|Your Funeral Guy has been Featured in the Dow Jones NEWSWIRE Prepaid Funerals Like Digging Your Own Grave
|December 2, 2010 9:16 a.m. EST
By AL LEWIS
A DOW JONES NEWSWIRES COLUMN
R. Brian Burkhardt is a funeral director in Illinois and Virginia who writes a blog called “Your Funeral Guy.”
It’s filled with handy consumer tips, as is his book, “Rest in Peace, Insider’s Look at the Low Cost Less Stress Funeral.”
Burkhardt also covers the funeral news:
“Mom fakes daughter’s funeral.”
“Father sues after son’s body falls out of casket.”
“Corpses to appear on cigarette packages.”
And, “Unclaimed cremated remains: A growing problem.”
One of the biggest stories on the funeral beat these days involves a St. Louis, Mo., company called National Prearranged Services Inc. and its related businesses operating in several states from Illinois and Ohio to Tennessee and Texas.
Federal prosecutors last week unveiled a 50-count indictment burying six controlling officials in assorted criminal charges: money laundering, conspiracy and wire, bank, mail and insurance fraud.
Defendants are Doug Cassity, 64; his son, Brent Douglas Cassity, 43; Howard Wittner, 73; Randall Sutton, 65; Sharon Nekol Province, 66; and David Wulf, 58.
The indictment alleges they took as much as $600 million that should have gone into trusts and life-insurance policies to cover as many as 150,000 funerals.
“White-out was the main tool,” Burkhardt said. “It’s sounds blastedly simple, but that’s what they did.”
Indeed, one of the many tricks alleged in the federal indictment is altering documents with correction fluid.
Money that should have gone into trusts or to pay life-insurance premiums for the funeral plans were diverted to pay for business investments, luxury homes and jewelry, the Feds allege. A Ponzi scheme for the dead?
Toni Weirauch, special agent in charge of IRS-criminal investigations in St. Louis, said his office “is committed to investigating individuals who allegedly use their businesses as personal piggy banks.”
The losses will go to state insurance guarantee associations, plan purchasers and funeral homes.
Connie James of James and Gahr Mortuaries in St. James, Mo., said her family-owned funeral business put all of its prepaid funeral funds with the company.
A state fund likely will get stuck with most of the tab for the prepaid services her company has contracted to provide, but not all of it. Some of the losses will be hers.
“You just pray every day that you’re going to be here tomorrow,” James said.
She has a name for defendant Doug Cassity, who went to federal prison in the early 1980s for charges stemming from his investment club.
“He is the Bernie Madoff of Missouri,” she said.
She wonders how so blatant an alleged fraud could have gone on for so long in an industry that is supposed to be regulated. Cassity’s criminal past, and issues with underfunded trusts dating back to the 1990s, didn’t set off the alarms until the shortfall was enormous.
“$600 million. That’s a lot of damn funerals,” James said.
National Prearranged Services sold folks on the idea that they could pay today’s prices for tomorrow’s funeral services. Say you put $5,000 down now, and if the funeral you want costs $15,000 due to future inflation, no problem.
“Any product that says, ‘We will cover you no matter how much your prices increase’ is too good to be true,” said Scott Gilligan, general counsel of the National Funeral Directors Association in Brookfield, Wisc.
“That should have been everybody’s first clue,” he said, “because nobody can do that.”
Burkhardt said he’s been warning consumers not to buy prepaid funeral plans for years. “It’s better to a get term life insurance policy and apply that money to the funeral,” he said.
He also says the scale of the National Prearranged Services case shows how easily prepaid funeral funds are diverted, and how long it can take regulators to do something about it.
“Every week, somebody misappropriates pre-need funds, and every two to three weeks somebody gets caught,” Burkhardt said.
“I have had a funeral director tell me, “When I can’t meet my payroll, I just borrow from the pre-need fund.” That’s fraud. But in their minds, it’s kind of their money.”
Burkhardt said he suspects business will go on as usual, despite the news he covers on his blog. Reading up on prearranged funeral plans isn’t something folks always do before they buy.
“People don’t want to talk about death,” he said. “You almost have to trick your mind to think about it. That’s why people buy these plans.”
–(Al’s Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. He can be reached at 212-416-2617 or by email at firstname.lastname@example.org, or on his blog at tellittoal.com.)
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Funeral Industry| Funeral News| Funeral blog by Your Funeral Guy
Due to my stint in ICU and hospitalization it took some time to get this article up.
YOUR FUNERAL GUY HAS BEEN Featured in the Dow Jones News Wires. Your Funeral Guy is quoted but other opinions are mentioned.