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California Insurance Commissioner Dave Jones, seen here in 2010. (AP Photo/Rich Pedroncelli)

More than $17 million was distributed recently to 3,274 California senior citizens who purchased National Western annuities as part of a class action fraud law suit.

The case began in 2005, when Ezra Chapman, then a licensed life insurance agent, sold an annuity to an 83-year-old widow. Chapman failed to disclose to the woman that National Western would charge penalties if she withdrew money or died during the 15-year surrender penalty period. The woman passed away during the penalty period, and National Western deducted 25 percent as a penalty to the beneficiary.

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