Neasham

Background In early February 2008, 83-year-old Fran Schuber and the 82-year-old man with whom she had been living for 15 years, Louis Jochim, made an unsolicited visit to defendant’s office to discuss the purchase of an annuity by Schuber. Jochim had been a client of defendant for some 10 years and had previously purchased an annuity from him,

1 which he considered a good investment. According to Jochim, “Fran thought she wanted to do the same thing I was doing.” The particular annuity that was discussed and which Schuber purchased is labeled a “MasterDex 10 Annuity” and is issued by Allianz Life Insurance Company of North America (Allianz). The annuity is approved by the California Department of Insurance for sale to persons through the age of 85 years. The premium Schuber paid for the annuity was $175,000, to which Allianz adds a $17,500 “premium bonus” if the policy is annuitized after the fifth year, so that the “annuitization value” of the policy becomes $192,500 plus accrued interest. Under the terms of the policy, interest on the principal accrued at 3.25 percent per annum the first year and at no less than 2 percent per annum thereafter. Except in the event of the…