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Insurance Agent Gets Jail Time

By JLP | March 22, 2012

This is the first I have heard of this story: Annuity Case Chills Insurance Agents.

Last month, Glenn Neasham, an independent insurance agent, was ordered to spend 90 days in jail on a felony-theft conviction for selling a complex annuity to an 83-year-old woman who prosecutors alleged had shown signs of dementia.

The agent’s conviction, by a state-court jury in Lake County, Calif., is sending shivers down the spines of Mr. Neasham’s peers across the country. They can’t recall another case where an agent was sent behind bars for selling an annuity.

The guy talked the woman into putting $175,000 into an equity-indexed annuity. His commission: $14,000 (8 percent). I know it’s not the same product, but the commissions for $175,000 put into American Funds mutual funds are 3.5%.

Wow!

There is a quick way to end these abuses: stop paying bigger commissions for these products.

Now, it’s important to note that we do not have all the information. I just think putting an 83-year old into an equity-indexed annuity is not looking out for her best interest.

Let the ticked-off insurance agents’ vitriol begin…

Topics: Insurance | 10 Comments »


10 Responses to “Insurance Agent Gets Jail Time”

  1. Paul Williams Says:
    March 22nd, 2012 at 12:40 pm

    Ugh…this kind of stuff is why financial professionals get a bad wrap. We’re not all like this, but all the dishonesty that goes on makes it hard for people to believe that.

    Hope you don’t get too many ticked off insurance agents, JLP. :)

  2. Russ Says:
    March 22nd, 2012 at 2:33 pm

    The mortgage business suffered the same issue when Neg Am loans were paying exorbitant commissions. The problem though isn’t so much the commissions but you get too many companies (more like boilerooms) that set themselves up to focus on selling these high commission products. In addition, with barriers to entry being so low, the glorified advisors work to push these products even if it may not be appropriate for everyone.

    The Fed fixed commissions last April so loan officers make the same percentage on each transaction regardless of terms of the loan. Honestly, while I don’t like government telling me what I can and can’t make, it does make it easier since there is no incentive to push anything one way or the other at the individual level.

  3. Sam Says:
    March 22nd, 2012 at 5:14 pm

    No ticked off insurance agents yet . . .

  4. Dylan Says:
    March 22nd, 2012 at 5:20 pm

    Wow! They may not be in the same class, but this puts unscrupulous insurance agents on the same spectrum as Bernie Madoff.

  5. mercyn Says:
    March 22nd, 2012 at 7:24 pm

    Annuities are often complex and I think insurance companies purposely make them that way. There are numerous contingencies and the contracts filled with small print and indecipherable financial and legalese. I believe few purchasers totally understand what they are buying.

  6. Miguel Says:
    March 22nd, 2012 at 9:49 pm

    After about the 10th time my advisor has explained variable annuities to me, I think I finally maybe get it – and I have +20 years of legal, accounting and business experience.

    They can be pretty decent for the right person. We got one several years ago for a 70-something year old family member and it has outperformed anything I had invested in the past few years.

    But the complexity certainly worries me. I feel sorry for the victim in your story. Elderly people are always vulnerable to financial predators. Seems to be one of those universal problems. Knowledgeable and diligent family members is the best defense.

  7. BG Says:
    March 23rd, 2012 at 7:12 am

    The insurance agent would have gotten away with it too, if it weren’t for that pesky bank manager calling adult services when they scammed the old lady into handing over the $175k.

    I wonder if an insurance agent will sell an insurance product that protects you from future insurance product scams?

    Any ‘product’ that has 8% fees to be paid directly to your ‘trusted advisor’ is absolutely and unequivocally a scam.

  8. Grace Says:
    March 25th, 2012 at 4:02 pm

    I’m rather pleased to see responsed from folks who know a scam when they see one, and who have no sympathy for the devious insurance agent. I’d rather hang out with them than DIA’s any day!

  9. John @ Married With Debt Says:
    March 26th, 2012 at 1:28 pm

    Nice to see someone actually go to jail for these deplorable shenanigans. If he couldn’t sleep at night before, he definitely will be having trouble now.

  10. John Says:
    April 13th, 2012 at 1:06 pm

    Now if they would only go after all the bankers and finance officers for getting us into this mortgage nightmare.

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