Pre-Need Funeral Contract Fraud - The Newest "Too Big To Fail" - FoxChicago Blog post.
Pick a state...any state. I'm generally not the gambling type, but I would bet my eye teeth that there is some type of funeral or pre-need funeral contract fraud litigation active in all 50 states as we speak.
The most recent headline whores are the Illinois Funeral Directors Association (IFDA), the Virginia Funeral Directors Association (VFDA) and a basketful of Mississippi funeral homes who sold pre-need funeral contracts, but somehow missed the fact that the money paid by trusting consumers was not a personal check made out to them. Okay, one at a time...let's not get overwhelmed in the greed grab.
IFDA
As has been well documented in the Chicago Tribune and other news sources, the IFDA has $59 million in pre-need contract funds, paid by consumers, that are unaccounted for. It apparently just "poof"...disappeared. That is outside of the fact that, per the Illinois Burial Funds Act, contract sellers may keep 5% of the principal paid for "administrative fees" and 25% of the profit on principal. So, they really don't need to steal the money...a chunk of it is just given to them. Not to mention that Randall Earl, Executive Secretary of the National Funeral Directors Association and 2001 President of the IFDA, when it had only a measly $10.6 million dollar deficit, neglected to disclose to consumers that the IFDA was investing the trust funds in risky insurance policies and that investment management fees and commissions resulted in millions worth of profits for the IFDA and member funeral homes.
Don't stop now...it goes deeper...According to the AP, U.S. Senator Roland Burris has been subpoenaed to turn over his records, license issuance due diligence, analysis on issuance of license revocation, and...gasp!...amount he was paid as a lobbyist for the IFDA. You see, when Burris was State Comptroller in 1980, he issued a license to the IFDA allowing them to manage the "trust funds" investments. Call me crazy, but since when is a funeral director suddenly an investment specialist. But interestingly, in 2007, after his role as Comptroller, Burris was hired as a lobbyist for the IFDA, specifically to lobby then State Comptroller Dan Hynes. And, shockingly, one Illinois funeral director claimed on a blog that "our pre-need trust sales are the biggest in 3 years"...time for a wake up call for Illinois consumers. Hmmmm, this one continues to play out and gets more interesting...and more disturbing...by the moment.
VFDA
In an article posted on CNNMoney.com, according to Mike Nicodemus of Hollomen-Brown Funeral Home and Crematory, an average funeral at that particular funeral home costs $8,500...not chump change by any means. The VFDA promoted Shenandoah Life Insurance Company as it's funeral insurance provider of choice. Oh...did I mention that was before it was placed in receivership by the Circuit Court of Richmond, VA? It apparently does not have a balance sheet that adequately matches liabilities with assets. The FAQ document on the company's website states that policy holders should continue to pay renewal premiums to avoid disruption of claims, but does not guarantee actual payment of any claims, and at this time does not honor their "Required Minimum Distributions" on IRAs. What part of "required" am I missing? And the state of Virginia assures policy holders that interest will continue to accrue on annuities, but they cannot guarantee that this interest will actually be paid. And in more news...
Missouri
Missouri is a mess. According to WLBT3 news, several pre-need funeral contract sellers are deficient in their accounts. Here's a quick sample...Green Acres (Vicksburg, MS) has $221 dollars in their trust fund to cover over $373,000 in contract liabilities. Other offenders include Prentiss Memorial Gardens (Baldwyn, MS), Sunset Gardens Memorial Park (Laurel, MS), Liberty Memorial Park (Booneville, MS), Pinecrest Memorial Park (Pittsboro, MS), which has at least 50% of the over $378,000 in pre-need contract funds unaccounted for, Southern Mortuary (Jackson, MS), missing over $38,000, George West Funeral Home (Natchez, MS), $95,000 deficient, and Jackson Mortuary (Aberdeen, MS), the runt of the group with only $10,000 unaccounted for.
But, the sad and frustrating fact is that the Missouri debacle was completely avoidable. For instance, according to the Natchez Democrat, in July 2006, a cease and desist order was issued to George F. West Funeral Home to stop selling pre-need contracts and they were ordered to pay a $5,000 fine. They ignored both the order and the fine and continued operations as usual. After they were recently...(that would be years later)...again ordered to cease and desist business operations, Mr. West hired attorney Earl Banks, a member of the MS legislature to represent him. Mr. Banks, as a member of the MS legislature, has the right to request a continuance if the case he is working on has potential to interfere with his legislature duties and obligations. Thus...this case will potentially be continued until the end of Mr. Banks' legislative term. Does anyone smell a whiff of conflict of interest...
And Green Acres Memorial Park, founded in 1955 (sold twice before 2001), faithfully neglected to file the necessary and state mandatory annual financial reports, which the "regulatory authority" was fully aware of. According to the Vicksburg Post, it filed an incomplete perpetual-care trust fund financial report in December 2003, which was rejected by the "regulatory" authority. In October 2005, Stephanie Graham, acting President, signed a consent agreement with the State of Mississippi to file reports in accordance with the Mississippi Pre-Need Act (enacted January 2002). In November 2005, the state issued a formal request for the report. In March 2006, the Mississippi Secretary of State indicated that the report had not yet been filed. In November 2006, Green Acres was issued a formal cease and desist order and their license is revoked. Fast forward to July 2008, where the Chancery court again requested the annual reports and in October 2008 the Secretary of State initiated a formal audit. As of January 2009, the Secretary of State estimated a $373,000 deficit and temporarily froze all accounts.
Oh, did I mention that Mississippi Secretary of State Delbert Hosemann is quoted in the Natchez Democrat acknowledging "at this time the state has no process for follow-up"? Well, thanks for the news flash Mr. Secretary, but that is pretty obvious
Adding insult to injury...Service Corp. International (SCI)...in case you are unaware, this is the national funeral corporation with over 1,500 funeral homes and over 400 cemeteries that showed the ultimate disrespect to our brave military vets who were in route to Arlington National Cemetery by piling their bodies up in hallways, unrefrigerated garages and other areas and, according to the AP, the defendant in over $60M in lawsuits, has applied for a bail out from the Troubled Asset Relief Program, or TARP. Really...go ahead a pinch yourself...unfortunately, this is all true and our reality.
You can protect yourself and your family from fraud and manipulation. Please visit www.FuneralPlannersInc.com today to learn how we can help.
As has been well documented in the Chicago Tribune and other news sources, the IFDA has $59 million in pre-need contract funds, paid by consumers, that are unaccounted for. It apparently just "poof"...disappeared. That is outside of the fact that, per the Illinois Burial Funds Act, contract sellers may keep 5% of the principal paid for "administrative fees" and 25% of the profit on principal. So, they really don't need to steal the money...a chunk of it is just given to them. Not to mention that Randall Earl, Executive Secretary of the National Funeral Directors Association and 2001 President of the IFDA, when it had only a measly $10.6 million dollar deficit, neglected to disclose to consumers that the IFDA was investing the trust funds in risky insurance policies and that investment management fees and commissions resulted in millions worth of profits for the IFDA and member funeral homes.
Don't stop now...it goes deeper...According to the AP, U.S. Senator Roland Burris has been subpoenaed to turn over his records, license issuance due diligence, analysis on issuance of license revocation, and...gasp!...amount he was paid as a lobbyist for the IFDA. You see, when Burris was State Comptroller in 1980, he issued a license to the IFDA allowing them to manage the "trust funds" investments. Call me crazy, but since when is a funeral director suddenly an investment specialist. But interestingly, in 2007, after his role as Comptroller, Burris was hired as a lobbyist for the IFDA, specifically to lobby then State Comptroller Dan Hynes. And, shockingly, one Illinois funeral director claimed on a blog that "our pre-need trust sales are the biggest in 3 years"...time for a wake up call for Illinois consumers. Hmmmm, this one continues to play out and gets more interesting...and more disturbing...by the moment.
VFDA
In an article posted on CNNMoney.com, according to Mike Nicodemus of Hollomen-Brown Funeral Home and Crematory, an average funeral at that particular funeral home costs $8,500...not chump change by any means. The VFDA promoted Shenandoah Life Insurance Company as it's funeral insurance provider of choice. Oh...did I mention that was before it was placed in receivership by the Circuit Court of Richmond, VA? It apparently does not have a balance sheet that adequately matches liabilities with assets. The FAQ document on the company's website states that policy holders should continue to pay renewal premiums to avoid disruption of claims, but does not guarantee actual payment of any claims, and at this time does not honor their "Required Minimum Distributions" on IRAs. What part of "required" am I missing? And the state of Virginia assures policy holders that interest will continue to accrue on annuities, but they cannot guarantee that this interest will actually be paid. And in more news...
Missouri
Missouri is a mess. According to WLBT3 news, several pre-need funeral contract sellers are deficient in their accounts. Here's a quick sample...Green Acres (Vicksburg, MS) has $221 dollars in their trust fund to cover over $373,000 in contract liabilities. Other offenders include Prentiss Memorial Gardens (Baldwyn, MS), Sunset Gardens Memorial Park (Laurel, MS), Liberty Memorial Park (Booneville, MS), Pinecrest Memorial Park (Pittsboro, MS), which has at least 50% of the over $378,000 in pre-need contract funds unaccounted for, Southern Mortuary (Jackson, MS), missing over $38,000, George West Funeral Home (Natchez, MS), $95,000 deficient, and Jackson Mortuary (Aberdeen, MS), the runt of the group with only $10,000 unaccounted for.
But, the sad and frustrating fact is that the Missouri debacle was completely avoidable. For instance, according to the Natchez Democrat, in July 2006, a cease and desist order was issued to George F. West Funeral Home to stop selling pre-need contracts and they were ordered to pay a $5,000 fine. They ignored both the order and the fine and continued operations as usual. After they were recently...(that would be years later)...again ordered to cease and desist business operations, Mr. West hired attorney Earl Banks, a member of the MS legislature to represent him. Mr. Banks, as a member of the MS legislature, has the right to request a continuance if the case he is working on has potential to interfere with his legislature duties and obligations. Thus...this case will potentially be continued until the end of Mr. Banks' legislative term. Does anyone smell a whiff of conflict of interest...
And Green Acres Memorial Park, founded in 1955 (sold twice before 2001), faithfully neglected to file the necessary and state mandatory annual financial reports, which the "regulatory authority" was fully aware of. According to the Vicksburg Post, it filed an incomplete perpetual-care trust fund financial report in December 2003, which was rejected by the "regulatory" authority. In October 2005, Stephanie Graham, acting President, signed a consent agreement with the State of Mississippi to file reports in accordance with the Mississippi Pre-Need Act (enacted January 2002). In November 2005, the state issued a formal request for the report. In March 2006, the Mississippi Secretary of State indicated that the report had not yet been filed. In November 2006, Green Acres was issued a formal cease and desist order and their license is revoked. Fast forward to July 2008, where the Chancery court again requested the annual reports and in October 2008 the Secretary of State initiated a formal audit. As of January 2009, the Secretary of State estimated a $373,000 deficit and temporarily froze all accounts.
Oh, did I mention that Mississippi Secretary of State Delbert Hosemann is quoted in the Natchez Democrat acknowledging "at this time the state has no process for follow-up"? Well, thanks for the news flash Mr. Secretary, but that is pretty obvious
Adding insult to injury...Service Corp. International (SCI)...in case you are unaware, this is the national funeral corporation with over 1,500 funeral homes and over 400 cemeteries that showed the ultimate disrespect to our brave military vets who were in route to Arlington National Cemetery by piling their bodies up in hallways, unrefrigerated garages and other areas and, according to the AP, the defendant in over $60M in lawsuits, has applied for a bail out from the Troubled Asset Relief Program, or TARP. Really...go ahead a pinch yourself...unfortunately, this is all true and our reality.
You can protect yourself and your family from fraud and manipulation. Please visit www.FuneralPlannersInc.com today to learn how we can help.
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