By now most people are familiar with the California case of Glenn Neasham, the former insurance agent convicted of felony theft of an elder for selling an 83 year old woman an annuity. Prosecutors in the case believed the elderly women suffered from dementia at the time of sale. Neasham was prosecuted under “Elder Abuse” statutes in place to protect seniors from various abuses including investments, savings and money.
In the weeks following Neasham’s conviction many people weighed in on the case and its potential ramifications throughout the financial services industry. California has numerous laws in place to protect seniors from abuse including requiring banks to report suspected elder abuse or undue influence. In the Neasham case, a bank manager at Fran Schuber’s bank reported Schuber and her long-term boyfriend Louis Jochim to California adult protective services because she seemed to be confused and influenced Jochim when they came in to cash out her certificate of deposit.
For sake of argument, according to California law, anyone over 65 is considered elderly. When insurance agents and the alike sell financial products like annuities they do in fact receive a commission. Based upon these assumptions, several questions come to mind.
- Should all financial industry professionals receive specialized training in the signs of dementia and mental illness in order to obtain their license?
- If banks and other mandated reporters of abuse do not see abuse during a transaction will they still be subject to criminal charges?
- Should potential annuitants and other clients be required to submit medical records and/or a doctor’s certification of their mentally competence to purchase financial products?
- Do financial institutions need to have certified medical professionals on staff to determine the state of mind of individuals over the age of 65 at the time of the transaction?
- Do financial institutions need to set up alerts for all cash withdrawals over a certain amount in regards to seniors?
- Will these laws hinder seniors’ ability to make decisions regarding the movement of their money from one institution to another?
- Should purchasing annuities, certificate of deposits as well as other financial products require court approval to determine whether or not the transaction is in the best interest of the client?
- Should judges and lawyers be required to take specialized training to determine the mental capacity of the potential client?
- Will competitors report elder abuse because they don’t want to lose the business to another firm?
- Does receiving a commission or other compensation serve as proof of intent to financially abuse seniors?
- Does the state have to demonstrate the potential for loss or does an actual loss have to occur in order to convict agents of theft?
- Will some companies refuse to sell financial products to individuals over the age of 65?
- Will selling future payments from a structured settlement annuity be considered illegal for individuals over the age of 65 because the annuitant would take a loss due to the discount rate?
- As more individuals over 65 continue to stay in the workforce, how will the elder abuse laws effect retirement plans when the employee suffers a loss or borrows against the funds?
- Why do laws state that people in their mid to late 60’s are elderly when they are still capable of working, driving, babysitting—even running the country?
- Will these laws be abused by the elders themselves to get out of transactions that are later deemed unfavorable years down the road?
- Will other laws be established preventing seniors from entering into contractual obligations even leasing an apartment?
- And in the case of Louis Jochim, Fran Schuber’s long-term boyfriend, who not only brought her to Neasham but testified to her mentally competence during the transaction—Why wasn’t he prosecuted for his undue influence? As the beneficiary of the annuity wouldn’t he have more to gain than Neasham?
As you can see there are many questions that need to be answered in order to protect individuals with diminished capacity while ensuring that these laws do not infringe upon the rights of mentally competent seniors. The Neasham case is an exceptionally sad one. Everyone involved in the case believed they were doing the right thing for Ms. Schuber and she even made a profit. Unfortunately the outcome for Neasham wasn’t as favorable. The now destitute, former insurance agent convicted of theft is about to be released on bail pending appeal.
Glenn A. Neasham has been granted bail pending appeal. The former insurance agent will avoid starting his jail sentence in April by posting $20,000 bail, reported The Lake County Bee-Record. The now destitute Neasham is planning to pay $2,000 for a bond from money lent to him by a relative. The 52 year old was convicted of felony theft of an elder in October of last year.
The charges were filed following a California Department of Insurance investigation into the 2008 sale of an annuity to Fran Schuber, 83, who was reportedly diagnosed with dementia. Neasham’s legal team claimed Neasham and his staff did not notice any signs of the annuitant's diminished mental state during the transaction.
Neasham's attorney filed a notice of appeal on February 29, 2012, the day Neasham’s request for a new trial was denied and he was sentenced to 300 days, which the judge reduced to 90 days with three years' probation. That sentence was further reduced to 60 days for good behavior. While his lawyer filed an appeal Neasham still owes him over $40,000 and now qualifies for a public defender. The state revoked his insurance license on March 9 and his ability to earn an income has been reduced.
As previously reported, there were several issues regarding the trial including the failure of two jurors to disclose immediate family members suffering from dementia. Others made up their mind regarding the case based upon newspaper accounts. In addition, since Schuber didn’t suffer a loss so there was no theft. In fact, by the time the case went to trial she gained $43,000 and still held the annuity.
As previously reported Glenn Neasham, was convicted by a jury of felony theft of an elder in October 2011. He was arrested the previous December following a California Department of Insurance investigation. According to reports, the insurance agent had allegedly sold an annuity to an elderly woman, who prosecutors claimed was mentally incompetent.
Neasham apparently did his due diligence regarding product suitability and complying with California’s senior protection law, regarding the unsolicited visit to Neasham’s office by Fran Schuber and her boyfriend. Neasham’s only red flag was her choice of beneficiaries, her boyfriend and his daughter.
On February 29, 2012, Neasham’s request for a new trial was denied and he was sentenced to 300 days, which the judge reduced to 90 days with three years' probation. That sentence was further reduced to 60 days for good behavior. While his lawyer filed an appeal with a higher court, Neasham owes him over $40,000 and now qualifies for a public defender.
There were several significant issues regarding Neasham’s trial including two jurors failure to disclose immediate family members suffering from dementia. Two other jurors claimed that the made up the minds regarding the case based upon previous newspaper accounts. Others felt that Neasham should be made an example.
In addition, Schuber didn’t suffer a loss so there was no theft. In fact, by the time the case went to trial she gained $43,000 and still held the annuity. Neasham was destitute with his family relying on food stamps. There was also possible prosecutorial misconduct and Schuber was not legally declared in competent until 3.5 years after the sale of the annuity.
As unfortunate as this case is for everyone involved, there are other issues of concern. First, will this case subject innocent people to prosecution based on the sale of annuities to customers based solely on age. Will insurance companies and agents start refusing to sell financial products to seniors based upon their age? How will this case affect the resale off all annuities on the secondary market? Are factoring companies going to need sworn statements by doctor’s declaring the seller’s competence? Will the sale of financial products to seniors need court approval?
Lakeport, CA—a jury convicted Hidden Valley Lake insurance agent, Glenn Neasham, 51 of felony theft of an elder on Friday, October 21, 2011. According to The Lake County News, Neasham was arrested last December following a California Department of Insurance investigation. According to reports, the insurance agent had allegedly sold an annuity to an elderly woman, who prosecutors claimed was mentally incompetent.
Neasham sold a $175,000 annuity to the then 83 year old victim that would have taken 15 years to fully mature. In doing so Neasham earned a commission on the sale. The victim took money from a CD to purchase the annuity. The victim, who did not take the stand, has been recently placed under conservatorship.
Neasham will be sentenced on Dec. 20 and faces probation combined with up to year in jail or as much as 4 years in prison, according to state sentencing guidelines.