Certified Senior Advisor

“Certified Senior Advisor” is Really an Annuity Salesman

The story is sadly familiar. An elderly individual, seeking to get estate planning done inexpensively, seeks legal help from a non-lawyer paralegal. The paralegal identifies himself as a “Certified Senior Advisor”, 0r CSA. But what he really does is to sell a large and inappropriate annuity to the senior.

American Family Legal Services

Tom and Barbara Williams had used American Family Legal Services to create their revocable living trust. When Barbara Williams died in 2015, Tom called the company to help him update his trust.

Despite their name, American Family Legal Services didn’t have any lawyers or legal professionals on their staff. The company appears to have been just Victor Pantaleoni, whose business card identified him as a CSA. Those initials stand for “Certified Senior Advisor,” and the certification is available for a $395 fee.

Well, in fairness, the applicant does also have to take an exam. There’s even a helpful course, titled “Working With Older Adults: A Professional’s Guide to Contemporary Issues of Aging”. It costs another $400, and includes sample questions for exam preparation.

What kind of “professionals”? The CSA website indicates that its study programs satisfy continuing education requirements for certain professionals. Like CSAs. And, maybe, accountants. Possibly Certified Financial Planners, though that seems to require additional steps.

So what happened with Mr. Williams?

When CSA Pantaleoni visited Mr. Williams after his wife’s death, he learned that the couple had decided to leave much of their estate to a charitable organization. But their trust named Mrs. Williams’ daughter Merrily Lee as beneficiary. It also seemed to require both of them to sign any amendment.

Mr. Pantaleoni collected a $360 check from Mr. Williams, and prepared new trust documents. He visited Mr. Williams in his home, got his signature, asked him a number of questions about his finances, and took the new trust documents with him. He did not leave copies.

A week later, Mr. Pantaleoni returned for another meeting. He suggested a new idea: Mr. Williams should write him a $100,000 check (he helpfully filled in the check and got Mr. Williams to sign it). He did not tell Mr. Williams precisely how he was going to invest the money, but assured him it would help manage his estate.

What Mr. Pantaleoni, Certified Senior Advisor, did, of course, was to use Mr. Williams’ check to purchase a $100,000 annuity. Other documents he had Mr. Williams sign misrepresented his income and his remaining net worth. The forms filed by Mr. Pantaleoni indicated that Mr. Williams still had $120,000 in liquid assets (he actually had about $14,000 left). They also reported that his annual income was $24,000 (it was actually $16,000).

Trust mills and annuities

Mr. Williams’ story is all too familiar. So-called “trust mills” frequently entice seniors into estate planning seminars, touting the value of living trusts. They may even offer free meals (who doesn’t love a free meal?). But they are too often really just annuity salesmen, hoping to get financial information from their victims.

Why do they do it? Money, of course. Mr. Pantaleoni, a man who seems to have had no particular training or skill to market, made $9,500 in commissions for sale of the annuity to Mr. Williams. Plus the $360 he charged for amending a trust that, he later testified, could not be amended.

But the story doesn’t stop there. The annuity, as all annuities are, was issued by an insurance company. In this case, the insurance company was National Western Life Insurance Company, which touts its sales of annuities on its website. National Western Life cheerfully issued the annuity to the elderly Mr. Williams.

When Mr. Williams received the actual annuity contract and realized that there was a $15,000 surrender penalty, he tried to cancel the policy within the 30-day grace period it provided. He sent the form to National Western Life, which promptly indicated to Mr. Pantaleoni that he should contact his client about “conserving” (that is, reinstating) the policy. Mr. Pantaleoni leaped into action, got Mr. Williams to sign yet another blank form, and then filled it out indicating that the annuity should stay in place. Thus the Certified Senior Advisor preserved his commission.

The lawsuit

Eventually, Mr. Williams managed to cancel the inappropriate annuity. But he did lose nearly $15,000 in the transaction. And so he sued National Western Life.

Why not sue Mr. Pantaleoni himself? Well, he tried — but Mr. Pantaleoni had filed for bankruptcy. In fact, Mr. Pantaleoni had filed for bankruptcy three times in the few years before dealing with Mr. Williams. Also, he carried no professional errors and omissions (that is, “malpractice”) insurance.

Mr. Williams asked good questions. Did anyone at National Western Life know that Mr. Pantaleoni had made three trips to bankruptcy court (spoiler alert: they did)? Did they know that Mr. Pantaleoni was disciplined for his misrepresentations to Mr. Williams (again: they did)? How about Mr. Pantaleoni’s business cards, which were required by California law to identify him as an insurance salesman?

The California jury awarded Mr. Williams $14,941.41 to repay the surrender penalty. They also gave him $350,000 for past and future “pain and suffering,” and more than $400,000 more for National Western Life’s negligence. They added $200,000 for the insurance company’s intentional misrepresentations. Just to make the point more strongly, they added another $2.5 million in punitive damages. Meanwhile, the Certified Senior Advisor, schooled in “working with older adults,” was ordered to pay $1,000 in punitive damages — based on his ability to pay. The story was widely reported at the time, and is part of the phenomenon of “professionals” putting their own financial interests ahead of those of their elderly and vulnerable clients.

The appeal

The judgments entered three years ago have traveled up and down the California appellate court system for the intervening years. First the California Court of Appeals reversed the judgment against National Western Life, deciding that Mr. Pantaleoni was Mr. Williams’ agent, not the insurance company’s. The California Supreme Court considered that ruling and reversed it, sending the case back to the California Court of Appeals. Now the intermediate appellate court has held in favor of Mr. Williams on some subjects, but largely in favor of the insurance company.

According to the Court of Appeals, Mr. Williams failed to show that the insurance company had actual knowledge of, or ratified, Mr. Pantaleoni’s misbehavior. Consequently, the punitive damages award — by far the biggest portion of the judgment — is reversed.

Still, though, most of the other damages claims are upheld. Mr. Pantaleoni was an agent for the insurance company, the appellate judges acknowledge. The remaining judgment, totaling over $400,000, is upheld. On top of that, the appellate judges indicate their general approval of the trial judge’s award of attorneys fees — though they direct the trial judge to reconsider the award based on reversal of the punitive damages claim. Williams v. Naitonal Western Life Insurance Company, March 4, 2020.

[Editors’ Note:

You may have noticed that we have not posted Elder Law Issues for about four weeks. We had some difficulties with our website “crashing” multiple times. We took the opportunity to make some style changes, clean up some of the now almost 30-year history of our newsletter, and improve our searchability and delivery. But we’re back — though we’re still rebuilding some of our recent articles, especially. Thanks for your continued patience.]

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