California's insurance department has revoked the insurance license of Glenn Neasham, who was convicted of felony grand theft of an elder for selling an Allianz Masterdex 10 indexed annuity to an 83-year-old woman with dementia.
On February 29, 2012, the California Superior Court in Lakeville, CA sentenced Neasham to 300 days in jail, which the judge in that court reduced to 60 days.
Neasham is scheduled to report to jail April 18, 2012, with an interim hearing. March 20 to postpone serving jail time while an appeal is heard.
Neasham has paid a heavy price for selling a single annuity in which the victim purportedly made money. He said the case has destroyed his business and his family is subsisting on food stamps. He can no longer afford the cost of his defense and expects to qualify for a public defender, according to report in Insurance News. A fund seeks contributions for his defense.
Neasham purportedly DID take steps to determine suitability and the customer did not lose any money (she actually made money)
It has been argued that Neasham's case is significant because (1) Whether or not the product was one I would recommend as a partial CD replacement, Neasham purportedly did take steps to determine suitability and the customer did not lose any money (she actually made money) and denies he did anything wrong. The adequacy is called into question (2) apparently it was a single incident; does the punishment fit the crime he was convicted for? (3) the case has received notoriety because the result makes causes agents to be more skittish of working with senior customers, leaving that market underserved.
Neasham Case Highlights the Huge Crevasse Between Regulation Of Insurance Agents Compared to the Structured Settlement Secondary Market
In a previous post I drew a parallel to the structured settlement industry and used the findings in the Neasham case to underscore the need for suitability regulations with teeth, mandatory training and continuing education for the sale of structured settlement annuities to plaintiffs who have mental incapacitates, or are seniors, and the like, that is similar to the standards for sale to seniors in states like California.
Furthermore, sale of re-marketed structured settlement payment rights (rights that are acquired in the secondary market and resold to investors (including the potentially and actual use by some with personal injury plaintiffs) is ripe for potential abuse IF there is a lack of up-front disclosure and understanding of the person's role and actual or potential conflicts are not addressed.