Summary and timeline of the Glenn Neasham case
By Kim O'Brien
The Annuity Advocate
Neasham executive summary as prepared by NAFA's General Legal Counsel
On October 8, 2013, in a unanimous, 3-0 decision, the Court of Appeal of the State of California – First Appellate District, Division Three – reversed Glenn Neasham’s theft conviction. Neasham had been convicted in 2011 in Lake County Superior Court of theft with respect to the property of an elder (CR925185). The underlying facts in the matter involved the 2008 sale of an annuity policy to 83-year-old Fran Schuber, who was later diagnosed with dementia.
In a decision written by Justice Stuart Pollak, the court found no evidence that the defendant/appellant (Neasham) appropriated funds to his own use or to the benefit of anyone other than Schuber herself, nor was there evidence that he’d made any misrepresentation or used any artifice in connection with the sale of the annuity policy. In addition, the Court held that the jury received incorrect instructions that prejudiced the outcome of the trial.
The Court stated that, for the jury to convict Neasham, they needed to find that he “took possession” of Schuber’s funds knowing that she did not have the ability to make an intelligent decision to purchase the annuity. Acknowledging that there was “force” to the defendant’s and the amici’s argument that the evidence was insufficient to support a finding of Schuber’s incapacity, the Court assumed for the sake of argument Schuber’s incapacity — but nevertheless determined that Neasham’s acceptance of Schuber’s payment for the annuity could not be considered a trespassory taking of her property. Here, the Court references the amici argument that Neasham did not deprive Schuber of her property but rather placed her funds into an investment instrument of equal value to the monies withdrawn from her certificate of deposit. The annuity was issued to Schuber and she was at all times the owner of the policy.
Moreover, the 30-dayday “free look” period allowed Schuber to cancel the policy and receive back her entire purchase price. (In fact, the Court suggests that without evidence of criminal intent to take her property, finding that an elder lacked the capacity to consent to the delivery of funds should more likely result in a void contract — not a criminal conviction for theft.)
The Court dismissed the State’s argument that the annuity policy’s potential withdrawal penalty deprived Schuber of the enjoyment of her property, stating that: 1.) there was no evidence that Schuber intended or needed to withdraw monies from the policy; and 2.) the penalty did not apply if Schuber became hospitalized or needed to move to a long-term care facility; and, most importantly, 3.) there was no evidence that this “standard term” reduced the value of the policy to less than she paid for it. The Court further found that while “reasonable persons” can disagree whether Schuber’s decision to transfer her funds from a CD to an annuity was in her best interest, whether or not it was, the annuity policy was approved by the CA Department of Insurance for sale to a person of Schuber’s age. The Court agreed with the defendant’s and the amici argument that treating the sale of the annuity as a trespassory taking would "convert otherwise lawful activity into a crime." Indeed, the Court stated that under the State’s theory of the case, “merely cashing a check for a person known to suffer from dementia would support a larceny conviction.”
Finally, the Court discussed another reason that Neasham’s conviction must be overturned: larceny (or theft) requires an intent on the part of the perpetrator to steal; the jury needed to find that Neasham intended to steal from Schuber. At trial, the jury instruction regarding the requirement to find this element of intent was “inexplicably” changed to only require a finding that the property was removed from the owner’s possession for an extended period of time that deprived the owner of a major portion of its value or enjoyment, regardless of the defendant’s intent. The Court here found that this jury instruction misstated the law in an essential respect and was a prejudicial error of constitutional significance, stating that, had the jury been properly instructed the outcome would have been different.
(It should be noted that the Court did not consider whether the video of Schuber, taken three years after the purchase of the annuity when her dementia was more advanced and which was entered into evidence at trial, was prejudicial, in light of the conclusions the Court reached on other issues. However, in a footnote the Court did acknowledge that the prejudicial impact of the video may well have outweighed its evidentiary relevance.)
To quote the conclusion and holding of the Court: “Theft is a specific intent crime requiring the intent to steal. By permitting the jury to find defendant guilty if it found that the annuity deprived Schuber of a significant portion of the value or enjoyment of the funds with which she purchased it, regardless of whether the defendant considered the annuity to increase the value of her holdings and had no intention to deprive her of anything, the [trial] court prejudicially erred. Indeed it is doubtful whether one who gives equal value in exchange for property received can ever be found to have intended the property received. Defendant’s conviction must be reversed." The following provides a brief timeline for the People of the State of California v. Glenn Andrew Neasham. This timeline was prepared by The Society of Financial Service Professionals (FSP).
- October 2011: Glenn Neasham was convicted of criminal theft felony under California’s elder abuse laws for selling an annuity to an 83-year-old woman. The case rested on the client’s mental capacity at the time of the sale. The court found that Neasham knew or should have known that his client lacked the capacity to understand the transaction.
- February 2011: Neasham’s request for a new trial is denied and he plans to appeal.
- August 2012: The Society of FSP, with the support from AALU, LIDMA, NAFA, NAHU and NAILBA, decides to file an amicus curiae (friend of the court) brief to address the far-reaching underlying issues in the Neasham case to financial practitioners. The Los Angeles law firm of Horvitz & Levy is engaged to prepare the brief.
- November 2012: Neasham’s appeal brief is filed with the First District Court in California.
- March 2013: The state of California (Respondent) filed its response to Neasham’s appeal brief. This brief was well-articulated and caused Glenn Neasham serious concern about the effectiveness of his court-appointed attorney.
- April 2013: Horvitz & Levy were able to secure Jones Day, a prestigious California-based law firm, to take over Neasham’s appeal on a pro bono basis.
- May 2013: The second draft of amicus curiae brief was completed and circulated to supporting parties. Comments were coordinated and shared with Horvitz & Levy for preparation of the final brief.
- May 31, 2013: Neasham’s response to the Respondent’s brief, prepared by the Jones Day attorneys, was filed with the court.
- June 14, 2013: Our amicus curiae brief was filed with the court.
- August 28, 2013: Oral arguments were held. Then FSP president, Dick Weber, attended as an observer and reported that, while it is difficult to assess how the panel of judges will decide the case, they clearly understood the broad implications for the financial service industry beyond the immediate impact on Glenn Neasham.
- October 8, 2013: The Appellate Court of California delivered its verdict on California insurance agent Glenn Neasham’s 2012 felony conviction for selling an indexed annuity to a senior citizen. The judgment against Mr. Neasham was reversed on appeal.