Do annuity agents face a future of felonies?
As you read this, Alan S. Lewis is sitting in a Southern California jail for selling annuities with a surrender charge.
That’s the top layer of the story. Of course, the case and its issue have deeper layers and nuances, many of which were pointed out in comments on our site and email messages to us. Lewis is essentially accused of twisting because he sold clients annuities and then selling them a new annuity, triggering a surrender charge. In some cases, he did that a third time.
The California Department of Insurance investigated and handed over the findings to the Riverside County district attorney, who decided to prosecute, lodging 36 felonies for embezzlement, grand theft and burglary. Although some observers have been surprised by the long list of felonies for what could have been an insurance department matter, the burglary charges really perplexed them. The prosecutor argues that because Lewis visited clients at home for the annuity sales, it was burglary.
It’s a bit of a long tale and I won’t repeat a whole lot from the article. But I wanted to mention the intriguing spectrum of reactions. As I mentioned, some readers were surprised by the felony charges (although they were also uncomfortable with the surrenders).
“Garnish his wages for the surrender charges his clients incurred, but prison? Sheesh,” said one commenter (edited for spelling). “All agents better start working out and learning self-defense because it won’t be easy in prison.”
That was a craftier way to articulate the concern that any agent accused of an unsuitable annuity sale would risk prison.
Others said Lewis did not have his clients’ best interest at heart and therefore deserves the charges.
“It’s real, real simple: we in the business are SHEPHERDS. We take care of our clients and put THEIR interests AHEAD of ours at ALL TIMES,” another said (again with a little bit of editing). “We are 100% truthful and honest at ALL times and 100% professional and ethical. ANY OTHER approach to our business should be run OUT of the business immediately! Arrested? If the shoe fits.”
As I mentioned, variants of these opinions were sent in comments and in emails to us. Some agents and advisors in California were particularly worried about a hostile environment in which to sell annuities, particularly after the Glenn Neasham case. Neasham was convicted of theft in a California court for selling an annuity to an 83-year-old woman who was said to be suffering from dementia. Neasham and two assistants said they had not seen any indication of the dementia.
His conviction was reversed and the Supreme Court ordered it “depublished” so that it could not serve as a precedent. In the years between conviction and reversal, Neasham lost his business, house and license. He is still struggling to rebuild a livelihood.
Why California? Is it just because it has “avenging” officials? Or could it be something else? It could be. This story will be unfolding significantly, particularly as Lewis’ trial starts on June 9.