Insurance Agent’s Criminal Conviction Reversed in California

December 1, 2013
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California law penalizes theft, embezzlement, forgery or fraud with respect to the property of an elder or a dependent adult by any person not a caretaker who knows or reasonably should know that the victim is an elder or a dependent adult. In February 2012 a California insurance agent was convicted of felony theft and sentenced to 90 days in prison for the sale of an annuity to an elderly woman that prosecutors claim had apparent dementia. Recently reversing that conviction in People v. Neasham, the California Court of Appeals assumed that there was evidence sufficient to support findings at trial that the plaintiff was incapable of giving informed consent to the transaction and resolved the matter by examining the alleged substantive offense and associated jury instruction.

Because the prosecution in Neasham did not allege, and the trial court did not instruct the jury to determine, that the agent either induced the plaintiff to purchase the annuity by misrepresenting its terms or embezzled the plaintiff’s funds, the appellate court focused on theft by larceny.

With no allegations or jury instructions as to fraud or embezzlement in the trial court, the appellate court focused on theft by larceny.

The appellate court first held that acceptance of the annuity premium could not constitute larceny because the premium was given to the agent, not taken or converted, in exchange for an annuity of equal value. Moreover, no evidence was offered to suggest that the contract’s penalty and withdrawal provisions somehow reduced the value of the annuity.

Noting that California approved the annuity for sale to persons through age 85, the appellate court asserted that treating the transaction as a trespassory taking would convert otherwise lawful activity into a crime.

The appellate court then found that the trial court’s jury instruction inexplicably omitted larceny’s intent requirement. Reversing the conviction, the appellate court reiterated that omission of an essential element of an offense "is an error of constitutional significance."

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