NPS Preneed Update

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UPDATE 11/25/2010--- US Attorney's Office Indicts NPS Officials on 50 Counts

Six officials with NPS - including members of the Cassity family- have been indicted on charges of fraud that allegedly cost funeral consumers and funeral homes up to $600 million. Here's the press release from the FBI:

National Prearranged Services, Inc. Controlling Officials Indicted

ST. LOUIS, MO—The United States Attorney’s Office announced the indictments of six controlling officials of National Prearranged Services, Inc., in a 50-count indictment charging wire, bank, mail, and insurance fraud; money laundering; and multiple conspiracy charges involving the sale of pre-paid funeral services.

The indictment states that after taking into account insurance and trust assets expected to be available to pay for future funeral services, and merchandise under prearranged funeral contracts sold by National Prearranged Services, Inc., (NPS), the loss to purchasers, funeral homes, and state insurance guarantee associations will range from $450,000,000 to $600,000,000.

According to the indictment, individuals who purchased a prearranged funeral contract from NPS, signed contracts which set forth the terms of that contract. The total price for the funeral services and merchandise was agreed upon, and would remain constant regardless of when the funeral services and merchandise would be needed. The purchaser could pay the agreed upon price either in full, or by periodic installments. NPS agreed to arrange for the funeral with the funeral home designated in the agreement upon the death of the person for whom the contract was purchased. In order to secure the performance of the prearranged funeral contract, a third party received the deposited funds. In Missouri, the purchaser and NPS agreed that the payments made under the contract after the initial 20 percent were to be deposited into a trust with a financial institution, such as a bank, as trustee. The seller of a contract was permitted to retain for its own use, the initial 20 percent deposited by the purchaser. In other states, such as Ohio, Illinois, and Tennessee, the purchaser and NPS agreed that the purchaser would apply for a life insurance policy which would fund the prearranged funeral contract when the funeral services were needed. Beginning in 1983, NPS entered into agreements with several financial institution to act as trustees of the various trusts which were established to hold the funds paid by the purchasers located in Missouri.

The indictment alleges that instead of making the required deposits into trust or forwarding the insurance premiums as paid, NPS obtained insurance in a manner that allowed it to retain money received from purchasers that should have been deposited into trust or paid as a premium to an insurance company. Since NPS and the insurance companies from whom policies were obtained were controlled by the defendants, NPS was able to pay substantially less than the amounts which should have either been deposited into the trusts or to the insurance companies.

According the indictment, NPS borrowed large amounts of the cash surrender values of the insurance policies. NPS had no right to borrow the cash surrender values of these policies. These loans reduced the death benefits which would be available to pay for funeral services after the deaths of the purchasers. Additionally, the indictment alleges that the defendants concealed this practice from insurance regulators. In some instances, the defendants used money obtained from new purchasers to pay premiums of insurance policies on the lives of previous purchasers and also to reimburse funeral homes for the cost of funeral services for the earlier purchasers.

The indictment states that the defendant removed large amounts of money from prearranged funeral trusts established by NPS. This money was allegedly used to enable Doug Cassity to purchase residential real estate, to finance business projects for affiliated companies, to purchase a New York insurance company, Professional Liability Insurance Company of America (PLICA), and to pay personal expenses of Doug Cassity and his family.

Finally, count 49 charges Doug Cassity with insurance fraud for his participation in the insurance business, after being previously convicted of a felony, which prohibits him from engaging in the insurance business. Count 50 charges Randall Sutton, Brent Cassity, and Howard Wittner with permitting Doug Cassity to engage in the insurance business.

"IRS Criminal Investigation is committed to investigating individuals who allegedly use their businesses as personal piggy banks," said Toni Weirauch, Special Agent in Charge of IRS Criminal Investigation, St. Louis Field Office.

"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, AIC for the St. Louis Field Office of the U.S. Postal Inspection Service. He continued, "Any time the mail is trusted to exchange correspondence, Postal Inspectors will aggressively investigate those who use the mail to engage in fraud."

"It doesn't matter if a fraud scheme is simple, or as in this case elaborate and complex," said Dennis L. Baker, Special Agent in Charge of the FBI St. Louis Division. "It will be investigated regardless of resources needed, in a cooperative team as shown in this case."

In addition to the fraud charges, upon a finding of guilt, the defendants will be subject to a forfeiture allegation, which will require them to forfeit to the government all money derived from their illegal activity.

Indicted:

Randall K. Sutton, 65, Chesterfield, MO;
Sharon Nekol Province, 66, Ballwin, MO;
Doug Cassity, 64, Clayton, MO;
Brent Douglas Cassity, 43, Clayton, MO;
Howard A. Wittner, 73, Chesterfield, MO; and
David R. Wulf, 58, St. Louis County.

If convicted, the maximum penalty ranges for each of these charges range from five to 30 years in prison and/or from $250,000 to $1,000,000.

This case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, and the Postal Inspection Service. Assistant United States Attorney’s Steven Muchnick, Charles Birmingham, Stephen Casey, and Michael Reap are handling the case for the U.S. Attorney’s Office.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.


7/16/2010— The Cassity family - owners of the defunct National Prearranged Services company - are back in court. Attorneys for insurance guaranty associations (insurance industry trade groups that pay out to policyholders when an insurance company goes bankrupt or out of business) are asking a federal judge to issue an injunction against the  Cassitys preventing them from spending any money they make if the family sells off any assets. The insurance associations want any such money set aside to pay off any judgment against the Cassitys, who are accused of stealing $600 million that should have stayed in trust funds to pay for consumers' eventual prepaid funerals. The St. Louis Dispatch reports:

The Cassitys were sued last August in federal court by seven state insurance guaranty companies, some of them from Missouri and Illinois. The lawsuit sought to recover the cost of paying for 150,000 pre-need funeral service contracts after NPS collapsed in 2008. Regulators in Texas seized control of the company. The lawsuit claimed the family "preyed on consumers and funeral homes to perpetuate a multimillion-dollar, nationwide scheme...."

Now, attorneys for the insurance guaranty companies wanted a judge to issue an injunction against the Cassitys to keep them from spending money that the attorneys claimed was an "unjust benefit."

. . . .

"They say we got $600 million," J. Douglas Cassity said loudly to an attorney during a break. "We got nothing, nothing but a salary."

They highlighted American Express bills, paid for by NPS, that showed the Cassitys spending $64,000 to charter a yacht and $22,300 on a family trip to St. Maartens. They claimed that pre-need funeral funds were used to pay off mortgages on Cassity houses in Nantucket, which were then bought by one of their life insurance companies.

Many of the transactions were in the form of loans, which were never repayed, Pozner told the judge. "The Cassitys borrowed money, not to pay Peter, but to pay Cassitys."

The hearing served as a preview of arguments that will likely play out in the civil lawsuit. Attorneys Reilly and Larry Pozner, who represent the guaranty companies, spent the day outlining how they believed the Cassitys used money set aside for pre-need funeral contracts for their personal whims.

NPS was part of a funeral empire owned by the Cassitys. It sold prepaid funeral insurance (mainly through funeral homes, but sometimes directly on behalf of the Cassitys' own funeral homes) to hundreds of thousands of families across the country. The company is in receivership after regulators alleged the family cashed out consumers' whole life policies, pocketed the cash, and replaced them with more expensive term life policies. For earlier stories and background on the NPS scandal, go here.

Last Updated ( Monday, 24 June 2013 13:26 )  
Comments (19)
1 Friday, 30 July 2010 13:28
Monica Beale
I am so upset over this whole mess. I don't understand how no one has caught all these mistakes and held some one responsible for it. 12 Days ago my father was still making payments to this company, per the people at Mt Washington. He is a Korean Veteran, 80 years old, that was just trying to take care of his funeral expenses, to keep his family from paying for it. It is disturbing to think that anyone would do this, and to so many people. And that no one that should be monitoring these companies would do their jobs to takes appropriate action against them.
2 Saturday, 31 July 2010 03:42
James Fritz
I bought a pre-funeral deal. When Texas was doing something about this last year, I sent an inquiry on my acct and I received a letter from Mt. Wash... Forever. It stated as of August 09, 2009 that my contract would be upheld to the agreement made with me. They were holding payments from the receivership since May 2008, and then had the gall to even put it on paper that all was fine. Lied through their teeth. Such low-lifes.
3 Monday, 16 August 2010 16:39
Mary/Gerald Kimberlin
Upset doesn't begin to describe the emotional distress my husband and I are going through. We paid a nice little chunk out of our monthly SS checks as we had little or no burial insurance. Yes couple the burial package with the interest we paid and Yes, indeed, NPS etal, added to their pleasures from Ill-Gotten-Gains. WHERE ARE THE WATCH DOGS? I have been battling this problem for too long--since 2008. Each time, I am told it is being looked into. RIGHT!!!!! BY Whom? The attorney General's office has been looking into this since 2008 with no success and We were also reassured by Mt. Washington Forever (received a letter to this effect) that we had nothing to worry about. What a laugh! So many people were looking into this but the consumer is still and will probably always be left hanging. We cannot afford to pay for any funeral services now so I guess we can have our bodies tossed in the middle of the street. I say its a sad day when consumers are duped. This situation /Problem speaks for itself and I say, Someone ought to be responsible for the crimes committed. Stealing this much money from people is a CRIME. I believe that the consumer deserves to be looked out for and, if the responsible parties cannot do this then the system is less than functional. I know, the Attorney General's office watches out for the consumer. Well here is one for you, Mr. Attorney General (I will keep this on a no-name basis because before this is all over there will probably be another two or three different AG's) Where are we at this point and since someone stole our money, How can we get it back? And, no, we cannot afford a private attorney
so now just answer the question. We would like our money and what shall we do to get it?
4 Monday, 30 August 2010 14:51
david
mo attorney general laughed it off when i called so what gives?? where is the real info on what can be done?
5 Wednesday, 27 October 2010 12:34
"A"
I work for an office that deals with numerous funeral homes every day. When I heard about a particular funeral home "closing" I contacted a family member who had a preneed contract with NPS that was already paid in full. Since that time, we have contacted the MO Attorney General, the Missouri Insurance Guarantor Association, and Lincoln Memorial. We were told by MIGA what little information they did have, and exactly where the money that had been paid in was now. We learned a very small portion of the money was in a whole life policy and a very large chunk was in a term life policy, and of course these were held by Lincoln Memorial. We then submitted a letter to LMLI and a couple months later, we received in writing how much money could be expected to be honored. The only good thing in all this is that we have since gone to another funeral home run by someone I trust, and they have agreed to take over the plan at no additional cost to us. This is just the first of a long list of family members I will have to deal with as this all plays out. Sad sad situation...and these family members are still alive! I can only imagine what families are going through at the time of death when, as they are grieving their loss, they are told "Oh by the way, there's really no money here, so you will be responsible for 'xxx' amount of money". I truly hope something is done to rectify this as much as possible.
6 Tuesday, 30 November 2010 09:00
Dean Moore
Since my mother is now 92 years old with only Social Security to live on, it would be nice if somebody would stand up and state what good is her paid up plan with NPS. As her son, she has asked me to research the fate of NPS and it appears that after two years of of several States, the Federal government, the Postal Services and especially the Missouri Insurance Guarantor Association cannot or will not give a straight answer as to whether or not her contract is any good at all. Since I will be the one that has to deal with some funeral home after my mothers demise, I also would like to know what value (if any) her paid up plan has.
7 Thursday, 06 January 2011 12:26
Louanna Davis
Years ago home funerals, like home births, were the norm. But slowly the care of our loved ones was turned over to professionals and we forgot how to care for our own. Now there is a remembering of the sanctity of this final act of love, and more and more families are seeking to have a home funeral. Home funerals are legal in most states (except CT, IN, LA, MI, NE, NY). Embalming is not required in any state (except for a few very limited situations), nor does it take a licensed mortician to transport a body. A casket for burial is also not required by law.
Home funerals can provide more meaningful end-of-life rituals and this helps the families take the time they need to grieve in a familiar environment. In the comfort of their own home, family members experience less fear of death and they are free to mourn in their own way. This more natural pacing deeply honors the deceased and the experience.
Being physically involved with the process can help family members in the grieving process.
It gives more closure to the loss of a loved one. And it’s a relief to many people because they can “do something” rather than sitting idly by waiting for a funeral home to take care of arrangements. Sometimes a loved one may request that she wants her final arrangements to be at the hands of people she trusts and loves, rather than be taken care of by strangers.
The funeral choices that people make influence attitudes toward death for literally generations to come.
You can go online and purchase a casket for a fraction of the cost charged by funeral homes. Just another way to go.
8 Saturday, 15 January 2011 12:01
Kim
My mother had purchased her pre-need plan from a funeral home in Mound City, MO in 1981. When she became ill, my sister contacted the owners of the funeral home (Meierhoffer) and was told that everything would be taken care of as my mother had desired. When my mother died, I requested of Meierhoffer the "policy" (not knowing the about the problems with NPS) be transferred to a funeral home in Topeka. They indicated no problems with making this transfer. My family then made her arrangements with our local funeral home. After it was all arranged, my local funeral home called to inform me about NPS and that only the amount that my mother actually paid would be available to cover these costs and we would be responsible for the remainder. We paid for the services.

I received the paperwork for the Guaranty Assn. to payout mother's actual contribution, so I contacted them. The Kansas Guaranty Assn told me there was a national agreement with funeral homes that sold the policies and they would be responsible for all the costs associated with performing the service as planned.

In our case, the selling funeral home did not perform the service. The Guaranty Assn said the selling funeral home should have "assigned" the benefit to the receiving funeral home. If so, the receiving funeral home would be responsible (and should not have billed us), or if not assigned, the selling funeral home would be responsible for the costs as long as they were in line with the original agreement.

Neesless to say, Meierhoffer (St. Joseph, Mo) did not bother to mention if mother's services were performed elsewhere, we would not have the benefit of her pre-arranged plan. They also did not assign the benefit to my local funeral home. Had our family known this was going on, we would have had Meierhoffer perform the services and then paid to have mother transferred to Topeka for burial. Instead, we were left having a large bill. I have contacted the MO attorney general for assistance. Not only was my mother a victim of NPS, we too were not informed by the funeral home of their obligations. I believe they too have a responsibility to grieving families.
9 Thursday, 27 January 2011 02:05
bill smith
How is it that Tyler Cassity seems to have gotten off? He has two matching BMW's and NPS money paid for over a million dollars for his credit card bills. What is going to become of Hollywood Forever Cemetery?
10 Sunday, 13 February 2011 10:48
Epstein
When is the trial? Is it true that they are not able to leave the state of Missouri?
I don't understand either how Tyler Cassity is not involved. Seems strange since he and a miliion plus american express bill? Are they going after all their oersonal property some said that their homes in Nantucket are for sale, An update on this story would be very interesting if anyone out there knows
11 Thursday, 24 March 2011 21:32
harvey stern
We are already into March, has there been a trial or a plea in this case? I know that they are still in missouri but I would think that there would be a trial date at this time.
12 Thursday, 24 March 2011 21:46
David
Seems ironic that in August of 2010 Doug and Rhonda Cassity sponsored Brent and Julie Cassity for membership in the new Great Harbor Yacht Club. I guess that crime does pay and pay and pay. These individuals obviously feel they did nothing wrong since they seem to have no problem dropping $300,000 for a membership at a Yacht club in Nantucket?

As stated in the New York Times.
"In the same way, the old Nantucket Yacht Club has spawned a rival, the Great Harbor Yacht Club. About 300 families have already bought memberships, which now cost $300,000."
13 Sunday, 03 April 2011 14:38
Connie
How can their accounts not be frozen? Yacht club memberships? Seems like the St. Louis media needs to do a follow up to the status of the case against this family. How can they explain the need to spend this money and not repay the money due to people like me who picked Forever for our final resting place?
14 Sunday, 17 April 2011 10:42
Arthur
I think KSDK or KMOV needs to do a follow up story about the Cassity Family and
Doug, Brent and Tyler how can they still be living like they are? I think we all need answers to these questions and especially from the horses mouth!
15 Wednesday, 22 June 2011 18:32
Nelson
He's probably making more money turning cemeteries into amusement parks because that's what has happened to Hollywood Forever Cemetery. I live around there and its disgusting what he's done. They're having movies, concerts, parties, etc...all of this on the cemetery site. The noise and traffic caused by this is unbearable, that's how I came to find out more about Tyler Cassity and family. If you have loved ones buried there please have a look because I noticed that he put the concert stage where some mausoleums use to be located.
16 Wednesday, 09 May 2012 01:40
ed adams
When does the case go to trial?
17 Wednesday, 16 May 2012 02:35
Francine york
Being a Hollywood star I was told HOLLYWOOD FOREVER was the choice after my passing ( I hope not for quite a while) After hearing all of the "scandal" involved it makes me wonder If that is the right choice-- I do not like all the festivities going on around
like a circus either. How would DE MILLE feel about that ??So the problem of choice continues of what to do for unfortunately
we must all think about it sooner or later.. should I plan to go there--- Big Question??????
18 Tuesday, 07 August 2012 16:33
anon
Trial date is set for Monday, August 5, 2013.
19 Wednesday, 08 August 2012 17:09
Tyler Cassity
http://www.tabletmag.com/jewish-arts-and-culture/78893/burial-plots