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Questionable ANNUITY?

John Timko was a most unlikely candidate to purchase a tax-deferred annuity when Barnett Investments sold him one seven years ago.

The retired security guard who spent winters in Tarpon Springs was dying of cancer and unable to walk without help. Not exactly the usual profile for a buyer of a long-term investment designed to pay off over a number of years. He had never bought a security in his life, and his income was so low that he paid no taxes, making the annuity's tax benefits useless.

Yet somehow Timko ended up investing $50,000 in an annuity naming a friend, Loretta Myers, as his beneficiary. Thirteen days later, he died.

But Barnett Banks of Pasco County didn't give up on him as a customer.

Timko's widow, Evelyn, says a teller called and talked her into mailing the bank a check for all the money that remained in the Timkos' joint account at a bank in Connecticut. That money, $36,732, also ended up in Myers' account.

Mrs. Timko fought for seven years to find out what happened to the money she and her husband had given to Barnett and to try to get it back. In January, she got her first taste of satisfaction.

A panel of arbitrators ordered Bank of America Investment Services, the successor to Barnett Investments, to pay her $266,383 plus attorney's fees. The panel for the National Association of Securities Dealers awarded compensatory damages and interest. It said the second transaction qualified under a Florida law that allows triple damages for civil theft or exploitation of the elderly.

Mrs. Timko still has a lawsuit pending in Pinellas County Circuit Court against Bank of America, the successor to Barnett Banks, and Loretta Myers, who now lives in New Port Richey. Both have denied the charges she made against them.

"I don't think we have anything to say other than that we disagree and we are disappointed in the ruling," bank spokeswoman Shirley Norton said.

Myers declined to speak to a reporter. Her comments in this story are taken from a deposition she gave in the lawsuit filed against her.

Although what happened to the Timkos is unusual, questionable annuity sales to older investors are not. The issue is one of growing concern to many state regulators, who worry that older investors are being talked into investments that are not suitable for them or that they do not fully understand.

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Married in 1962, John and Evelyn Timko brought up two daughters in Milford, Conn. He worked as a security guard and she as a secretary, and they liked to dance the polka. He knew Myers, a widow, from work, and when she was recovering from an auto accident, he became her driver. Myers described Timko as her chauffeur and friend and said the relationship was strictly platonic.

Although Mrs. Timko said she and her husband were on good terms, their marriage wasn't altogether conventional. In 1995, Mrs. Timko moved to North Carolina to live near one of their daughters. Timko stayed behind in Connecticut. Their savings stayed in a joint account at what is now Fleet Bank in Connecticut, which became the source for his Barnett investment. Timko moved in with Myers, staying at her house in Connecticut or her condo in Tarpon Springs. According to her, he did not pay rent.

"As far as I know, he just rented a room from her," Mrs. Timko said. "She swore up and down that they were only friends, and I have to believe that."

Although he lived apart from his family, they say Timko kept in touch with them. Two months before he died on March 6, 1997, he spent Christmas in North Carolina with his wife and daughters.

"I asked him to stay with us and told him that we would take care of him," Mrs. Timko said. "He said he had appointments with the doctors in Florida. I have a feeling he didn't want me to see him go downhill as fast as he did."

In Florida, Timko's health deteriorated quickly. His medical records show that he was in severe pain as cancer spread through his body and that he was taking morphine and other pain medications. He was under hospice care and had been released from the hospital two days before the date on his Barnett Investments account application.

"That profile doesn't fit with someone who's going to go down to the bank and get a tax-deferred annuity," said Robert Persante, a Clearwater lawyer who represents Mrs. Timko. "There are a lot of little things for which there is no explanation."

Among them: Because of his health, Timko could no longer drive, but it is not clear how or if he got to the bank to apply for the annuity that named Myers as beneficiary. Myers said she never took him to the bank to meet with the teller who notarized his signature that day. Myers also said she never had any discussions with Timko about the annuity and could not recall anyone from the bank coming to her home.

According to Persante, the salesperson whose name appears on the account form said he did not recall where he met with Timko.

The account application says the mortally ill Timko had an "investment time horizon" of six to eight years and considered long-term total return very important. It gave his investment objective as "tax deferral" even though it listed his tax bracket as zero. The form also contains several errors, including an incorrect Social Security number, a listing of Timko's marital status as single and the notation that he "lives with sister."

Myers acknowledged that she authored a handwritten request to Timko's bank in Connecticut to close his account and send the money to him at her address in Tarpon Springs. In response, the bank sent only part of the money, $54,807, of which $50,000 was used to buy the annuity.

Myers said she was "very surprised" that Timko named her as his beneficiary and did not find out he had done so until after his death.

"It was the man's wishes," she said. "That's all I know. He's the one that set it all up."

She said Timko never discussed his finances with her and never told her who would receive the assets of his estate. His will left everything to his wife, but that didn't override the decision to leave the annuity to Myers.

Timko was 65 when he died. Mrs. Timko, who was 66, is 73 today. Myers, who was 71, is 78 today.

Timko's annuity named his two daughters as contingent beneficiaries, which meant they would benefit only if Myers died before he did. Mrs. Timko says her husband must have been led to believe the investment would go to their daughters. In fact, she says that's what Barnett teller Kimberly Altrui told her that convinced her to mail the bank the $36,732 balance in the Timkos' joint bank account.

"They were telling me to send the money down to them so that they could start issuing checks to my two daughters, who as I understood, were the beneficiaries," said Mrs. Timko, who lives in Southport, N.C. "I had no objection to that. I knew he wanted them to be taken care of, and I wanted to make sure they were taken care of, too."

She sent the check in June, along with a letter specifying that it was to be invested on behalf of her two daughters.

Barnett did not notice, or did not act on, that instruction. The bank attempted to invest the additional money in Timko's annuity, but the insurance company refused it because Timko was dead. Instead, the bank deposited the money in Myers' account.

The Timko family's efforts to find out what happened started with teller Altrui, whose name appears on some documents related to the transactions.

After one of the Timkos' daughters called her, Altrui told Myers about the contact.

"She does not know that she is a contingent beneficiary and not the primary," Altrui wrote in a letter to Myers. Altrui reported she had done "all that I possibly can" to obtain the money that remained in the Timkos' bank account.

Altrui, who is now 37, and Myers were on friendly terms. Myers said she did her banking with Altrui if she was available, and Myers said she introduced Timko to the teller. A letter Myers sent Altrui three years ago is signed "Love you, Loretta." However, Myers said she never talked to Altrui about Timko's finances before his death.

Cheryl Bennett, one of the Timkos' daughters, said Altrui would not tell her what had happened to her father's money.

"She told me the matter was no longer in her hands, that I needed to call another number," Bennett said. "When I called, it was an insurance company, and they couldn't tell me anything because I was just a contingent beneficiary."

Mrs. Timko says she wrote letters to state officials asking for help, but never got any answers to her questions. Finally she hired Clearwater lawyers Persante and Charles Hilleboe, who brought the two legal actions on her behalf.

Her arbitration complaint accused Barnett Investments of misrepresentation, fraud and selling Timko an unsuitable investment for the purpose of generating commissions. Arbitration is a substitute for court proceedings. It was used because Barnett, like most brokerages, required customers opening new accounts to agree to arbitrate any disputes.

The court case includes additional allegations of fraud against Myers and Bank of America as the successor to Barnett. Mrs. Timko said Myers deposited or cashed checks made out to Timko after his death. Myers denied the allegations but said she added Timko's name to her checking account for convenience in late January or early February before his death. She said only a Social Security check was deposited after he died in March.

Although the arbitration award was for more than Mrs. Timko's losses, lawyer Persante said the law on civil theft allows her to continue to pursue her claims in court.

There are no pending actions against Altrui, the former teller, who now runs a home decorating business in New Port Richey. She declined to comment on the case.

The Timkos say they are delighted with the arbitration award.

"This has put our family through hell for seven years, not being able to put closure to my father's death," daughter Bennett said.

Mrs. Timko put it more simply:

"It's nice to know that somebody cares," she said.

_ Helen Huntley can be reached at huntleysptimes.com or (727) 893-8230.

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