Every choice has a consequence! And especially in funeral service, when our customers can be highly vulnerable, it is important if not critical to be cautious about the choices made. That said, lengthy prison sentences were recently handed down in what is one of the largest frauds in Missouri and certainly one of the largest in the funeral services industry.
Sentenced on more than 40 counts of fraud, money laundering, and related crimes, defendants, acting through National Prearranged Services, Inc. received a total of 36 years’ and one month’s incarceration. These criminals defrauded more than 97,000 customers in more than 16 states, hundreds of funeral homes, and multiple financial institutions, causing more than $450 million in losses.
Five of the defendants previously pled guilty to various counts of fraud in June and July of this year, and each of those defendants was sentenced to the terms of imprisonment consistent with their respective plea agreements. Of the defendants who pled guilty, James Douglas Cassity, 67, received the longest sentence of 115 months’ imprisonment after admitting that he organized and led the fraudulent enterprise. The former CEO of Lincoln Memorial Life Insurance Company, Randall K. Sutton, 68, received a sentence of 84 months’ imprisonment. Brent Douglas Cassity, 46, a one-time officer of NPS, received a sentence of 60 months’ imprisonment. Howard A. Wittner, 76, an attorney for the companies, received a sentence of 36 months’ imprisonment. Former NPS President Sharon Nekol Province, 69, received a sentence of 18 months’ imprisonment.
One defendant, David Wulf, 61, the statutorily appointed independent investment adviser entrusted to oversee the prearranged funeral trusts established in Missouri, faced trial in August and was convicted by a jury on 18 counts of bank fraud, wire fraud, and wire fraud affecting a financial institution. Wulf was sentenced to 10 years in prison. (If I recall correctly he did not take a plea deal and paid the price for ticking off the government).
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money,” said Sybil Smith, Special Agent in Charge of IRS-Criminal Investigation.
“This is the largest corporate fraud case prosecuted in the Eastern District of Missouri,” said Dean C. Bryant, Special Agent in Charge of the FBI St. Louis Division. “This case affects us all because part of the life insurance premium we pay goes to cover such loss from fraud.”
These sentences mark the culmination of a multi-year investigation and prosecution that brought together three federal law enforcement agencies, numerous state regulatory agencies, and the Department of Justice to unravel a complex and immense fraud that spanned more than 15 years. According to court documents and testimony presented at trial, beginning as early as 1992 and continuing until 2008, NPS sold prearranged funeral contracts in several states, including Missouri, Illinois, and Ohio. During that time, insurance companies affiliated with NPS issued life insurance policies related to those prearranged funeral contacts. As part of the contracts, the total price for funeral services and merchandise for an individual was agreed upon and that price would remain constant regardless of when the funeral services and merchandise would be needed. Customers entering into prearranged funeral contracts would usually pay a single sum of money up‐front to NPS either directly or through a funeral home that was also a party to the contract. NPS represented to individual customers, funeral homes, and state regulators that funds paid by customers under the prearranged funeral contracts would be kept in a secure trust or insurance policy as required under state law.
NPS made use of funds paid by customers in ways that were inconsistent both with its prior and continuing representations and with the applicable state laws and regulations. Instead, NPS operated as a fraudulent Ponzi‐like scheme, where customer funds were neither kept safe in bank trusts or insurance policies but instead were utilized for unauthorized purposes and the personal enrichment of NPS’s officers and others. In turn, new business became the source of funding for funerals that prior customers had previously paid for in advance. Victims of the scheme include individual customers, funeral homes, and state insurance guarantee associations across the country.
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As a business ethics author, speaker and COO of American Funeral Financial, Chuck Gallagher is active in promoting the value of making wise choices and is actively involved in the funeral service profession. For information about Chuck’s presentations both within the funeral service profession and out visit: https://www.chuckgallagher.com
