Family says dementia victim was improperly sold annuities

The daughters of a New York City man who jumped from a Manhattan building last summer describe their father as a dementia sufferer who got lost repeatedly and impulsively rented numerous expensive apartments.

Joan Jacobson, Jay Jacobson’s widow, is suing a broker and several insurers for allegedly selling him improper annuities. The defendants sold Jay Jacobson $2 million worth of annuities from 2019 and 2023, Joan Jacobson said, with no death benefits.

The lawsuit was initially filed in November against three brokers and USAA Life Insurance Co., New York Life Insurance and Annuity, Charles Schwab and Co., Fidelity Insurance Agency and Massachusetts Mutual Life. Joan Jacobson filed an amended complaint in March dropping Charles Schwab and two brokers. Michael Bryce Venable is the lone broker defendant.

“At the times these annuities were sold, [Jay Jacobson] was unlikely – by virtue of his advanced age and dementia – to live more than five years, let alone the near decade necessary to recoup just the multi-million dollar principal outlay,” the lawsuit states. “These annuities were objectively not in [his] best interest and the recommendations to purchase them are unjustifiable.”

On July 27, Jacobson, 84, committed suicide by jumping from a penthouse apartment at the Anagram Columbus Circle at 1 West 60th Street.

If it goes to trial, the lawsuit filed in New York Supreme Court promises to be an interesting test of the state’s Regulation 187.

New York adopted Regulation 187 in 2019. It requires insurance producers to act in the "best interest" of their clients when recommending life insurance and annuity products. While similar to a fiduciary duty, the rule does not technically state as much.

“At all times, a fiduciary relationship existed between [Jacobson] and defendants both at common law and statutorily,” the complaint says. Regulation 187 “required defendants to act in [Jacobson’s] best interest, thereby establishing a fiduciary duty.”

According to court documents, Joan Jacobson declined to participate in Alternative Dispute Resolution.

'Irrational mood swings'

Last week, the court posted affidavits from Jay Jacobson's daughters, Mindy Goldstein and Abbey Braverman. He was diagnosed with Lewy Body Dementia and hospitalized in January 2024, Goldstein wrote. But his physical and mental decline includes years of bizarre behavior, she added.

"He was emotionally impulsive and exhibited regular and irrational mood swings," she said. "At times, he would appear manic."

From May 2023 to July 2024, Jay Jacobson signed "multiple apartment leases for no reason other than his diminished capacity," Goldstein said in her affidavit. "These moves came at great expense to him since each time required him breaking a lease."

Similarly, Braverman recalled once waiting for Jacobson to meet her at his home. She later learned that he was "in a cab more than seventy blocks away from his home and had no recollection of where he lived."

In his short affidavit supporting a motion to dismiss filed by Fidelity, Venable paints a different picture of Jay Jacobson. Jacobson contacted Fidelity in April 2023, expressing interest in "an annuity with specific terms," Venable's affidavit states.

"In particular, Mr. Jacobson expressed his desire to purchase through Fidelity an annuity that did not include any benefits paid to Mr. Jacobson's beneficiaries upon his death, but instead provided higher annuity income payments to Mr. Jacobson during his lifetime," the affidavit says.

Venable provided Jacobson, who had run a professional staffing company, with an eight-page "Illustration of Payout and Benefits" for a New York Life Guaranteed Lifetime Income Annuity II. That document begins with these two sentences: "This is an illustration and not a contract. Assumptions on which figures are based are subject to change by the insurer."

The $500,000 annuity paid Jacobson $5,413.59 per month. By that time, Jacobson already owned several high-dollar annuities:

• In 2019, he bought a $500,000 New York Life annuity sold through a Charles Schwab broker, the lawsuit states. The broker told Jacobson that the annuity “would perform better for him than a reasonably invested securities portfolio,” the lawsuit says. Those claims were false, Joan Jacobson alleges, because the annuity “had no death benefit and would take nearly a decade to simply recoup [the] principal investment amount back.”

The New York Life annuity contract began July 24, 2019, the lawsuit states, and Jacobson was to receive monthly payments of $4,285.06 per month until his death and “nothing thereafter.”

• In 2021, Jacobson purchased a $500,000 MassMutual annuity that took effect June 21, 2021, and paid Jacobson $4,630.67 per month until his death and nothing thereafter, the lawsuit says.
• In 2022, Jacobson bought a $500,000 USAA annuity that took effect on Aug. 19, 2022, and paid him $5,427.31 per month until his death and nothing thereafter.

'No direct interaction'

The five defendants filed several motions to dismiss. In its motion, USAA Life stresses that it is the annuity issuer and had no knowledge of Jay Jacobson's mental state.

"Plaintiff lays out no direct interactions between Mr. Jacobson and USAA Life NY. Instead, she baselessly attempts to hold it responsible for the conduct of a third-party broker and its agent," states a memorandum accompanying the motion. "Plaintiff’s vague references to the unidentified oral statements by these non-parties, and to unidentified written materials, fall woefully short of the particularity required to allege fraud."

In addition, USAA attorneys note that Regulation 187 contains no private right of action.

"Only the Superintendent of the Department of Financial Services ... has the authority to enforce Regulation 187, as confirmed by the regulation’s plain language, history, and caselaw construing it," the memo says.

In a response to the USAA motion to dismiss, Joan Jacobson's attorneys urge the judge to permit the case to advance to the discovery phase.

"[D]epositions are necessary to assess Defendant’s knowledge of the Decedent’s health and mental condition, and whether that knowledge was exploited," the response says. "Additionally, documents—largely in Defendant’s exclusive possession—will shed light on the Decedent’s mental state, Defendant’s awareness, and the circumstances surrounding the sale."

Following Jacobson's death, attempts were made to reverse the annuity sales, the lawsuit says, but none of the insurers would return any money.

“At the time of his death, [Jay Jacobson] had received little benefit from the $2,000,000 he invested in the Annuities sold to him by Defendants, receiving relatively few payments before his untimely death,” the lawsuit says.

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