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.