A federal grand jury has indicted six officials of National Prearranged Services, Inc. on alleged crimes involving the sale of prepaid funeral services. Some of those prepaid services were purchased through Mount Washington Memorial Funeral Home in Independence, which abruptly closed in July.
A federal grand jury has indicted six officials of National Prearranged Services, Inc. on alleged crimes involving the sale of prepaid funeral services.
Some of those prepaid services were purchased through Mount Washington Memorial Funeral Home in Independence, which abruptly closed in July.
The grand jury delivered a 50-count indictment charging wire, bank, mail and insurance fraud and money laundering and multiple conspiracy charges, according to the U.S. Attorney’s Office in St. Louis.
The case was filed in the U.S. District Court in Eastern Missouri.
The six NPS controlling officers indicted are Doug Cassity, 64, Clayton, Mo.; Randall K. Sutton, 65, Chesterfield, Mo.; Sharon N. Province, 66, Ballwin, Mo.; Brent D. Cassity, 43, Clayton; Howard A. Wittner, 73, Chesterfield; and David R. Wulf, 58, St. Louis County.
The loss to buyers of prepaid plans, funeral homes and state insurance guarantee associations could be between $450 million to $600 million, according to the indictment.
Prepaid or pre-need plans are signed contracts that provide funeral services and merchandise to families when a member dies. The total price for services were agreed upon and the buyer could pay the bill in full or by periodic installments.
NPS agreed to arrange for the services with the funeral home that was designated in the agreement upon the death of the person. One of those funeral homes that NPS worked with was Mount Washington.
A third party received the deposited money from the families who bought pre-need contracts in order to secure the performance of those contracts.
These third parties acted as a trust. They were usually financial institutions such as a bank.
Starting in 1983, NPS entered into agreements with several financial institutions to act as trustees that held the funds paid by a family.
Most of the pre-need plans were worthless, officials say.
Instead of making the required deposits into a trust or forwarding the insurance premiums as paid, the company got insurance that allowed it to retain money received by buyers of the pre-needs. That money should have been deposited into a trust or paid as a premium to an insurance company. NPS was able to pay much less money than the amounts that should’ve either been deposited into the trusts or the insurance companies, according to federal authorities.
NPS borrowed large amounts of the cash surrender values of the insurance policies, the indictment alleges. The company “had no right” to borrow the cash of the policies, according to the indictment.
The loans reduced the death benefits that would have been available to pay for funeral services after the death of the purchasers. The company allegedly concealed this practice from insurance regulators.
“The effects of this are not just felt by consumers who bought the policies but also by local funeral homes who are often small, family-owned businesses,” said J.R. Ball, an official with the U.S. Postal Inspection Service.
Doug Cassity allegedly used large amounts of money from prearranged funeral trusts, according to the indictment. Cassity bought residential real estate, financed business projects for affiliated companies, purchased a New York insurance company called Professional Liability Insurance Company of America, and to pay personal expenses for Cassity and his family.
“The Internal Revenue Service Criminal Investigation is committed to investigating individuals who allegedly use their businesses as personal piggy banks,” said Toni Weirauch, special agent with IRS Criminal Investigation.
If convicted, the maximum penalty for each of the 50 counts for each person could range from 5 to 30 years in prison.