Wednesday, October 9, 2013
Court of Appeal Rejects Conviction Based on Sale of ‘Unsuitable’ Annuity
By a MetNews Staff Writer
The First District Court of Appeal yesterday tossed out the conviction of an insurance agent on a theft charge based on sale to an elderly woman of an annuity the prosecutor called “an unsuitable product for her age.”
Justice Stuart Pollak, writing for Div. Three, said Glenn Neasham’s conviction of theft from an elder and dependent adult was unsupported by evidence that Neasham misappropriated the victim’s funds or engaged in deception to sell the policy. He also said the trial judge erred in not telling jurors they needed to find that Neasham intended to deprive the victim of her property.
According to testimony, the 83-year-old victim and the 82-year-old man she had been living with for several years visited Neasham’s office without a solicitation. The man, Louis Jochim, was a longtime client of the agent’s and had purchased an annuity from him years earlier.
The woman, Fran Schuber, agreed to purchase an annuity issued by a major company, at a price of $175,000 plus a 10 percent “premium bonus” if the policy becomes annuitized after the fifth year. The annuity accrues interest at the rate of 3.25 percent the first year and not less than 2 percent each subsequent year.
There are substantial penalties for withdrawals in the first five years, unless the annuitant is confined to a hospital or longterm care facility.
The agent received an 8 percent commission.
The Department of Social Services investigated after a call from an employee of the bank from which Schuber withdrew $175,000 from a certificate of deposit. The employee and others said that Schuber was confused and that Jochim—who was made the beneficiary, with his daughter as a contingent beneficiary and with no provision made for Schuber’s son—seemed to have undue influence.
Jurors found Neasham guilty. But Pollak said that while the testimony may have established that Schuber was confused and easily manipulated, it did not prove that Neasham took her money with criminal intent.
Siding with the defense and its amicus, the Society of Financial Service Professionals, the justice wrote:
“[Neasham] did not take [Schuber’s] funds or convert her property for his own use or the use of any other person; as the amici argue, he did not deprive her of any property but instead placed her funds into an investment instrument of equal value to the monies withdrawn from her certificate of deposit. The annuity was issued in Schuber’s name and she at all times was the owner of that policy. For 30 days after its issuance, she had the unqualified right to cancel the policy and receive back the full price paid for the policy. While the prosecution placed great emphasis on the penalty she might have incurred had she withdrawn more than 10 percent of the policy value within five years of its issuance, there was no evidence that Schuber had any intention or need to make such a withdrawal, the penalty did not apply if she became hospitalized or moved to a long-term care facility and, most importantly, there was no evidence that this standard term reduced the value of the policy to less than she paid for it.”
The case is People v. Neasham, A134873.
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