The Chicago Tribune has done an article on preneed aggressively sold to a person on disability. This is truly another example about why one should not pre-purchase, prepay a funeral. This type of aggressive salesmanship is not needed or good for the Funeral Business.
The flier that arrived in Carol Rognstad’s mailbox sounded like a great deal. For only $38 a month, she could prepay for her future cremation.
The 48-year-old, who is mentally disabled, prides herself on doing things on her own. So she called the number listed and set up an appointment.
In mid-July, a representative from Warren Funeral Home visited her low-income apartment in Round Lake Beach. Rognstad signed a 60-month contract, in which she agreed to pay a total of $2,280.
But a few months later, Rognstad began having second thoughts. Because she relies solely on her monthly disability check, the $38 payment had a significant impact. Concerned she had done something wrong, Rognstad called her mother, Holly Anderle, and asked for help.
$2,280 USD is far too much to pay for a cremation.
Funeral industry| Funeral News| Funeral Blog by Your Funeral Guy
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There has been another case of Funeral Preneed Fraud, another case of the Funeral Director takes your money in a prepaid funeral contract(Scam).
The most famous case of this in Illinois recently, was a scam hatched by the Illinois Funeral Directors Association in their IFDA Preneed Trust Scam where 100 million + dollars of the of the folks prepaid funeral money in Illinois disappeared. Incredibly at the center of the IFDA scam is the current National Funeral Directors Association(NFDA) Executive Treasurer, Randal L Earl.
Snippet from the current Preneed scam Story:
A former Southern Illinois funeral director has been charged with mishandling funds from multiple pre-need funeral service contracts.
John B. Jones, a former partner with Gaskins-Jones Funeral Home in Harrisburg, faces 11 felony counts of theft and failure to deposit funds into a trust account — all dealing with pre-need funeral arrangements.
A warrant has been issued for Jones’ arrest, but as of Tuesday afternoon, he was still being sought by police, according to Special Prosecutor Charles Zalar with the Illinois Appellate Prosecutor’s Office in Springfield. Bond in the case has been set at $100,000.
The charges were filed last week by Zalar.
He alleges that Jones, 50, of Equality, Ill., accepted payment from various pre-need funeral service clients and failed to purchase life insurance policies or annuities. Jones is accused of putting the money into the funeral home’s checking account to pay for business expenses instead.
The lesson from the Scandal state of Illinois is to avoid funeral preneed or prepaid funerals.
Funeral industry|Funeral News|Funeral blog by Your Funeral Guy
Your Funeral Guy First reported on the California Funeral Directors Association(CFDA) on January 7th, 2010. Click Here for the report.
Now that the scandal has received local coverage in California we can report on this matter more fully because my research has been verified by a State Audit. The scandal is quite similar to the Illinois Funeral Directors Association Scandal. Right now the dollar amount is less than The IFDA Preneed Trust Scandal. That could change.
Early audits in the IFDA Preneed trust scandal did not reveal the extent of the problem. Later on Gross Misappropriation of the Folks Money was discovered. The current situation involves the California Master Trust.
Now that there is a second maor Funeral directors association scandal the national media may take note.
Do Not Hold your Breath.
The audit was the first to find systematic problems with a funeral trust fund(California), Wallinder said. Typically, auditors find problems involving individual funeral homes or trusts set up for individual consumers, he said.
In this case, the department ordered the trust’s governing board to return more than $2 million that was spent on lobbying and conventions for the California Funeral Directors Association. Some of the money already has been paid back, auditors said.
The audit also found the trust failed to pay at least $1.6 million it owed to consumers, their estates or the state treasury in cases where funeral homes went out of business or families paid for funeral services because they didn’t know their loved one had a prepaid plan.
Funeral industry|Funeral News|Funeral Blog by Your Funeral Guy
There is still room for preneed, prepaid, funeral and cemetery fraud around the country. In spite of the Illinois Funeral Directors Association Scandal ($100 million) and National Prearranged Services Scandal(approximately $1 billion) the practice continues on a small scale and a larger scale as well.
The current example comes from Mississippi, were it appears there is a large problem with preneed cemetery fraud.
JACKSON, Miss. — Since Secretary of State Delbert Hosemann took office, his agency has seized five Mississippi cemeteries for mismanaging funds, a scenario that’s playing itself out across the country.
Critics of the pre-paid industry contend that’s because oversight has been poor, and despite states’ efforts to beef up laws, there is still plenty of room for fraud.
Mississippi Secretary of State Delbert Hosemann:
“Misapplying trust funds from someone’s funeral arrangements is literally grave robbing,” Hosemann said. “It is unfortunate that we have to go after these companies in court to recoup the money that is missing.”
Anyone taking from folks preened funeral funds including the IFDA and NPS is guilty of Grave Robbing.
Funeral Industry| Funeral News|
At http://www.southcoasttoday.com an article makes two leaps that often happens in the media and at funeral blogs.
Prepaying funerals are on the rise and is a good thing. Prepaid funerals are on the rise? This not the case according to funeral industry stats and is only funeral director hype. The South Coast today article quotes no statistical studies on the matter- only an informal survey of the newspaper’s funeral homes. Now Preplaning is a must but prepaying is not.
The article implies that the AARP supports prepaying. Officially the organization does not support prepaid funerals and definitely not Joshua Slocum.
The big lie comes next with Funeral Packages Save you money. Even Casual industry observers can quickly see this is not the case.
Although buying a whole funeral package through the funeral home is far more convenient and often less expensive, the Federal Trade Commission has ruled that no one is obliged to buy caskets, burial containers or any other products in-house.
This article is pure funeral spin. It is being promoted at the funeral spin site- Connecting Directors.com Info on the other Funeral Spin article is here.
Funeral Industry | Funeral news | Funeral blog by Your Funeral Guy.
Funeral packages an prepaying will not help you come in under the average cost of a funeral.
Websites like connecting directors have an interest in Funeral Spin because they receive funds from funeral corporations, Newspapers receive funds from funeral homes through the paid obituary.
Last week Small funeral homes in Illinois have lost fiduciary authority over their. preneed funds. Funeral Directors are looking for new ways to bring in income and they are considering knowledge basis of services, end of life services, estate planing, grief counseling etc as a new income source.
The small funeral home owners can thank the Illinois Funeral Directors Association through the IFDA Preneed Trust Ponzi scheme for this.
Last week 10/28/2009 the Governor of the State of Illinois amendatory veto applied to Senate Bill SB1692 was passed by the Illinois Legislature. It can be viewed here.
The funeral homes will have to find a trustee for their preneed funds in 2010.
Who own’s funeral preneed? Is it the bank that own’s the trust fund? The insurance company? The Funeral corporation?The funeral director? The policy holder?The answer is not in plain sight. This makes repaying a funeral not a good idea.
Because the laws are different in each State, each may have a different answer. Because each contract is different clearly the Managers of the IFDA Trust(through IFDA services)thought the money was theirs when they robbed it. The funeral corporations list the money as theirs on the balance sheet(this is true for SCI, Big Death, Service Corporation International and other funeral corporations).
Funeral Directors count on the preneed money being there, for themselves and their funeral home.
NPS, National Prearranged Services saw the preneed insurance money in their contracts and they took it.(preneed insurance is different from life insurance)The consumer who purchases the preneed contract often walks away thinking the money is their own. Sadly that is never the case.
Funeral industry| Funeral Blog by Your Funeral Guy
The scandal ridden Illinois Funeral Directors Association is seeking another trustee for it’s IFDA Preneed Trust Fund. This is what the brought the Ponzi Scheme in to the light in the first place.
The Comptroller of the State of Illinois took away the license of the State of the Illinois Funeral Directors Association to Manage the trust fund because the leaders of the IFDA were raiding the Fund for there own purposes. In the Fall of 2007 there losses 40 million, in fall 2008 59 million and now nearly 100 million.
At there Convention in June this summer there was talk(VENDORS) that the Illinois Funeral Directors Association will not be around next year. There is also rumors circulating about Illinois that The Six Funeral homes Suing(lawsuits) the state IFDA are starting there own funeral directors association called The IFSA. I have not confirmed the rumor bit. That said going with the New Association maybe just just a jump from the frying pan into the fire. Some say the Funeral Home leading the charge against the IFDA is deficient in Ethics.
This much is true The IFDA is Seeking a new Trustee, a bad sign for their survival. From an E-Mail From the IFDA:
IFDA E-News Bulletin
Aug 26, 2009
IFDA Seeking New Trustee
“Merrill Lynch Trust Company is working with IFDA to appoint a new Successor Trustee. Conversations have been established with four financial institutions to review the possibility of taking over as a new trustee. IFDA Executive Director, Duane Marsh, cautions, “This is a very complex undertaking but a necessary one if we are to provide the fund with long-term stability.”
The IFDA is not saying why they are seeking a new trustee, and why Merrill Lynch is not continuing as trustee.
This has been the way the IFDA has operated throughout the Scandal.
Sadly the press has not reported on these events. It is past the time that someone should speak up.
Funeral Industry|Funeral blog by Your Funeral Guy
The worlds largest funeral corporation Service Corporation International(SCI) has partnered with yet another insurance company.
SCI’s numbers have been in almost a free fall for Fiscal 2009 and they have joined another Insurance Company at the hip to stop the decline. Insurance Companies have been hurting dramatically due to the recession and so have the Funeral Corporations. The latest Company SCI has partnered with is United Home Life Insurance. Previously the have partnered with SLAICO and MATRIX DIRECT.
“United Home Life Insurance Company and Service Corporation International (NYSE: SCI) announce the creation of a partnership to enhance the products currently offered by United Home Life for agents. Through the partnership, independent agents can utilize the Dignity Planning(TM) tool to increase their profitability by offering clients the ability to turn their policy into a complete end-of-life plan. Dignity Planning is unlike any other end-of-life planning tool in that it was designed for financial service professionals and provides agents with real-time needs analysis and pricing, as well as inflation and aged-based life expectancy costs of specific elements rather than generic national averages.
Be sure to keep control of your own life insurance policy and do not turn it over to Dignity Planning
Funeral Industry|Funeral Blog by Your Funeral Guy
Dignity Logo Pic on flickr under the creative commons license at