Agent Arrested and Convicted for Selling an Annuity.

[Mr_Ed]

Glenn Neasham: victim of geography?
by Stephen Forman on June 6, 2013

Editor's note: On June 3, 2013, Glenn Neasham informed ProducersWEB that his legal team had filed a reply brief to the Court Of Appeal of the state Of California. Neasham said he anticpates oral arguments to begin in approximately six months.

​No matter your feelings about Glenn Neasham — and surely he's as polarizing a figure in insurance as any of the last decade — I believe his story would have played out very differently had it not taken place in California. Let's go even further: had it not taken place in Bakersfield, California.

Rather than re-hash Mr. Neasham's case (of which there are some 50-odd articles on ProducersWEB), I'd like to make my point by contrasting his with a recent crime blotter which appeared on the Washington State Insurance Department's site. The reader can draw his own conclusion.

In March, 2010, Michael A. Porfirio met with a Washington couple in their 90s and their son (to whom they'd given power of attorney). They discussed consolidating all of their liquid assets into a single American National annuity. According the Insurance Commissioner, at the time of this meeting, "the couple was in declining health, including dementia, and in need of easy access to funds on a monthly basis for the payment of home health care (HHC) expenses."

Mr. Porfirio "knew or should have known" this. To ensure the couple understood what they were purchasing, Mr. Porfirio drew up a letter of understanding for their signature. It listed these highlights:

• The annuity was guaranteed by the WA State Guaranty Fund
• The annuity was being purchased as a simplified way to access funds to cover HHC expenses
• The annuity was being purchased to ensure adequate retirement income
• The annuity was being purchased to establish an emergency fund with easy access to unforeseen expenses

Here are the findings of fact by the Insurance Commissioner regarding the American National annuity that Mr. Porfirio (seemingly) obscured (Read the case here):

• It contained a 10-year surrender schedule (listed only as "10 year declining"), and a 10-percent-per-year free withdrawal cap (this limitation was not listed at all by the agent).
• Its nursing home expense waiver and disability insurance waiver had upper age limits of 80 and 65 respectively, which neither qualified for.
• Due to their ages, neither of the consumers qualified to be the annuitants (maximum age 85). The couple was therefore listed as owners, and their son as the annuitant (giving rise to a 37-year amortization schedule).
• The American National annuity was funded in part by a 2002 annuity: This replacement was not listed. One year later in 2011, the couple needed full-time home care totaling $15,000 per month. The annuity they purchased as a simplified way to cover those expenses only permitted around $3,600 per month in penalty-free withdrawals. Anything more would've incurred "substantial penalties." Fortunately, we are told, American National did right by the customers and allowed them to terminate the "unsuitable policy" without penalty and receive their money back. Mr. Porfirio was found guilty of several Washington regulations, including the following:
  • Misrepresenting the terms of a policy
  • Using the existence of the WA Insurance Guaranty Association in connection with a sale or solicitation
  • Recommending an unsuitable annuity
  • Failing to disclose a replacement
  • Failing to disclose the penalties and surrender fees in connection with an annuity

And to make it all go away? He paid a $2,000 fine. Quite different from Glenn Neasham's story, isn't it? In Glenn's case, there was reasonable doubt whether his client was cognitively impaired. Yet in this case, Mr. Porfirio knew.

Do we not "throw the book" at Mr. Porfirio because the son had power of attorney and was present? Or because Washington state does not have the powerful elder financial abuse laws (and prosecutorial saliva) that California has? What do you think? Would Glenn's case have been different had it happened in your state? Would Mr. Porfirio have received harsher justice had he practiced in California?

Stupid question, Arthur.

Just because the agent in Washington got a light punishment doesn't mean that Neasham should have gotten a light punishment.

what they both did was ethically wrong AND illegal in both states.

Just because WA's punishment is less severe doesn't mean that Neasham doesn't deserve his sentence.

ditto to djs.

 

[xrac]

Stupid question, Arthur.

Just because the agent in Washington got a light punishment doesn't mean that Neasham should have gotten a light punishment.

what they both did was ethically wrong AND illegal in both states.

Just because WA's punishment is less severe doesn't mean that Neasham doesn't deserve his sentence.

ditto to djs.

Personally I have a hard time being convinced that Nesham deserved punishment let alone a felony. However, the Washington case is clearly fraud.

 

[Arthur Rudnick]

originally posted by Mr_Ed

Stupid question, Arthur.

Just because the agent in Washington got a light punishment doesn't mean that Neasham should have gotten a light punishment.

what they both did was ethically wrong AND illegal in both states.

Just because WA's punishment is less severe doesn't mean that Neasham doesn't deserve his sentence.
ditto to djs.

I'm not sure that I asked a question. I just re-posted an article from someone.

 

[hardworkwillwin]

Stupid question, Arthur.

Just because the agent in Washington got a light punishment doesn't mean that Neasham should have gotten a light punishment.

what they both did was ethically wrong AND illegal in both states.

Just because WA's punishment is less severe doesn't mean that Neasham doesn't deserve his sentence.

ditto to djs.

Whats wrong with you Mr.Ed? Illegal?? Nope it was a product approved to age 85. It's THE product the client asked for.She wanted a similar FIA like Lou's ( Flex Dex Bonus annuity) which wasn't available anymore. She didn't want a traditional annuity... Lou earned 10% the year before on his and she wanted a similar product. The MD10 was the most similar to it, and few FIA went to age 85.Ethically wrong??? The MD10 was the #1 selling FIA on the market at the time, and it had the best crediting strategy out of ALL FIA in California. Plus it passed suitability.It was money she wasn't intending on using, however if she did it was a really great opportunity for her.

 

[Norwayguy]

Whats wrong with you Mr.Ed? Illegal?? Nope it was a product approved to age 85. It's THE product the client asked for.She wanted a similar FIA like Lou's ( Flex Dex Bonus annuity) which wasn't available anymore. She didn't want a traditional annuity... Lou earned 10% the year before on his and she wanted a similar product. The MD10 was the most similar to it, and few FIA went to age 85.Ethically wrong??? The MD10 was the #1 selling FIA on the market at the time, and it had the best crediting strategy out of ALL FIA in California. Plus it passed suitability.It was money she wasn't intending on using, however if she did it was a really great opportunity for her.

I believe he can say both agents did something illegal hence thief convictions, how we feel about said convictions means nothing in the grand scheme of things.

 

[hardworkwillwin]

I believe he can say both agents did something illegal hence thief convictions, how we feel about said convictions means nothing in the grand scheme of things.

Mr.Ed is a she.She's very judgemental!

 

[Norwayguy]

Mr.Ed is a she.She's very judgemental!

I thought Mr. Ed was a horse.

 

[b61mack]

A horse of course! If Mr Ed, has read the full thread. he/she would see it in a different light. It should have be handled by the DOI, not the DA.

 

[xrac]

I thought Mr. Ed was a horse.

You mean it is not a talking horse?

 

[Mr_Ed]

A horse of course! If Mr Ed, has read the full thread. he/she would see it in a different light. It should have be handled by the DOI, not the DA.

well, mack, mr neasham doesn't even think the DOI should have been involved. mr neasham thinks that what he did is business as usual for insurance agents. he did nothing wrong.