If I'm understanding what you are trying to do, your code is correct except for one line:
On line 25 where you are picking the closest sprite based on the convicts image point, comment that line out. Your code should work now.
There are two issues here:
1) If you use a object family to in a condition, ALL further actions must also be on the family. You can't use "Convicts Family" and then call an action on "Convict" - As far as the scope is concerned they are two separate objects. You need to replace your "Pick Nearest" with the convict family.
2) The "Is Overlapping" statement should already be picking the correct box underneath it - further picking the closest object does nothing.
Edit - I think maybe the confusion here is that when you pick a family it automatically selects the correct object for the given condition. You don't need to select a specific object type from that family. If you have a family of shapes (square, triangle and circle) and you say "Where Shapes are overlapping player" and the triangle is over the player, C2 will select the triangle.