Selling annuities: A criminal offense in CaliforniaBlog added by Nicholas Paleveda MBA J.D. LL.M on June 9, 2014
Nick Paleveda MBA J.D. LL.M

Nicholas Paleveda MBA J.D. LL.M

Bellingham, WA

Joined: March 27, 2012

I recently read an an article about Alan Lewis who is in jail awaiting trial on 29 felony counts of embezzlement, grand theft and burglary related to selling fixed index annuities to seniors. These charges were brought by a district attorney who is up for reelection. (Is this our version of political prisoners or what?)

The charges filed by the district attorney allege that Lewis induced 12 seniors into surrendering IRAs or annuities for a “less favorable” annuity, and the seniors (collectively) lost more than $300,000 in surrender penalties.

“Just because compliance approved it does not mean he did not commit twisting or churning,” said one commentator. “Whoever approved the transactions should face punishment, as well." (Does this mean people who administer annuities are also criminals?)

The real question is, is this a case for the Department of Insurance or a civil litigator — or is it a crime? Commentators have noted a hostile environment toward selling annuities to seniors in California. Today, “burglary” charges are stemming from meetings being held in the homes of the seniors. Who makes the determination that the surrender charges are appropriate? What happens if the bonus covers the surrender charge? Can the D.A. say the seniors lost more than $300,000 in penalties and mislead the public and the press? We do not know all the facts, but are all annuity agents now at risk for jail time?
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