THE MATTER OF: Docketed iar bl RICHARD PALMER EBERHARDT CASE NO.: 91390-08-AG ADMINISTRATIVE COMPLAINT RICHARD PALMER EBERHARDT 317 SE 3™ Street Cape Coral, FL 33990 RICHARD PALMER EBERHARDT LLQ Consulting, LLC 13180 North Cleveland Avenue, #126 North Ft. Myers, FL 33903 You, RICHARD PALMER EBERHARDT, insurance agent license number E055503, are hereby notified that the Chief Financial Officer of the State of Florida (“the Department”) has caused to be made an investigation of your National Foundation of America ("NFOA") activities while licensed as an insurance agent in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statutes, you, RICHARD PALMER EBERHARDT, are currently licensed in this state as a Life Including Variable Annuity & Health (2-15), Life (2-16), Life & Health (2-18), and Health (2-40) insurance agent. Your original insurance agent licensure date was May 6, 2004. 2. At all times pertinent to the dates and occurrences referred to herein, you, RICHARD PALMER EBERHARDT, were licensed in this state as a life including variable annuity & health, life, life & health, and health insurance agent pursuant to Chapter 626, Florida Statutes. 3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your, RICHARD PALMER EBERHARDT, insurance licensure and appointments. . 4. At all times pertinent to the dates and occurrences referred to herein, you, RICHARD PALMER EBERHARDT, were associated with LLQ Consulting, L.L.C., an Arizona limited liability company registered to do business in Florida. Your wife, insurance agent Nancy L. Eberhardt, is presently the Manager of LLQ Consulting, L.L.C. You, RICHARD PALMER EBERHARDT, were the previous Manager. Department records evidence that LLQ Consulting, L.L.C. is not licensed as an insurance agency in Florida. 5. Section 624.401, Florida Statutes, provides that no person shall act as an insurer, and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance in this state except as authorized by a subsisting Certificate of Authority issued to the insurer by the Florida Office of Insurance Regulation (“OIR”). 6. Section 624.03, Florida Statutes, defines “insurer” to include every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity. 7. Section 624.04, Florida Statutes, defines “person” and includes “company”, “corporation”, and “every legal entity” in the definition. 8. Section 624.09, Florida Statutes, provides that an “unauthorized insurer” is an insurer which is not duly authorized by a subsisting certificate of authority issued by OIR to transact insurance in this state. 9. Section 624.602(1), Florida Statutes, provides that the transaction of life insurance includes annuity contracts. 10. | Records maintained by the Tennessee Secretary of State reflect that NFOA was formed on January 27, 2006, as a nonprofit Tennessee corporation headquartered in Franklin, Tennessee. 11. An NFOA Corporate Resolution dated April 18, 2006, provides for the corporate authority to “liquidate stocks, bonds, and annuities ... in connection with charitable contributions or transactions...” This same resolution also provides for the corporate ability to “enter into and execute planned giving or charitable contribution transactions with donors, including executing any and all documentation related to the acceptance or acquisition of a donation, ...given in exchange for a charitable gift annuity...” 12. On April 13, 2007, OIR issued an Immediate Final Order (“IFO”) In the Matter of: NFOA, Richard K. Olive, Susan L. Olive, Breanna McIntyre, and Robert G. DeWald, Case No. 89911-07, finding that the activities of NFOA, et al., constituted an immediate danger to the public health, safety or welfare of Florida consumers. OIR further found that, in concert, NFOA, et al., were “soliciting, misleading, coercing and enticing elderly Florida consumers to transfer and convey legitimate income tax deferred annuities for the benefit of themselves and their heirs to NFOA in exchange for charitable term certain annuities”; and that NFOA, et al., had violated provisions of the Florida Insurance Code, including Sections 624.401 and 626.901, Florida Statutes. 13. OIR records show NFOA has never held a license or Certificate of Authority to transact insurance or annuity contracts in Florida, nor has NFOA ever been registered pursuant to Section 627.481, Florida Statutes, for purposes of charitable gift annuity agreements. NFOA was never a registered corporation with the Florida Department of State, Division of Corporations. 14. On May 4, 2007, the United States Department of Treasury, Internal Revenue Service (“IRS”), sent a letter to the Tennessee Department stating that the IRS had no record of NFOA being a tax-exempt organization under section 501(c)(3) of the IRC by virtue of an approved application. 15. On May 11, 2007, NFOA appealed OIR’s IFO to the First District Court of Appeal of Florida (“First DCA”). The First DCA dismissed the appeal on July 24, 2007. 16. On May 17, 2007, the IRS sent a letter to the Texas Department of Insurance stating that NFOA was not classified as an organization exempt from Federal Income Tax as an organization described in Section 501(c)(3) of the IRC. 17. On May 23, 2007, the Tennessee Department of Commerce and Insurance (“Tennessee DCI”) filed a Verified Petition for Appointment of Receiver for Purposes of Liquidation of National Foundation of America; Immediate and Permanent Injunctive Relief; Request for Expedited Hearing, in the matter of Newman v. National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, Kenny M. Marks, and Hunter Daniel, Chancery Court of the State Tennessee (“Chancery Court”), Twentieth Judicial District, Davidson County, Case No.: 07-1163-IV. The Verified Petition alleges at paragraph 30: NFOA’s contracts reflect an express written term that it is recognized by the IRS as a charitable non-profit organization under Section 501(c)(3) of the Internal Revenue Code (Prosser, attachment 4), and NFOA represents in multiple statements and materials that the contract will entitle the customers to potential generous tax deductions related to that status. The IRS states that it has granted NFOA no such designation. The deceptive underpinning related to NFOA’s supposed tax favored treatment of its contracts permeates its entire business model and sales pitch. This misrepresentation has materially and irreparably harmed and has the potential to harm financially all its customers and the intended beneficiaries of the contracts. These harms are as varied in nature and degree as the circumstances of all those individuals’ tax conditions, the assets turned in to NFOA, and the extent to which they have entrusted their money and keyed their tax status and consequences to reliance on such an organization. 18. On August 2, 2007, the Commissioner for the Tennessee DCI, having determined that NFOA was insolvent with a financial deficiency of at least $4,300,000, filed a Verified Petition to Convert Rehabilitation by Entry of Final Order of Liquidation, Finding of Insolvency, and Injunction, in the matter of Newman v. National Foundation of America, et al. 19. On September 11, 2007, pursuant to a Final Order of Liquidation and Injunction entered in the matter of Newman v. National Foundation of America, et al., the Chancery Court placed NFOA into receivership after finding that the continued rehabilitation of NFOA would be hazardous, financially and otherwise, and would present increased risk of loss. 20. On February 6, 2008, the IRS sent a letter to the court appointed Receiver for NFOA stating that NFOA does not qualify for exemption from Federal income tax as an organization described in Section 501(c)(3) of the IRC. The IRS, in determining that NFOA did not qualify for tax exempt status, states that the sale of NFOA annuity plans has a “distinctive commercial hue” and concluded that NFOA was primarily involved in the sale of annuity plans that “constitute a trade or business without a charitable program commensurate in scope with the business of selling these plans.” COUNT I 21. The above general allegations numbered one (1) through twenty (20) are hereby realleged and fully incorporated herein by reference. 22. On or about February 20, 2007, you, RICHARD PALMER EBERHARDT, or in conjunction with your wife, insurance agent Nancy L. Eberhardt, directly or indirectly solicited and induced J.B. of Cape Coral, Florida, then age 75, to transfer or otherwise surrender his existing annuity contract(s) with Allianz Life Insurance Company of North America in return for an NFOA gift annuity. 23. As part of the solicitation and inducement of J.B., you, RICHARD PALMER EBERHARDT, or in conjunction with your wife, insurance agent Nancy L. Eberhardt, knowingly misrepresented that NFOA was recognized as a charitable non-profit organization under Section 501(c)(3) of the IRC. 24. Based on the above transaction of insurance, a commission of $4,062.80 was paid by NFOA. 25. As a result of the actions of RICHARD PALMER EBERHARDT, J.B. is anticipated to lose approximately $32,651.05, even after an expected partial refund by the Receiver. 26. By taking advantage of your insurance agent fiduciary relationship with J.B., you, RICHARD PALMER EBERHARDT, directly or indirectly represented or aided NFOA, an unauthorized insurer; knowingly misrepresented that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC; and have otherwise demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. IT IS THEREFORE CHARGED that, you, RICHARD PALMER EBERHARDT, have violated or are accountable under various provisions of the Florida Insurance Code and rules of the Department of Financial Services, which constitutes grounds for the suspension or revocation of your licenses as a Florida insurance agent: (a) No person shall directly or indirectly represent or aid any insurer not then authorized to transact such insurance in this state in the solicitation, negotiation, procurement, or effectuation of insurance or annuity contracts with respect to subjects of insurance resident, located, or to be performed in this state. [Section 626.901(1), Florida Statutes. ]; (b) Knowingly placing before the public in any way a statement, assertion, or representation with the respect to the business of insurance, which is untrue, deceptive, or misleading [Section 626.9541(1) (b) 4., Florida Statutes.]; (c) Knowingly causing to made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. [Section 626.9541(1) (e) 1.e., Florida Statutes.]; (d) The licensee or appointee demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes.]; (e) Violation of any provision of the Florida Insurance Code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment. [Section 626.621(2), Florida Statutes.]; (63) The licensee or appointee engaged in unfair or deceptive practices, as prohibited under part IX of Chapter 626, Florida Statutes, or having otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes. ]. COUNT II 27. The above general allegations numbered one (1) through twenty (20) are hereby realleged and fully incorporated herein by reference. 28. On or about May 8, 2006, you, RICHARD PALMER EBERHARDT, or in conjunction with your wife, insurance agent Nancy L. Eberhardt, directly or indirectly solicited and induced F.A.C. of Ft. Myers, Florida, then age 70, to pay cash in return for an NFOA gift annuity. 29. As part of the solicitation and inducement of F.A.C., you, RICHARD PALMER EBERHARDT, or in conjunction with your wife, insurance agent Nancy L. Eberhardt, knowingly misrepresented that NFOA was recognized as a charitable non-profit organization under Section 501(c)(3) of the IRC. 30. Based on the above transaction of insurance, a commission of $18,000.00 was paid by NFOA. 31. As a result of the actions of RICHARD PALMER EBERHARDT, F.A.C. is anticipated to lose approximately $70,000.00, even after an expected partial refund by the Receiver. 32. By taking advantage of your insurance agent fiduciary relationship with F.A.C., you, RICHARD PALMER EBERHARDT, directly or indirectly represented or aided NFOA, an unauthorized insurer; knowingly misrepresented that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC; and have otherwise demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. IT IS THEREFORE CHARGED that, you, RICHARD PALMER EBERHARDT, have violated or are accountable under various provisions of the Florida Insurance Code and rules of the Department of Financial Services, which constitutes grounds for the suspension or revocation of your licenses as a Florida insurance agent: (a) No person shall directly or indirectly represent or aid any insurer not then authorized to transact such insurance in this state in the solicitation, negotiation, procurement, or effectuation of insurance or annuity contracts with respect to subjects of insurance resident, located, or to be performed in this state. [Section 626.901(1), Florida Statutes. ]; . (b) Knowingly placing before the public in any way a statement, assertion, or representation with the respect to the business of insurance, which is untrue, deceptive, or misleading [Section 626.9541(1) (b) 4., Florida Statutes. ]; (c) Knowingly causing to made, published, disseminated, circulated, delivered to any person, or placed before. the public, any false material statement. [Section 626.9541(1) (e) L.e., Florida Statutes.]; (d) The licensee or appointee demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes. ]; (e) Violation of any provision of the Florida Insurance Code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment. [Section 626.621(2), Florida Statutes. ]; (63) The licensee or appointee engaged in unfair or deceptive practices, as prohibited under part IX of Chapter 626, Florida Statutes, or having otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes.]. WHEREFORE, you, RICHARD PALMER EBERHARDT, are hereby notified that the Chief Financial Officer, or her Deputy, intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent or to impose such penalties as may be provided under the provisions of Sections 626.611, 626.621, 626.641, 626.651, 626.681, 626.691, 626.692, 626.9521, Florida Statutes, Rule Chapter 69B-231 of the Florida Administrative Code; and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. You are further notified that any order entered in this case revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code. NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, Florida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel acting as Agency Clerk, at the Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing. YOUR FAILURE TO RESPOND IN WRITING WITHIN | TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF SUSPENSION OR REVOCATION WILL BE ENTERED AGAINST YOU. 10 If you request a proceeding, you must provide information that complies with the requirements of Rule 28-106.2015, Florida Administrative Code. For the purpose of requesting a hearing in this matter, you are the "Respondent." Completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: (a) Your name, address, and telephone number, and facsimile number (if any). (b) The name, address, telephone number, facsimile number of the attorney or qualified representative of the respondent (if any) upon whom service of pleadings and other papers shall be made. (c) A statement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) A statement of when you received notice of the administrative complaint. (e) A statement including the file number to the administrative complaint. If a hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. If a proceeding is requested and there is no dispute of material fact, the provisions of Section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However, if you dispute material facts which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State Administrative Law Judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. 11 Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. Mediation of this matter pursuant to Section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the Department. DATED and SIGNED this / Fh. day of Que , 2008. KAREN CHANDLER Deputy Chief Financial Officer 12 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished to: RICHARD PALMER EBERHARDT, 317 SE 3 Street, Cape Coral, FL 33990; LLQ Consulting, LLC, 13180 North Cleveland Avenue, #126, North Ft. Myers, FL 33903, by Certified Mail this _/ 7tl day of Ou Q , 2008. _ Mo ( LE 4 . Philip M. Payne Florida Bar Number: 0729310 Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 (850) 413-4156 Fax (850) 487-4907 Attorney for Department 13 IN THE MATTER OF: STATE OF FLORIDA DEPARTMENT OF FINANCIAL SERVICES DIVISION OF LEGAL SERVICES RICHARD PALMER EBERHARDT ELECTION OF PROCEEDING I have received and have read the Administrative Complaint filed by the Florida Department of Financial Services ("Department") against me, including the Notice of Rights contained therein, and I understand my options. I am requesting disposition of this matter as indicated below. (CHOOSE ONE) : 1 f] 3.1) I do not dispute any of the Department’s factual allegations and I do not desire a hearing. I understand that by waiving my right to a hearing, the Department may enter a final order that adopts the Administrative Complaint and imposes the sanctions sought, including suspending or revoking my licenses and appointments as may be appropriate. I do not dispute any of the Department's factual allegations and J hereby elect a proceeding to be conducted in accordance with Section 120.57(2), Florida Statutes. In this regard, I desire to (CHOOSE ONE): {] Submit a written statement and documentary evidence in lieu of a hearing; or [] Personally attend a hearing conducted by a department hearing officer in Tallahassee; or {J Attend that same hearing by way of a telephone conference call. I do dispute one or more of the Department's factual allegations. I hereby request a hearing pursuant to Section 120.57(1), Florida Statutes, to be held before the Division of Administrative Hearings. I have attached to this election form the information required by Rule 28-106.2015, Florida Administrative Code, as specified in subparagraph (c) of the Notice of Rights. Specifically, I have identified the disputed issues of material fact. TO PRESERVE YOUR RIGHT TO A HEARING, YOU MUST FILE YOUR RESPONSE WITH THE DEPARTMENT OF FINANCIAL SERVICES WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. THE RESPONSE MUST BE RECEIVED BY THE DEPARTMENT NO LATER THAN 5:00 P.M. ON THE TWENTY-FIRST DAY AFTER YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. The address for filing is: General Counsel acting as Agency Clerk, Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Signature Print Name Date: Address: Date Administrative Complaint Received: If you are represented by an attorney or qualified Phone No.: representative, please attach to this election form his or her name, address, telephone and fax numbers Fax No.: 14

Docket for Case No: 09-003089PL

Orders for Case No: 09-003089PL