California Court of Appeals, First District, Third Division
Trial Court: Lake County Superior Court No. CR925185, Trial Judge: Hon. Richard C. Martin
Counsel for Defendant and Appellant John Doyle Law Office of John Doyle Beong-Soo Kim, and Joseph D. Axelrad of Jones Day.
Counsel for Society of Financial Service Professionals as Amicus Curiae on behalf of Defendant and Appellant Andrea Ambrose Lobato and Jason R. Litt of Horvitz & Levy.
Counsel for Plaintiff and Respondent: Sharon Wooden Deputy Attorney General Kamala D. Harris Attorney General of California Dane R. Gillette Chief Assistant Attorney General Gerald A. Engler Senior Assistant Attorney General Seth K. Shalit Supervising Deputy Attorney General.
Defendant Glenn Andrew Neasham, a licensed insurance agent, appeals his conviction for committing theft from an elder and dependent adult by selling her an annuity policy which the prosecutor argued to the jury “was an unsuitable product for her age” despite its approval for sale to such a person by the California Department of Insurance. Although there was conflicting evidence as to the elder’s inability to understand the nature of the transaction, there was no evidence that defendant appropriated the elder’s funds to his own use or to the benefit of anyone other than the elder herself, nor was there evidence that defendant made any misrepresentations or used any artifice in connection with the sale. Moreover, the jury was incorrectly instructed that to convict it need find only that the purchase of the annuity deprived the elder of a major portion of the value or enjoyment of her property, eliminating the necessity of proving that defendant had any such intention. Hence, defendant’s conviction must be reversed.
In early February 2008, 83-year-old Fran Schuber and the 82-year-old man with whom she had been living for 15 years, Louis Jochim, made an unsolicited visit to defendant’s office to discuss the purchase of an annuity by Schuber. Jochim had been a client of defendant for some 10 years and had previously purchased an annuity from him, which he considered a good investment. According to Jochim, “Fran thought she wanted to do the same thing I was doing.”
The particular annuity that was discussed and which Schuber purchased is labeled a “MasterDex 10 Annuity” and is issued by Allianz Life Insurance Company of North America (Allianz). The annuity is approved by the California Department of Insurance for sale to persons through the age of 85 years. The premium Schuber paid for the annuity was $175, 000, to which Allianz adds a $17, 500 “premium bonus” if the policy is annuitized after the fifth year, so that the “annuitization value” of the policy becomes $192, 500 plus accrued interest. Under the terms of the policy, interest on the principal accrued at 3.25 percent per annum the first year and at no less than 2 percent per annum thereafter. Except in the event of the annuitant’s extended confinement to a hospital or certain long-term care facilities after the policy has been in effect for one year, the policy imposes a substantial penalty for the withdrawal of more than 10 percent of the principal during the first five years of the policy; thereafter, installments are paid to the annuitant over the following 10 years. As of the time of trial in October 2011, the policy had a secondary market value of $180, 000. At the expiration of the five-year waiting period in February 2013, the value of the policy would be $224, 228, with the right to receive 120 monthly payments of $1, 962, totaling $235, 440 over the 10-year period.
The policy authorizes the annuitant to assign or transfer ownership rights of the policy and permits the annuitant to borrow up to half of the cash surrender value of the policy, not to exceed $50, 000, at an interest rate of 7.4 percent in advance. In the event of the death of the annuitant, the beneficiary named in the policy — here Jochim — receives all remaining unpaid benefits.
Defendant received a commission of approximately 8 percent from Allianz upon the purchase of the annuity.
There was evidence that when Schuber and Jochim met with defendant on February 4, 2008, defendant explained the terms of the MasterDex 10 Annuity, contrasted those terms and benefits with the terms of certificates of deposit, and that Schuber signed, among other documents, a form acknowledging that she had read the information setting out the values and factors that affect the value of the annuity, that the information had been explained to her by defendant, and that she understood that the values shown, other than the guaranteed minimum values, were not promises or guarantees. Jochim testified that Schuber “was very clear in her mind at that time.” Defendant’s former assistant who was present for much of the conversation testified that “[s]he seemed like a very competent woman to me. She knew what she was doing and what she was signing and everything that entailed that. She didn’t seem like somebody who didn’t understand what she was doing.” Another former assistant, who was present when defendant conducted a subsequent review of the policies with Schuber and Jochim, testified that Schuber told defendant she “definitely” understood the policy. At one point, the examination continued:
“Q. And was she asked any questions during that interview if you remember?
“A. [Defendant] always asked, ‘Are you sure you understand what you’re [sic] choices are?’ What’s going on and those are the kinds of questions that ...