Does selling a structured settlement annuity to a senior expose agents to potential criminal prosecution?

A recent court case in California should give pause to virtually every structured settlement planner, agent or broker in the country as it seems to indicate that the sale of annuity products to seniors or claimants with impaired decision process could lead to criminal prosecution.

In this weeks “ Speaking of Settlements “ video broadcast, Mark Wahlstrom looks at the recent case of annuity agent Glen Neasham, a 52 year old annuity agent in California, who was recently convicted of felony theft charge and sentenced to 90 days in jail for selling a $175,000 annuity to an 83 year old woman who prosecutors alleged exhibited signs of dementia at the time of the sale. He was prosecuted under what are broadly referred to as “Elder Abuse” statutes that cover not only physical or nursing home abuse, but increasingly exploitation of seniors in the decision process of handling investments, savings and financial planning.  Annuity agent criminal intent

The article, written by WSJ staff reporter Leslie Scism, does an excellent job of covering the facts of the case and looking at the issues involved. You can read the full article by clicking here.

However, in this weeks broadcast Mark Wahlstrom elaborates on how this might impact structured settlement planners, annuity agents and others who deal with anyone over the age of 65. A great number of laws have been passed that REQUIRE banks and other’s to report suspected elder abuse or inappropriate influence in the planning or sales prospect, as happened in this case, making the likelihood of other such cases being pressed in other states quite high.

Some of the issues at stake here for structured settlement planners going forward are:

  • If state laws now indicate that any person doing planning over the age of 65 is considered elderly and is thus covered under these statutes, do planners and agents need to take particular care in dealing with anyone 65 or older if recommending a structured settlement annuity?
  • If the compensation for annuity sales in the form of a commission is going to be used to establish “criminal intent” as was the case in the Neasham prosecution, are there additional disclosures necessary on how an agent is compensated when dealing with any impaired claimant or senior?
  • How might this decision impact the structured settlement factoring business? If the high cost of “getting out of the product” is used as evidence of harming the clients, as it was in this case, what does this say about factoring company advertising and inducements to “ get your cash now” when it causes demonstrated financial loss to claimants in many cases to proceed down that path?



We anticipate there will be a great deal of follow up on this case and others like it around the country and we will continue to follow it and comment on how it might impact structured settlement sales and consulting moving forward.

Posted on March 21, 2012 .