Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Click here to read more on the Glenn Neasham case.
UPDATE: Bail was set for Glenn Neasham, allowing him to stay out of jail pending his appeal.
By Steven A. Morelli
The theft conviction of a producer for selling an annuity will have a long-lasting chilling effect on agents, according to the distributor who worked with the producer, but the company that issued the annuity said the case was “unique” and does not expect to see the circumstances repeated.
Glenn A. Neasham was convicted on Oct. 21 in California for felony theft from an elder because he sold an Allianz MasterDex 10 indexed annuity to an 83-year-old woman with dementia. Neasham and two of his assistants have insisted they were not aware the client had dementia during the 2008 transaction.
Mikel Rosaasen, vice president of Triumph Marketing, the wholesaler that worked with Neasham, said producers are anxious about the case because it looks like Neasham did all the right things and is not a case of outright theft.
“I know that had Glenn known anything about any sort of cognitive impairments or anything like that, he would have documented it and probably taking precautionary steps to make sure that he was covered,” Rosaassen said. “I do believe he had no idea that she wasn’t of sound mind to make that kind of decision.”
California allowed the sale of the MasterDex 10 to people up to 85 years old. Neasham said he abided by the state’s suitability standard in the February 2008 transaction. Neasham was arrested in December 2010. On Feb. 29, he was sentenced to 300 days in jail, which was reduced to 60 days.
“The scariest part of it is that you've got agents out there that have written tons of annuities for people in their 80s,” Rosaasen said. “And you don't want four years later for them to say, ‘Well, did you know that Mrs. Smith, when she was 83, she had dementia?’ ”
Allianz Life, which terminated its relationship with Neasham days after his arrest, said the case was unusual and it had resulted from a sale that was far from typical.
“The case represents a unique set of facts and circumstances,” Allianz said in a written statement. “As we understand it, it was not about the product, which performed as designed and provided value. Instead, the case was about dementia. Our suitability review process is not intended to touch on health issues or diagnose dementia.”
The company said producers have to be vigilant when working with senior clients.
“While we do not anticipate that this set of facts and circumstances will ever be duplicated, if an agent has questions about a customer’s state of mind at the time of purchasing an annuity or life insurance, we recommend contacting the carrier or broker/dealer to resolve any issues,” according to the Allianz statement.
The client in the Neasham case had not asked for the money back and had not taken any of the penalty-free withdrawals she was entitled to. It was only after the verdict that the client’s son asked the company for a full refund, which Allianz provided.
The biggest mystery to Rosaasen is how Neasham was convicted for theft when he did not have the money, which was available to the annuity owner for the asking.
“I think the biggest point is that Glenn didn't steal the money,” Rosaasen said. “There are plenty of cases out there where agents have stolen money from old people and this is not one of them. The money was sitting at an insurance company in an annuity and now they have all their money back and everyone is fine. Why should he go to jail and have his family and his wife ruined for something that's not even true?”
California revoked Neasham’s license on March 9. His income has been reduced to a trickle, about $20,000 last year to support a wife and four children, one with developmental disabilities. He is asking the court if he can postpone serving his sentence as he appeals his conviction. If he gets a new trial, Neasham said he will need to use a public defender because he can no longer afford his own lawyer.
Although Neasham is bearing the direct impact from the case, Rosassen said the verdict has other consequences.
“Annuity agents take a huge risk because they are dealing with retired people,” Rosaasen said. “Older folks need advisors, too. And they need advisors who aren't going to tell them to put all their money in the stock market.”
Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at firstname.lastname@example.org.
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