Monday, July 27, 2009

If It's Not BurrOak...Don't Fix It

As distasteful and horrifying as it is to contemplate, the 2 most recently reported cemetery scandals in IL are just the newest kids on a seemingly very large and polluted block. Quick review, Burr Oak Cemetery was the first major cemetery headline out of IL this month. Reportedly, after being tipped off by an employee who is reported to have known about the alleged practice of digging up caskets and either just tossing them into an adjacent lot or double stacking them into another plot, but reportedly came forward after he was threatened with being fired...the Cook County Sheriff's department now gets the honor of investigating about 5000 graves.

The second major cemetery headline in IL this month was that of Mt. Glenwood Cemetery, where a delivery driver reportedly found a bone in the storage area, which was determined by the Cook County Medical Examiner to be human.

Almost makes you forget about the bodies, both in caskets and cremated remains, found in the defunct Serenity Gardens Funeral Home in Gary, IN just a mere 2 months ago. You see, in the Gary case, while I certainly cannot speak for them, it seemingly never occurred to "regulators" that they might want to "regulate" and actually step foot into a funeral home after the owner's license was revoked.

Perhaps if the "regulators" in IL had "regulated", these outrageous atrocities possibly could have avoided...or at the very least limited in scope?

According to a rep from the IL Cemetery Care and Burial Trust Dept., it had received complaints on Burr Oak Cemetery in recent years, such as poor upkeep, sunken or tilting gravestones, unmanageable roads, drainage problems and tall weeks. And, both the Chicago and the Northern IL Better Business Bureaus gave Burr Oak Cemetery an "F" rating, with Steve Bernas, BBB President and CEO, being quoted in the Chicago Tribune as noting 5 complaints registered against Burr Oak Cemetery in the last 3 years. Personally, if true as reported by various sources, that might be enough to spark a "hmmm" moment in the mind of regulators. If not, then perhaps the reported 5 regulatory citations against Burr Oak Cemetery regarding sales from burial plots since 2001, or the reported citation in 2007 for failing to deposit funds from burial plot sales into trust within the mandated 30 days.

Now...I'm no "regulator", but I'm leaning towards thinking that with Burr Oak Cemetery, the writing might have been on the wall, especially in light of reports that these activities had allegedly been going on for up to 4 large, bold, red letters posted on the side of the James R. Thompson Center.

Let's not stop there...I don't want to beat a dead horse, but I want to perpetuate how obvious that writing possibly was...NOT to persecute any individual or government body...but to make the point that ONLY YOU CAN PROTECT YOU. A company called Perpetua Holdings of IL reportedly owns Burr Oak Cemetery, which it purchased in 2001. It also reportedly owns Cedar Park Cemetery in Calumet Park, IL, which it purchased in 1997. At the time of the purchase of Burr Oak, according to statements in the Chicago Tribune, a former Perpetua employee, James E. Becker, wrote to the IL Comptroller's office alerting and warning of the mismanagement of cemetery maintenance trust fund at Cedar Park Cemetery and urged the comptroller's office to investigate, the letter stating that the money was "in jeopardy". Alan Henry, a spokesman from the comptrollers office, issued a statement noting that after receiving this warning letter, the office "aggressively moved to investigate the trusting practice at both Cedar Park Cemetery and Chicago's Burr Oak Cemetery". Subsequently, Perpetua took corrective actions, "which included repayment by Perpetua to the trust fund". It was reported that Perpetua made about $400,000 in illegal withdrawals from the trust...with the word "trust" very lightly interpreted...but since they had not taken the interest on the stolen money, they were required to repay the trust fund $171,000, funds that were paid at the time of the Burr Oak Cemetery sale to Perpetua and the great State of Illinois approved the sale.

The Mt. Glenwood Cemetery wall writing seems less in your face...but there is also less information available as it is still fresh meat...pardon the pun. But, approximately a week before the human bone was found, 3 individuals filed lawsuits in Cook County Circuit Court on July 20th against Mt. Glenwood Cemetery, stating "unauthorized tampering with gravesites, including the apparent removal of a headstone", per court documents posted on the Chicago Tribune website and reported by CNN.

Now, in what I believe to be usual government fashion...politicians are seemingly flocking to save the day! Word from Gov. Pat Quinn's office was that the Governor issued an executive order launching a 9-member Cemetery Oversight Task Force to review IL regulations and laws relative to other states and provide recommendations by September 15. IL State Comptroller Dan Hynes' office issued a statement noting that the office immediately froze the approximate $6M in trust assets held in IL by Perpetua and is seeking to revoke the license of both cemeteries owned by the firm.

All big headline grabbers...interesting to me in light of the recent announcements in the IL Governors race, with Hynes announcing that he will seek election as Governor running against Quinn, among others. The way I see it...if a politician can make headlines declaring how they saw consumers (a/k/a taxpayer and/or voter) being hurt and sprang into action to stop whatever practice was in question and they saved and protected the little guy...that's a pretty good news day during an election cycle. Except...if reports are accurate, it would seem that to some degree both the Governor's office and the Comptroller's office, as well as potentially other departments, had some to potentially all of this information, dating back to 2001, and seemingly no regulatory or governmental initiative was launched to take action TO PROTECT THE IL CONSUMER. It seems to have taken a travesty of the most horrendous kind to prompt nimble regulatory attention.

In my experience, I have found that I do not and cannot rely on the trusty and loyal cemetery sales staff, the warm and compassionate funeral home sales staff, or forbid...the protect consumers from funeral and burial industry fraud and/or malpractice.

Contact Funeral Planners Inc. for a free initial consultation and begin taking the steps to pre-plan your funeral and burial decisions. We can and do help. Learn more at or call 219. 728. 1290.

copyright Funeral Planners Inc. 2009

Tuesday, June 30, 2009

Logically Speaking...Let's Talk About Price

Before I begin a quick analysis of the unquestionable and deplorable pricing structures forced upon widows and orphans, let me first make the point very quickly by mentioning a job posting I saw today (verbatim...the bold and caps are exactly as written)...

"2 Exp. cemetery and funeral service SALES PEOPLE needed. 401k, health insurance, training pay. Career position. HIGH INCOME POSSIBILITY. Recession Proof. 100% comm."

I see nothing about a compassionate individual wanted, or a thoughtful person to help grieving families and friends through this time of emotional and financial chaos. I see SALES PEOPLE...HIGH INCOME POSSIBILITY...100% commission. I see a flawed business model, with a target client base of grieving and irrational widows and children, with the focus on earnings potential based on how much you can sell them while they are not thinking clearly.

I understand that funeral homes and commercial cemeteries are for-profit entities...and I highly encourage a free market society. But, when the recruiting pitch is to make as much money by taking advantage of those who are emotionally distraught and not in a frame of mind to think through financial decisions...I believe that is just plain wrong, disingenuous and quite frankly, shameful.

I recently compared the funeral services from 2 funeral homes in NW Indiana, 1 in Elmhurst, IL, 1 in CA and 1 in NY, comparing a variety of regions across the US. NOT including a casket, cemetery plot or outer burial container, which I will discuss next, the range in expenses JUST for the funeral arrangements was $3,850 to $5,802...or a range in over $1,900 for the EXACT SAME SERVICES AND ARRANGEMENTS. Mind you that the 2 NW Indiana funeral homes are about 2 blocks away from each other! But, who thinks about shopping around when you've just lost your partner, your parent or your child?

You see, this is how it works...funeral homes charge an up front Basic Service Fee, which includes things like a "counseling fee"...paid no doubt to the 100% commission SALESPERSON...securing permits, filing death certificates and coordinating with the cemetery. It also includes an allocation to property taxes, overhead, personnel, etc...normal operating expenses of any business.

Everything else is itemized. Embalming generally averaged around $500, dressing and casketing the body averaged $300, visitation ranged from $400 for 4 hours on a weekday after noon to $1,175 for a full day and does not include a memorial or funeral service, which tacked on another average of about $500. Then you add an average of $300 for the transfer of the remains to the funeral home, average $200 for the hearse, average $250 for the utility/flower vehicle and $200 for a lead car (not a limo, which tacks on another couple hundred dollars).

Then you are pushed to purchase a guest register for about $40, memorial cards or folders for about $50, acknowledgement or thank you cards for about $40, and other little special touches that the SALESPERSON is sure would make the deceased feel special and important.

Mind you that this does not include the "cash advance items" like the obituary, in some cases the death certificate if it is not specifically included in the Basic Service Fee, flowers, and other items that, once again, the SALESPERSON is confident the deceased would have wanted, so how could you possibly not demonstrate this last show of love. A crucifix would really be a nice touch for only $38 and the pallbearers would look so elegant with matching gloves for $18.

So, without a casket, outer burial container or cemetery plot, the average cost of this 5 diversified sampling of funeral homes is $4,481.80.

According to Forbes in a 2005 publication, the average nationwide plot sells for $4,000. Outer burial vaults (although some areas still allow only liners) will run you on average $800 - $1,200 and a casket will run you on average from $2,000 to $6,000.

So, only using averages, the traditional at-need funeral service will cost you $4,481.80 + $4,000 + (low side outer burial vault) $1,000 + $3,000 (very low casket estimate)...for a combined total of $12,481.80...a pretty nice commission earned on that one, fur sure! In fact, using these low ballpark averages for the latter 3 items, if a funeral home ONLY conducted 50 at-need traditional funerals per year, at $12,481.80, and paid the SALESPERSON an 8% commission, that would equal an income just shy of $50,000/year. If the funeral home conducted 100 at-need traditional funerals per year, that income doubles to just under $100,000/year. Pretty nice chuck of change from manipulating the distraught.

This does not have to be the case for you. There are so many ways to save money while having a dignified, respectful funeral...the key is educating yourself, knowing your rights, making the decisions in advance, and documenting them. Somebody will have to make the can be you or you can punt it to your loved ones.

Be wise...Be prepared...

Please learn more at or contact us at 219. 728. 1290. We can help.

Copyright 2009 Funeral Planners Incorporated

Thursday, May 28, 2009

Why Offer Yourself As A Victim?

The idea of self sacrifice for the financial advancement of individuals or businesses that you do not know or are unaffiliated with seems unconscionable to the average person...I would suspect even to those below average. Hence, I am continually perplexed as to why consumers continue to offer their hard earned savings, or the savings of their family members, as sacrificial lambs to funeral homes by purchasing pre-need funeral contracts or funeral insurance. It just does not make or common...

I speculate that consumers want to believe that they can trust a funeral home...I mean, they're there for you in your time of need to hold your hand, walk you through mounds of paperwork and take care of decisions you don't want to deal with. They're also right there to offer you inflated prices, emotionally nudge you towards goods or services that you neither want nor need, and you can be sure that there is no hesitation to cash your check or run your credit card. A funeral home is a business...and like all businesses the primary focus is making money. This is easy to lose sight of when you've just lost a loved one and the amount of decisions, arrangements, contacts and paperwork seem overwhelming. DO NOT FORGET THAT YOU ARE A CUSTOMER...THEY ARE IN SALES TO SELL YOU FUNERAL GOODS AND SERVICES TO MAKE A PROFIT.

I mean, come on, you wouldn't allow the Wal-Mart employee to use emotional selling tactics to inflate your shopping trip from $50 to $ why let a funeral home take advantage of you? It looks like this...Wal-Mart employee to you: "you look tired, so just tell me what you're here for and I'll shop for you. Brown shoes, size 10? I'll take care of that and make other decisions for you, pay with your money and be right back". Later, you glance at the receipt and realize that yes, you got brown, size 10 shoes, but not for the $20 price paid $150 for them! could have picked out those shoes and paid $20...but instead, you willingly chose to pay the employee his unstated mark-up and commission. And by the refunds.

Just makes no sense. think ahead and make a list and give it to the employee, along with the money...except that he tells you it's not enough money because he takes 10%, 15%...even up to 25% in some states, as an up-front charge for his work, which you could have easily done yourself. But, since you have already asked him and he has the money, he will not only keep his up-front charge, but he will also charge you, let's say 10%, to transfer the assignment to another employee at a different store, who will likely also charge you an up-front fee to do your shopping and make your decisions.

Or better yet, as headlines scream everyday...not only do you not get your don't get your money back either! You see, he "misappropriated" it...plain speak translation: stole it...

But, you're no instead of delegating your decisions out and unwittingly paying the inflated prices, you want to see the merchandise before paying. But, the Wal-Mart employee is no dummy either...he does this for a living, and a nice one it is. He obligingly gives you the 30 page price list of all the brown, size 10 shoes offered, with lots of examples of "deals" and "packages" you can take advantage of when brown, size 10 shoes are combined with other merchandise, some of which you would never want or need, lots of pictures of beautiful brown, size 10 shoes, poems about brown, size 10 shoes, charts and tables. This is for your reference to look over later, but now, he would rather personally walk you through the selection. Although you have indicated the $20 brown, size 10 shoes...he begins by showing you the "beautiful" and "respectful" high end shoes, which would really show "love" and "importance". I suppose you could go ahead and by those cheaper, disrespectful yet equally dependable and comfortable brown, size 10 shoes, but the $150 option truly demonstrates to everybody just how loved and important you really are. Sold...$150 brown, size 10 shoes...

It's very simple...

It happens everyday in every way. How many times have you been, or seen others, just be guilted into making a decision they know they can't afford on things they know they don't need by a crafty salesperson. Big means you love them more! Higher price means you respect them more! Fancy means importance!

It's real's little Billy's 1st birthday and you need a cake! At 1 year of age, little Billy doesn't care what the cake looks like, how big it is, how fancy the decorating, how rich and creamy the frosting is or how much it cost. Little Billy wants to take handfuls of that frosted cake and shove them in his mouth, in your mouth, in his hair, on his clothes, over his face and wherever else he can fling or smear that cake. You see, he'll never see that cake again, you'll never see that cake again, nor will anybody else. In fact, nobody will likely even notice the cake because they will be celebrating little Billy's 1st year, sharing stories of how much he's grown, things he's learned, tasks he's mastered, and lots of other silly or funny things that Billy has done. Many of them won't eat one bite of that very important cake and the only time that they will even notice that there is a birthday cake present is when he smashes that first little fist into the frosting and proceeds to make the most glorious mess. But this is confusing, because this party is really about the cake...the baker said so.

The helpful and caring professional baker told countless heartwarming stories of how this particular cake, albeit more expensive and elaborate, is what is needed to make little Billy's 1st birthday special. He assured that family and friends will all notice the beautiful decorating and the creaminess of the frosting down to every last detail and equate the cake with how much little Billy's parents love him. The baker also showed the most delicate candles, sold only in packs of 25, that were essential to have to truly show how much he is loved, and although they are sold separate, it is incomplete without them. He also helped to make other decisions, like guidance on selecting a beautiful, hand painted, porcelain cake platter, which was not in the original plan, but if absent might imply a lack of love for him. But, like the candles, it is incomplete without them and sold separately. He also subtly insinuated that without high-end plates and napkins, those attending might get the impression that little Billy is not as cherished as they thought. And... he knows this business. The baker does this for a living, he is trustworthy and would not lead us astray for profit. He confidently shared that in his experience, there is but one way to truly celebrate little Billy's first year, to make it honorable and memorable for you and others and to show how much he is loved. To achieve those things, this is really the cake you need, but does not truly convey the depth of love without the additional items recommended. He bakes and sells cakes for a living, he has a lot of experience with these types circumstances, and he has guided many families to celebrate their child's 1st birthday with this cake...and in his experience, it is the cake that people remember...not the child or the party.

Sound crazy...not so fast. This is the emotional persuasion used everyday to increase sales...plain speak translation: pushing price-inflated caskets, arrangements and other goods and services on emotionally raw and vulnerable consumers making funeral arrangements on an at-need basis. Lines such as "this casket really shows how much he/she was loved or respected", implying that the equally durable casket within your price range somehow implies disrespect. And, of course, there is the up-sale of gasketed caskets, which provide no measure of protection to preserve the body, charging consumers for a bugler for a U.S. veteran, when the bugler actually volunteers his time and receives no compensation, or offering to oversee such tedious decisions as what the deceased will wear, in turn charging, for instance, $80 for a plain white button down shirt and $40 for underwear, which nobody really knows if the deceased was buried wearing underwear or went onto the great unknown commando. This may not always be the case...but unfortunately, you don't know which type you are dealing with until after it is too refunds.

Everyday I come across stories that remind me of when I was a child and my much more experienced and trustworthy father would playfully trade me a "big, bright, shiny red penny" for that "dingy, small dime". Trusting child that I was, I eagerly traded my small dime for that big, bright, shiny red penny, which my easily influenced, inexperienced and emotional mind equated as more valuable and felt gratitude to my father making this trade. Silly as it sounds, that anecdote pretty clearly demonstrates the degree of disadvantage that consumers experience when making at-need funeral decisions and arrangements. Looking to "experts" for guidance and comfort, like a child seeking parental guidance and comfort, except in this case, it does not come. Rather, the "experts" gently open the conversation with questions such as "does the deceased have life or funeral insurance" or "what kind work did the deceased do" in order to pre-calculate the so-called budget of the funeral and the degree of up-sale potential. The trusted "experts", from whom comfort and guidance were sought, have now turned predatory. In emotional turmoil, with their reality crumbling, a "to-do" list pages long and a limited time frame in which to make and enact decisions...somewhere along the line just seeking a time to cry and grieve... consumers follow this guidance like a sheep to slaughter. But, unlike an emotionally and inexperienced child, the bereaved are forced to be cautious and skeptical and the price is high...both emotional and financial. The hunt for profit is on, and the prey is in sight.

Dealing with funeral decisions when someone close to you dies is overwhelming and heartbreaking...between 100 - 200 questions and arrangements to be made, required documentation, not to mention calling or writing innumerable people, many which you don't even know of until you read about it on a credit report when it's too late. And the funeral home doesn't help with anything that they do not make money on. You're on your own, Toots, if there is no money to be made.

You don't have to be prey. Take control of your funeral and burial decisions and arrangements in advance. An independent funeral planner, like, walks you through the maze of questions and decisions that must be made...and let's face it, somebody eventually has to make them...except at that time their world will be crashing and they will willingly allow the shopping to be done by the store employee and not even glance at the receipt until it's too refunds.

copyright 2009 Funeral Planners Inc.

Monday, May 18, 2009

Opposite Day in IL Politics and Death Industry

A game that the children in my life love to play is Opposite Day...whereby everything you say means exactly the opposite of it's intent. The game is used to garner the desired result when the actual result is not delivered and is generally not agreed to beforehand. For instance, no means yes, up means down, when the answer to the question of "can I play ball in the street" is NO, Opposite Day suddenly comes into play, which makes the answer YES, of course you can play ball in the street.

This seems to be the game being played in IL as it relates to the fraud, misrepresentation and politics surrounding the Illinois Funeral Directors Association Trust ("the trust"), the investment vehicle used to "protect" the funds of IL consumers who purchased pre-paid funeral contracts through their local, trustworthy funeral home. By the way...this fund was written down by $59M last Fall to cover the shortage in seems Opposite Day was in effect even in naming it.

It begins in 1980, when then IL Comptroller, now US Senator, Roland Burris provided the license to the IFDA to manage the trust. Call me crazy, but when did being a funeral home operator somehow enlighten you to the nuances of managing money...and the money of other people to boot. And don't forget...this is the same Roland Burris who was hired to lobby current IL Comptroller Dan Hynes on behalf of the IFDA and their ability to continue to manage the trust, which had shown signs of mismanagement since 2001. By the time Hynes office got around to noticing, the fund had somehow lost $59M, and NOT due to market fluctuations.

But, let's not be hasty and place the entire blame on Sen. Burris's shoulders, the writing was on the wall before he concluded that funeral homes = money managers. As written, IL law allows funeral homes who sell pre-need funeral and burial contracts to keep up to 5% of the capital paid up-front as pure profit for pre-need funerals and up to 15% of the cost of a burial vault up-front as pure profit, as well as keeping 25% of the trust's earnings. Shockingly, even if the funeral home who sold the contract provides absolutely no funeral goods and/or services at the time of death, they are still allowed to keep $300 or 10% of the value, whichever is less.

Here's how the trust works...the IFDA is a non-profit entity. To manage the trust and be able to accept the 25% of earnings from the trust, they formed a for-profit branch named IFDA Services, and both entities share the exact same board of directors.

While the existing law provides a play-by-play game plan for Opposite Day, allowing IFDA Services to take 25% of the earnings that should be allocated to the consumers who purchased the contract, that wasn't good enough. Even though IFDA Services collected nearly $2.4M in 2006 and nearly $2.1M in 2007 in earnings from profits, the trust somehow continued to hemorrhage money. It could be the investment policy of the trust, which mandates a mix of bonds, equities and mutual funds. In reality, the investment policy utilized was purchasing life insurance policies...not on the contract holders, but on funeral directors themselves and on IFDA insiders, whose life expectancy statistics do not match the actuarial life expectancies of the contract holders. Classical case of Opposite Day...the aggregate life expectancy of the policy holders was 20 years whereas the aggregate life expectancy of the contract holders was 10 years. Seems to be a recipe for disaster.

Or, it could be the spending policy of the IFDA and IFDA Services. According to the IFDA's 2007 tax return, then IFDA Executive Director Paul Dixon received $175,784 in salary and $40,000 in unspecified benefits, of which more than $147,000 was paid directly by IFDA Services and two other senior IFDA executives received the bulk of their salary paid directly from IFDA Services, although it is stated that they are 40-hour a week employees of the IFDA. The prior two years of tax returns listed no salaries paid.

Or, other minor expenses, such as $24,600 in expenses to cover board meetings, $68,000 in automobile allowances or $22,000 for lobbyists, like for our friend Roland Burris. In fact, since 1996, the IFDA and it's political action committee have spent nearly $263,500 for politician and political party contributions, nearly $98,000 of that money spent after June 2006, when the IL Comptroller sent a warning letter to the IFDA and IFDA Services warning them that the trust had an "intolerable" shortfall and, per a lawsuit filed by 6 funeral homes, since that time the deficit in the trust has grown by over $20M.

Then again, per a 2007 audit, more than half of the investment management fees paid to IFDA Services were spent outside of that entity. $850,000 was given directly to the IFDA, $270,000 was spent on the IFDA museum...not to mention the personal loans. IFDA Services had nearly $10M in outstanding personal loans to IFDA insiders. David Reynolds, IFDA Treasurer, had an outstanding $900,000 mortgage loan for a new funeral home in Marion, IL, with a population of about 17,000 that already had 2 existing funeral homes. This new, clearly much needed funeral home, didn't get around to paying the 1999 property taxes until 2002. As an aside, according to online obituaries, Marion, IL experiences about 61 deaths per year...or about 1 per week. Thus, it is totally understandable and substantiated with 1 death per week and 2 existing funeral homes why IFDA Services would approve a $900,000 mortgage for Mr. Reynolds to start a new funeral home. Once again...Opposite Day...

Oh, and the loans are made with no written policy stating what information should be in the loan file. Therefore, you have 5 loans made to IFDA board members, but 1 file has no underwriting or approval paperwork and at least 2 files have no credit reports. Apparently, you get rubber stamp approval with no documentation, underwriting or approval needed...sort of like a checking account using other people's money. We all need one of those!

Once the IL Comptrollers office finally got around to following up on the glaring mismanagement since 2001...that would be in 2006...the license of IFDA Services was revoked and it was determined that the trust would actually have to have a fiduciary trustee...which to me seems like step 1 rather than one of the final steps. The first trustee selected, Morgan Keegan Trust, a TN investment firm retained by the IFDA in 2008, backed out because the life insurance policies are difficult to calculate a valuation on and they felt they should be liquidated in the best interest of the trust, even though that meant a significant tax liability. Once Morgan Keegan declined the business and the voice of reason no longer a concern, the selected trustee was Merrill Lynch...the same employer of the broker who sold the life insurance policies to the trust in the first place and the same broker whose license has been suspended for fraudulent activities in relation to those policies, which require the signature and authorization of the contract holder before purchasing a life insurance policy but that was the small print disclaimer that Merrill Lynch and IFDA Services chose to ignore.

IL consumers can depend on their politicians to fight for their rights in this mess. Several lawmakers have endorsed House Resolution 177, passed by the House on April 22nd, which would form a Funeral and Burial Pre-Arrangement Investigative Task Force, with a 10-member board to report it's findings by December 31, 2009. The bill was sponsored by Representative Dan Brady (R-Bloomington), a former IFDA member and IFDA committee official. He admirably stopped accepting campaign contributions about 2 years ago. Or, IL consumers could count on IL House Speaker Michael Madigan, who since 2006 has accepted $16,000 in political contributions from the IFDA political action committee, double the amount contributed to him in the previous decade.

IL do not have to be victimized, duped and betrayed. Learn more, plan ahead and protect yourself and your loved ones at

copyright 2009 Funeral Planners Inc.

Monday, May 4, 2009

IN HB1287 - Funeral Industry Fraud Finally Addressed!

Hats off to the Hoosier State!

For a state plagued in recent years with headline worthy pre-need funeral contract fraud and deception, the state's representatives have finally chosen to represent and take action to protect the consumers in Indiana with tougher legislation targeting the highly sensitive and emotional exploitation funeral and death industry consumer fraud.

Believe was sorely needed and overdue. Better late than never, but let's take a peak at the corruption and destruction leading up to this...

Most recently, in Dec 2008, Eunice Roper-Allen of the Allen Funeral Home in East Chicago pleaded not guilty to the indictment of concealing assets in her bankruptcy filing...along with mail fraud for defrauding a funeral home client of $44,000. Ms. Roper-Allen in confidence advised this client to deposit $84,000 into an Allen Funeral Home controlled account to circumvent probate proceedings. Subsequently, she returned $40,000 to the client, along with $44,000 worth of falsified checks and duped receipts for funeral expenses. Oh, not to mention the $470,000 in unpaid property taxes owed by the funeral home dating back to 1999. You see, in 1992, Ms. Roper-Allen transferred to funeral home and property to the Small Business Administration, who within months sold the funeral home and property to a relative for $1...yes...that is one dollar. A short 5 months later, the relative filed for bankruptcy protection, including the funeral home and property, and although the bankruptcy was dismissed within the same year it was filed, the property continued to be protected from property taxes under the bankruptcy filing.

The property tax "issue" came to light under the mail (funeral) fraud indictment when it was learned that the property was still deeded to the relative...except that the relative has been dead since 1997. It didn't hurt that Ms. Roper-Allen is the former President of the East Chicago NAACP and has close allies and relatives in the Lake County government, who knowingly removed the property from one of the biggest tax sales in Lake County in the Fall of 2007.

Since Indiana is about on par with Illinois for political malpractice, I wonder if that relative voted as well...hmmm...okay, moving on...

Earlier in 2008, the Memory Gardens scandal hit. Robert Nelms and his wife Debora Johnson-Nelms owned Memory Gardens Management Corp., which owned and operated funeral homes and cemeteries in 4 states (IN, MI, NJ & TN). They are charged with raping the perpetual care funds, which is mandated by law to be placed into a trust for ongoing and future ground maintenance and other expenses. I guess Mr. Nelms believe that "other" expenses included a $1.2M home and paying off $13M in personal loans.

While the scheme could be as large as $200M across the 4 states, the Indiana portion is approximately $47M. Fraudulent securities instruments and forged documents were used to transfer the funds to personal accounts. The couple has 5 felony counts each of theft, 1 count of fraudulent or deceitful acts, 2 counts of violation of a cemetery perpetual care fund, as well as other misdemeanor charges. Another "gentleman", business partner Clayton Smart, is also charged in relation to transfers involving 3 cemeteries and funeral homes, as is their Smith Barney broker, who it is alleged encouraged them to find a trustee who would permit these types of improper transactions. That broker, Mark Singer, was charged in 2007 with theft, conspiracy and money laundering in a similar cemetery scheme in TN. The company you keep apparently speaks volumes...

Oops...almost forgot...Memory Gardens and subsidiaries still has active job postings for insurance agents to sell pre-need funeral contracts on and, and is still listed on I assumed "botw" must stand for best of the worst, but it actually stands for best of the web.

A few years prior, Kent Kellogg of the Kellogg Funeral Home received a 16 year prison sentence for 4 guilty pleas to insurance fraud. Dating back as far as 2002, Mr. Kellogg didn't use clever securities transactions or complex trading schemes for his fraud...he simply falsified death certificates and cashed out life insurance policies entrusted to his funeral home on people who were still living.

Here's the best (worst) part...this is his quote during his trial to justify his actions, "I didn't try to deceive anyone out of their money, I was just trying to maintain my business. I've lost everything. It is my fault, I'm not trying to blame anyone else, but I've been through a lot". Yes, that is his actual quote as he knowingly and intentionally filed false death certificates, he "didn't try to deceive anyone out of their money" and he apparently believes that we all should feel forgiveness and leniency because he's "been through a lot". What about those folks who are still alive but have no life know, the life insurance they bought and paid for...I think that they're the ones who've been put through the wringer, and at no fault of their own.

Here's an even more simple Morocco, IN, H. Robert Long of the Long Funeral Home was charged with 13 felony counts of insurance fraud after he just simply chose not to deposit funds intended for life insurance policies by trusting consumers with the insurance company. A few got a bit suspicious when they never received a policy and the insurance company had never heard of them.

In 2008, Grandview Memorial Gardens Cemetery in Madison, IN settled a class action case for missing pre-need funeral and cemetery funds placed into their care...once again, by trusting consumers. The $4M settlement will be paid by 4 banks involved and 3 cemetery and/or funeral home affiliates. The settlement was based on what the account value should have been based on the funds paid in by consumers and what the value actually was...$100,000. Not that Grandview entered into this see an "intentional fire" per investigators was set in the office. After fire fighters put the blaze out, they found all of the client file drawers had been pulled out of the cabinets, assumably for an easier burn.

I suppose the fact that several bodies had to be exhumed in 2007 due to mass cemetery flooding caused by an improper drainage system likely didn't help the case. a very sad and emotionally disturbing way...

In 2007, Union City, IN elected town councilman and funeral director, Russell Reichard, of Reichard Funeral Home, pleaded guilty to fraud. He forged two signatures on a life insurance policy to make the funeral home, rather than the 2 sons of the policy holder, beneficiary. Here is the interesting part...

As an elected official, Mr. Reichard obviously has many connections. The court received 22 letters from people in Randolph County and neighboring Drake County, OH speaking highly of his integrity and requesting leniency. Most impressive is the fact that the daughter of the deceased, defrauded woman actually spoke in court in Mr. Reichard's defense, quoting "Russell is a good guy". This man just forged her mother's signature on her life insurance, after she died, to steal the inheritance from her two brothers...and she tells the court that he is a good guy...the fact that her two brothers were beneficiaries and she was not listed could indicate her motivation...

"I cut a corner and got in a hurry to do something and I apologize for what I did"...that was Mr. Reichard's defense. "Cut a corner and got in a hurry to do something"???...This translates to me as he got in a hurry to commit fraud and apologizes for getting caught.

FINALLY...some sanity!!!

Cheers to IN State Representative Dave Cheatham (D-North Vernon), co-author of HB1287, a bill that provides further clarification and refinement of the state funeral trust rules that he pushed through the IN General Assembly in 2008 in a direct response to the Grandview scandal.

Violations of perpetual care trust funds can be punishable as a class C felony and allows for two more important changes:

1) It changes the statute of limitations for pursuing a fraud claim to 5-years from withdrawal of pre-need funeral contact funds from the original language of 5-years from initial investment. This is critical, because most people realize the fraud when they make claim to the funds they have paid, which very well may be later than 5-years; and

2) It specifies that any property used to commit the crime be seized to recover damages. For instance, if the funeral director drove to work, the vehicle could be seized to recover damages. It allows for a broader range of assets which can potentially be included to compensate those defrauded.

On March 26, 2009, HB1287 passed the state Senate and goes back to the state House to consider any changes recommended by the state Senate, then proceeds to the Governor for final action. Cross your fingers that "My Man Mitch" (Gov. Mitch Daniels) does the right thing and signs this legislation into law.

Until then...I will continue to encourage all consumers to protect themselves from a very avoidable and financially devastating fraud which occurs everyday. Learn more at can and do help.

copyright 2009 Funeral Planners Inc.

Friday, April 24, 2009

House & Senate Pass "National Funeral Director and Motrician Recognition Day" - HUH???

Unbelievable...nonetheless it is true.

Within our daily reality of global and domestic economic meltdown, 8.5% US unemployment rate, TARP, the American Recovery and Reinvestment Act, auto bailouts, AIG, Madoff, toxic assets, mortgage scandals, swine flu outbreak, South Carolina burning, the Economic Stimulus Bill and tax day protests, Congress has chosen this prime opportunity to invest time and money into drafting and voting on legislation (House: S.Res.390; Senate: CR S14856) to, according to the bill "pay the Nation's collective debt of gratitude for all the hours and all the times they have put someone ahead of themselves by serving the living while caring for the dead". This would be National Funeral Director and Mortician Recognition Day. Am I missing something or does there seem to be a severe and distinct disconnect with what voters want and need their elected officials to be focusing on. Politics aside, if our congress wants to recognize a specific profession, there are certainly plenty of others that deserve a big thank you.

Sponsored by Senator Herbert Kohl (D-WI) and co-sponsored by Charles Schumer (D-NY), Mark L. Pryor (D-AR), Saxby Chambliss (R-GA), Sherrod Brown (D-OH) and Tim Johnson (D-SD). I'm sure that their constituents are so proud.

This piqued my curiosity on the funeral industry in each of their states, because it must be very different than what consumers in other states are experiencing...

Wisconsin: Sponsor Senator Herbert Kohl (D)
The WI funeral industry was rocked in mid-2008 by the fraud of Dickinson Family Funeral Home. Darrell Dickinson and Gary Sebranek, both funeral directors operating the funeral home, were convicted of 2 class I felonies for public assistance fraud for double-dipping into the WI Funeral and Cemetery Aids Program (WFCAP), which funds Medicaid and others who perish with no personal funds for funeral or cemetery expenses.

From 2003 to 2006, false claims were forged, submitted and paid from the WFCAP in the amount of $55,000 for 27 different funerals. The families and estates were also charged, so Dickinson and Sebranek were effectively paid twice. As if stealing from a state fund designed to help poor consumers pay for their loved ones funerals isn't appalling enough, Dickinson's punishment is purely outrageous. Found guilty on 2 felony counts of public assistance fraud, he was sentenced to 6 months incarceration, to serve the first 72 hours then be released on electric monitoring, pay restitution in the amount of $55,000 back to WFCAP, one-year of probation and must sell his share of Dickinson Family Funeral Home to his sons, who were employees at the time.

Doesn't seem to be much incentive to operate an honest funeral home in Wisconsin...but rest assured that as the state fund is fraudulently milked and consumers are stolen from, your Senator will propose a bill that "urges all Americans of all walks of life to embrace each of these special individuals"...yes, that is actual language from the bill. It's okay to laugh...

And by the way...the 4/17/09 seasonally adjusted unemployment rate for WI was 8.5%. (US Bureau of Labor Statistics)

New York: Co-Sponsor Senator Charles E. Schumer (D)
Where to even about with the 2008 widely publicized body harvesting scandal involving dozens of funeral homes under investigation and 3 different NY funeral homes, as well as 4 employees of the now defunct Biomedical Tissue Service being formally charged, for forging authorizations to allow tissue and body parts to be illegally harvested from 36 corpses for $1,000 a pop.

Or, in Nov 2005, Neil Foster Phillips, a Queens funeral director, and his wife Eloise Lyles-Phillips were charged with fraud involving over $20,000 in falsified and forged insurance claims paid for funeral related expenses.

Or maybe the 2008 FTC nationwide undercover investigation of funeral homes, inspecting 104 funeral homes in 7 states. Of the 18 funeral homes inspected in Nassau County, NY, 3 had minor violations and 2 had significant violations.

The Senator, who in February proudly proclaimed "To all of the chattering class that so much focuses on those little, tiny, yes porky amendments...The American people really don't care" clearly believes his rhetoric by taking the time to co-sponsor this bill.

As an aside...the 4/17/09 seasonally adjusted unemployment rate for NY was 7.8%, 8.1% for NYC. (US Bureau of Labor Statistics)

Georgia: Co-Sponsor Senator Saxby Chambliss (R)
GA, whose state motto is "Wisdom, Justice, and Moderation"...and the home of one of the most gruesome of all funeral related fraud.

In March 2004, a $40M settlement was reached in the case of 300+ rotting corpses found scattered in a forest. The settlement will be paid out by Tri-State Crematory and 58 funeral homes across GA, AL and TN. No further comment on GA....whose 4/17/09 seasonally adjusted unemployment rate was 9.2%. (US Bureau of Labor Statistics)

Ohio: Co-Sponsor Senator Sherrod Brown (D)
In early 2007, Brent Maders of the Mader-Peters Funeral Home was charged with stealing pre-paid funeral know the pre-need contracts that they sell "for your protection"...and falsifying death certificates to submit fraudulent insurance claims to the tune of over $700,000 over a 10 year period.

As a precursor to Maders, Mark Van Horn of Van Horn Funeral Homes was sentenced to 2 years in prison on 43 charges, and must pay restitution for stealing over $200,000 in pre-need funeral contracts. With instances dating back to 1990, but with most infractions occurring between 2000 - 2005, Van Horn simply did not forward the insurance premiums paid by 33 consumers to 2 different insurance companies, and instead just kept it for himself. In the infamous words of Steve Urkel..."did I do that?"...

Ohio was also 1 of the 7 states included in the 2008 FTC undercover investigation...Of the 15 Toledo-area funeral homes inspected, 1 had significant violations and 9 had minor violations.

Oh yeah...the 4/17/09 seasonally adjusted unemployment rate for OH was 9.7%. (US Bureau of Labor Statistics)

Arkansas: Co-Sponsor Mark L. Pryor (D)
Let's start with the AR ranking in the 2008 FTC undercover investigation...15 funeral homes in Southeastern AR were investigated resulting in 11 with significant violations and 4 with minor violations...which translates into a score of 100% failure...

Or, the 2001 conviction of Phillip Warren Stephens and his wife Linda Lou Stephens, of the Wilson-Stephens Funeral Home, the former of which was sentenced to 11 years in state prison for failing to invest more than $118,000 in pre-need funeral contract funds, who like all of the other funeral directors involved in pre-need funeral fraud, conveniently forgot that the money entrusted to his funeral home by everyday consumers was not his personal rainy day fund.

On the bright side, while 100% of the funeral homes investigated failed, at least the state's unemployment rate is only 6.5%.

And lastly...

South Dakota: Co-Sponsor Tim Johnson (D)
I am pleased to report that I could find no really glaring and/or horrific funeral fraud, body harvesting or otherwise distasteful stories readily available for South Dakota. Congratulations...

Other than the funeral home employee charged in August 2008 with 1 count of soliciting a minor and 1 count of attempted sexual contact with a minor for using computers at the Miller Funeral Home where he was employed...funeral homes in SD seem to be staying out of the news.

And, SD boasts the lowest seasonally adjusted unemployment rate of the states included here...only 4.9%. (US Bureau of Labor Statistics)

In summary...Whether the state you represent has glaring, embarrassing, and at times vomit-inducing disgusting incidents in the funeral industry is not the point. This is neither the time nor the place to spend resources and money to draft and vote on meaningless legislation, particularly when the line of work being praised and glorified is under a great deal of constant scrutiny from groups such as the Federal Trade Commission, Funeral Consumers Alliance and Funeral Planners Inc.

Be smart and do not rely on politicians to protect you when you can protect yourself. Please visit to learn how.

copyright Funeral Planners Inc. 2009

Tuesday, April 21, 2009

The Death Industry - Always Recession Proof

“The honest-to-goodness truth of the matter is that everybody does die,” says Arvin Starrett, a spokesman for the National Funeral Directors Association and the owner of Starrett Funeral Home in Paris, TX in a 4/18/09 N.Y. Times article.

And, let's face invincible as we may at times feel, and in an economic and political environment that changes with the wind, it is the one honest-to-goodness truth we all can believe. That is why funeral homes, crematories and cemeteries...otherwise known as the "death industry", is booming when the global and domestic economy around them is crumbling. I recently read that by most accounts, the real estimated average cost of a traditional funeral is over $8,000. $8,000!!! In a financial climate of 46 states reporting over-the-month unemployment rate increases and the jobless rate in all 50 states and the District of Columbia posting increases! (March 09, U.S. Bureau of Labor Statistics) How can that be? How can consumers continue to lose their jobs and their security...and when the final event of devastation occurs...the loss of a loved one...the death industry ruffles its feathers and zeroes in like a vulture to pick the remains of the fresh corpse and their families. It's just not right...but is one of the other truths that we are forced to live with.

According to senior industry analyst Toon van Beeck, of research firm IBIS World, the revenue of the U.S. funeral industry will grow by 1.2% this year to a $20.7 billion dollar industry, which, in all fairness, is down from a 2% revenue gain last year. My heart breaks for their loss.

The annual death rate of 2.5 million Americans a year is expected to increase by about 1% per year, and expected to spike by early 2020 as baby boomers reach their mid 70's. Rest assured...this is just the famine before the feast for the death industry, as their mouths water in anticipation of the aging baby boomers dying off...and perhaps the push to sell pre-need contracts. While they have to accept their measly 1.2% growth during a period of the U.S. experiencing a decrease in 2008 annual GDP of 6.3% (March 09, U.S. Bureau of Economical Analysis), they have derived clever new ways to push their growth numbers back up, particularly in light of the growing interest in "green" burials and cremation, which analysts expect to account for 38% of deaths this year. Let's see what they're up to...

The Video Tribute: This is the newest innovation from enterprising entrepreneurs and funeral homes. The services range from creating a video tribute to the departed using photographs and other memorials to live web-casting or recording the funeral as it takes place. Funeral homes offer this service to the families for hundreds of dollars. That big hearted gesture just brought tears to my eyes...until they turned to tears of anger as I realized that the necessary "capital expenditures" of the funeral home was a laptop and an internet connection. Virtually all laptops today are designed with web cam capabilities and you just need the knowledge of how to stream it (many free on-line tutorials, it really is not difficult). If the laptop does not have this feature, a web cam can be purchased, ranging from $10 to $50. Even newer Netbooks, the smaller, more compact versions of laptops, have web cam capabilities. Once again, thank you compassionate funeral homes, for taking the emotional and financial situations of the bereaved into consideration when designing your promotional offers.

Casket Rental: As the cremation percentage rises, funeral homes are feeling the pressure on the typically highest priced, and highest mark-up item...the casket. So, they are generously offering those who opt for cremation but would like a viewing to rent a casket. I recently saw one funeral home that offered a "discounted" rental fee of $1,000 for a "beautiful and ornate" casket rental. What they fail to mention is that they purchased that casket at wholesale, up to 800% below what they would sell it to you for, and after only a few, if that, rentals, the casket has paid for itself but they continue to rent it for years at the same rate. Does the phrase "cash cow" come to mind.

Others are offering grief counseling referrals, with a kickback from the referral source, and what is referred to as "thumbies"...14k gold earrings, rings, pendants or other jewelry that is made from the thumbprint of the deceased. To each his own, but you certainly do not need to pay a funeral director a fee above what the jewelry cost to be made...there are literally hundreds of vendors who provide this service without the "commission" being paid to the funeral home to Google a jewelry maker and give you a referral.

Another way that families are saving money and personalizing funerals is to have the viewing and funeral services take place in their homes or other places, sometimes with the aid of a funeral director and others that do not. That is a whole different subject and one I will cover in my next entry...wait and see!

In summary, the death industry is basically immune from the economy, or any other factor, because they have a very specific and select prospect list...everybody who is alive today! Beware of special promotional offers and be smart when selecting the types of funeral and burial goods and services. There are innumerable ways to save money through a comprehensive and documented pre-need funeral plan, you just have to take the first step.

Please learn more at Everyday, we help consumers understand their rights and help them protect themselves and their families, while saving money in the process...Guaranteed. An informed consumer is a prepared consumer, an we can help.

Friday, April 17, 2009

Pre-Need Funeral Contract Fraud - The Newest "Too Big To Fail"

Pick a state...any state. I'm generally not the gambling type, but I would bet my eye teeth that there is some type of funeral or pre-need funeral contract fraud litigation active in all 50 states as we speak. The most recent headline whores are the Illinois Funeral Directors Association (IFDA), the Virginia Funeral Directors Association (VFDA) and a basketful of Mississippi funeral homes who sold pre-need funeral contracts, but somehow missed the fact that the money paid by trusting consumers was not a personal check made out to them.

Okay, one at a time...let's not get overwhelmed in the greed grab.

As has been well documented in the Chicago Tribune and other news sources, the IFDA has $59 million in pre-need contract funds, paid by consumers, that are unaccounted for. It apparently just "poof"...disappeared. That is outside of the fact that, per the Illinois Burial Funds Act, contract sellers may keep 5% of the principal paid for "administrative fees" and 25% of the profit on principal. So, they really don't need to steal the money...a chunk of it is just given to them. Not to mention that Randall Earl, Executive Secretary of the National Funeral Directors Association and 2001 President of the IFDA, when it had only a measly $10.6 million dollar deficit, neglected to disclose to consumers that the IFDA was investing the trust funds in risky insurance policies and that investment management fees and commissions resulted in millions worth of profits for the IFDA and member funeral homes.

Don't stop goes deeper...According to the AP, U.S. Senator Roland Burris has been subpoenaed to turn over his records, license issuance due diligence, analysis on issuance of license revocation, and...gasp!...amount he was paid as a lobbyist for the IFDA. You see, when Burris was State Comptroller in 1980, he issued a license to the IFDA allowing them to manage the "trust funds" investments. Call me crazy, but since when is a funeral director suddenly an investment specialist. But interestingly, in 2007, after his role as Comptroller, Burris was hired as a lobbyist for the IFDA, specifically to lobby then State Comptroller Dan Hynes. And, shockingly, one Illinois funeral director claimed on a blog that "our pre-need trust sales are the biggest in 3 years"...time for a wake up call for Illinois consumers. Hmmmm, this one continues to play out and gets more interesting...and more the moment.

In an article posted on, according to Mike Nicodemus of Hollomen-Brown Funeral Home and Crematory, an average funeral at that particular funeral home costs $8,500...not chump change by any means. The VFDA promoted Shenandoah Life Insurance Company as it's funeral insurance provider of choice. Oh...did I mention that was before it was placed in receivership by the Circuit Court of Richmond, VA? It apparently does not have a balance sheet that adequately matches liabilities with assets. The FAQ document on the company's website states that policy holders should continue to pay renewal premiums to avoid disruption of claims, but does not guarantee actual payment of any claims, and at this time does not honor their "Required Minimum Distributions" on IRAs. What part of "required" am I missing? And the state of Virginia assures policy holders that interest will continue to accrue on annuities, but they cannot guarantee that this interest will actually be paid. And in more news...

Missouri is a mess. According to WLBT3 news, several pre-need funeral contract sellers are deficient in their accounts. Here's a quick sample...Green Acres (Vicksburg, MS) has $221 dollars in their trust fund to cover over $373,000 in contract liabilities. Other offenders include Prentiss Memorial Gardens (Baldwyn, MS), Sunset Gardens Memorial Park (Laurel, MS), Liberty Memorial Park (Booneville, MS), Pinecrest Memorial Park (Pittsboro, MS), which has at least 50% of the over $378,000 in pre-need contract funds unaccounted for, Southern Mortuary (Jackson, MS), missing over $38,000, George West Funeral Home (Natchez, MS), $95,000 deficient, and Jackson Mortuary (Aberdeen, MS), the runt of the group with only $10,000 unaccounted for.

But, the sad and frustrating fact is that the Missouri debacle was completely avoidable. For instance, according to the Natchez Democrat, in July 2006, a cease and desist order was issued to George F. West Funeral Home to stop selling pre-need contracts and they were ordered to pay a $5,000 fine. They ignored both the order and the fine and continued operations as usual. After they were recently...(that would be years later)...again ordered to cease and desist business operations, Mr. West hired attorney Earl Banks, a member of the MS legislature to represent him. Mr. Banks, as a member of the MS legislature, has the right to request a continuance if the case he is working on has potential to interfere with his legislature duties and obligations. Thus...this case will potentially be continued until the end of Mr. Banks' legislative term. Does anyone smell a whiff of conflict of interest...

And Green Acres Memorial Park, founded in 1955 (sold twice before 2001), faithfully neglected to file the necessary and state mandatory annual financial reports, which the "regulatory authority" was fully aware of. According to the Vicksburg Post, it filed an incomplete perpetual-care trust fund financial report in December 2003, which was rejected by the "regulatory" authority. In October 2005, Stephanie Graham, acting President, signed a consent agreement with the State of Mississippi to file reports in accordance with the Mississippi Pre-Need Act (enacted January 2002). In November 2005, the state issued a formal request for the report. In March 2006, the Mississippi Secretary of State indicated that the report had not yet been filed. In November 2006, Green Acres was issued a formal cease and desist order and their license is revoked. Fast forward to July 2008, where the Chancery court again requested the annual reports and in October 2008 the Secretary of State initiated a formal audit. As of January 2009, the Secretary of State estimated a $373,000 deficit and temporarily froze all accounts.

Oh, did I mention that Mississippi Secretary of State Delbert Hosemann is quoted in the Natchez Democrat acknowledging "at this time the state has no process for follow-up"? Well, thanks for the news flash Mr. Secretary, but that is pretty obvious

Adding insult to injury...Service Corp. International (SCI) case you are unaware, this is the national funeral corporation with over 1,500 funeral homes and over 400 cemeteries that showed the ultimate disrespect to our brave military vets who were in route to Arlington National Cemetery by piling their bodies up in hallways, unrefrigerated garages and other areas and, according to the AP, the defendant in over $60M in lawsuits, has applied for a bail out from the Troubled Asset Relief Program, or TARP. Really...go ahead a pinch yourself...unfortunately, this is all true and our reality.

You can protect yourself and your family from fraud and manipulation. Please visit today to learn how we can help.

Friday, April 10, 2009

The Average Joe's Madoff

Regulators and congress are outraged and appalled, as they always are, at the enormity and longevity of the Madoff ponzi scam. Despite the fact that for years the writing was on the wall, with flashing strobe lights, and at times right in their hands, somehow it was overlooked that Madoff was delivering miraculous returns, using a "trading strategy" that in no way could generate returns of that magnitude for long periods of time in various economic environments, and the auditor of this multi-billion fund was a one-man shop in a strip mall. Huh? I could go on and on, but Madoff is not my point.

The ponzi that should be in the spotlight involves a maze of intertwined companies under the umbrella of Missouri-based National Prearranged Services, including Lincoln Memorial Life Insurance Co. and Memorial Services Life Insurance Co., which was relatively quietly forced into liquidation in March 08.'s a thumbnail sketch...

NPS sold pre-need funeral contracts through funeral homes in 19 states, over 200,000 contracts nationwide. The pitch is to pre-pay funeral expenses at today's prices and avoid higher inflation adjusted prices later. What did my grandma always say...when it seems to good to be true, it probably is...then she would promptly box my ears for failing to see the obvious.

In a perfect world, NPS would take a percentage of the pre-paid funds and place them in a trust, which is used to buy a whole life insurance policy on the contract holder, which generates interest. When you die, NPS pays the funeral expenses within 24 hours and are reimbursed from cashing out the life insurance policy with interest. The insurance policies are, of course, purchased from their sister companies, Lincoln Memorial and Memorial Services. Keeping it all in the family...

In an imperfect world, a/k/a reality, NPS allows the insurance policies to lapse or cancels the whole life to buy a cheaper, non-interest bearing term-life policy. When you die, they "honor" the old contract with proceeds from new contracts sold. No harm, no foul. Except that you cannot sustain this model, it is illegal and is by any definition a classic ponzi! Aside from the fact that the percentage they are required to put into trust varies by state, with Missouri law allowing NPS to keep 20% of funds in commissions, and of course keep the interest. From the get go, a $10,000 contract is really worth $8,000, allowing consumers the privilege of paying $2,000 in inflation protection. I can feel my grandma's hands coming...

But, like Madoff, NPS operated with a relatively deaf ear from regulators. With it's various, cemeteries, funeral fell into one of those gray, murky areas of funeral industry? contract law? Like a quick game of hot potato...don't be the last to hold it, or you are the state agency forced to do your job!

NPS was poison from inception. Founded in 1979 by James Douglas Cassity, a disbarred Springfield, MO attorney who served time in federal prison in the early 80's for an unrelated tax shelter fraud. His name rarely appears, instead placing the ownership interests of all of the kissing cousins in various Cassity family trusts and other family members.

In 1992, the attorney general of MO began investigating NPS, resulting 8 years later in a 2000 court ruling which scolded NPS and told them to tighten up their financial records and make sure proper coverage is in place, with no further or ongoing regulatory monitoring guidelines.

In 2005, under the cleverly named "Operation Grave Concern", the MO attorney general targeted funeral homes and pre-need contract sellers. A handful funeral directors and contract sellers were charged, and NPS, the godfather of pre-need contract fraud, was harshly scolded for failing to ensure proper coverage in relation to one charged funeral director, and paid an out of court settlement of $10,000 and once again agreed to tighten their financial records, with no further or ongoing regulatory monitoring guidelines.

MORE SPOTLIGHTSIt apparently was not important that according to the National Institute of Money & Politics, NPS ranked in the top 10 funeral industry lobbyists and political contributors, giving around $109,000, much to none other than MO attorney general Jay Nixon and MO governor Matt Blunt. It almost feels like I'm talking about Illinois! Where's Blago when you need him...

In March 08, Texas forced NPS into liquidation, as the two primary insurance companies were headquartered there, noting that the businesses were "inextricably intertwined". Not surprisingly, the Chap. 11 agreement personally exempts the Cassity's and about 50 other entities, including the Nantucket home that Doug Cassity sold last year for over $16M to Google CEO Eric E. Schmidt. In receivership, the unfortunate individual appointed to try to unravel this mess has stated that NPS will honor the existing contracts, but does not state at what value, and the payout will come no later than 60 days of filing the claim. 60 days! That's not much solace for the family who is forced to pony up thousands now for the at-need funeral they believed was paid for in advance, with the pat on the head that they will receive some to all of that money back within 60 days.

Several states, including Iowa, Texas, Missouri, Kentucky and Ohio are investigating, as is the FBI, who preliminarily have stated the loss at around $500,000,000. And various knee-jerk, sloppy and reactionary pieces of legislation have been proposed, with all of them failing to pass.

And the sordid story continues today...with no conclusion and little to no press coverage. At least they weren't deemed too big to fail.

Monday, April 6, 2009

NFDA Stat Lacks Integrity-Fun With numbers

The great thing about statistics, and numbers in general, is that they can be manipulated to demonstrate whatever "fact" you are supposedly substantiating. Depending on so many variables, statistics are almost by design the perfect way to make fact out of fiction, allowing you to paint the canvas with the most appealing picture to influence others to your point.

The National Funeral Directors Association (NFDA) provides the 2006 average cost of a traditional funeral at $7,323, which most people who have arranged and paid for an at-need funeral know is much lower than they actually paid. Based on what I know and my background in finance, I simply do not believe that number. Skeptical curiosity got the best of me and I felt compelled to look into the statistical validity and integrity of that number, and...drum roll is bogus. Oh, don't get me wrong, it's an average of something...but not what I believe is the average cost of a funeral. Funny how a single fact can ruin a good argument.

I will clearly demonstrate, using the NFDA's actual data, why that number is misleading at best, just plain wrong at worst.

Here are some facts (per the NFDA, but with no date reference):
  • There are 20,080 funeral homes in the U.S.
  • Over 10,200 funeral homes are members of the NFDA in the U.S. and internationally (they do not provide a breakdown of U.S. vs international membership)
  • The NFDA provided 2006 average cost of a "regular adult funeral" is $7,323
  • The average was calculated based upon member survey responses
  • 3,000 member funeral homes, or 29% of it's membership, were invited to respond
  • The response rate was 38%

Okay, now it gets interesting.

There is no explanation as to why only 3,000 members, or less than 1/3, were sent the survey or the diversification of the invitees, the notes do not specify whether the 3,000 invitees operated in the U.S. or if international funeral homes were also included, there is no indication of the selection process to identify those 3,000 invitees...were they "cherry-picked" or randomly selected? All of these, among others, very simple points can and will drastically determine the outcome.

Let me break it down...

  • A 38% response rate equates 1,140 responses
  • 1,140 represents about 11% of NFDA member funeral homes, and only about 5.4% of total U.S. funeral homes
  • If survey invitees were not random, then inviting responses from targeted funeral homes in rural areas, financially depressed or disadvantaged areas, funeral homes whose business is influenced by providing goods and services to the homeless, mentally challenged or prisons, and family-owned vs corporately owned, basically allows the NFDA to handcraft a statistic to their advantage.
  • The NFDA took a set number of goods and services and priced only these items from the submitted general price lists. This list is decidedly vague in what exactly was being included, providing the average cost of a "viewing or visitation", but did not specify the number of days, time of day, weekday vs weekend, etc...things that can change that number, thus the overall average, by HUNDREDS of dollars
  • The average was NOT calculated from actual funeral receipts, but rather from only a pre-selected number of goods and services as determined by the NFDA.

Questions to the NFDA:

1) How would the average change if funeral home invitees were primarily located in the lowest median household income areas or rural areas? For instance, how would the prices differ from a funeral home operating in Liberty, MS (pop. 676) differ from one operating in Los Angeles, CA (pop 3.8M)?Or, funeral homes operating in Atherton, CA, with the highest median household income compared to those in Detroit, MI, with one of the lowest median household incomes?

2) Since when does information from 5.4% of total practitioners equate to "statistical integrity", as stated on the NFDA website? That's news to me...

3) What is the degree of influence from international funeral homes?

4) How were the 3,000 invitees determined?

5) Why did only 38% respond? A reasonable person might conclude that those funeral homes with higher prices operating in higher income, metropolitan areas may decline to respond knowing that they would influence the average up.

6) The funeral industry generates $11B annually...why weren't actual funeral receipts used as opposed to only the selected goods and services determined by the NFDA?

I could go on and on, but I believe my point is clear. When any type of analysis is prepared from unclear, misleading and manipulated data, the result is unclear, misleading and manipulated statistics. Only some of us can learn by other people's experiences...the rest of us have to be the other people.

Don't be the other people. Learn more about how to protect yourself and your loved ones by developing a thoughtful, comprehensive pre-need funeral plan at

Friday, April 3, 2009

Funeral Industry Price Fixing is NOT a Myth

Recently on the site, there was an article posted basically stating the absurdity of actually believing that funeral homes would knowingly and intentionally participate in nationwide price fixing and collusion with a casket manufacturer, and that anybody who doubted or questioned the integrity of funeral homes was callous. I beg to differ...

With the average cost of a traditional funeral in excess of $6,500, it is every consumers right, and frankly duty, to question why funerals cost so much today... especially in light of the fact that a casket is typically the most expensive cost. The article indicates that Funeral Consumers Alliance initiated a class action antitrust lawsuit, stating that three national funeral homes engaged in price fixing with a casket manufacturer. According to the article, "as a result of the conspiracy, unsuspecting casket buyers are forced to pay perhaps twice as much as they would if there were true competition in the market."

Reality check...caskets sold by funeral homes are typically MORE THAN DOUBLE!

Just a quick check of my casket file gave me some facts that I would like to share. Here is a simple comparison of what a casket sells for if purchased from a funeral home and what it costs if purchased directly from the manufacturer, many times with free overnight shipping:

18G Steel Casket
Funeral Home Price: $2,895
Manufacturer Price: $ 995
Difference: $1,900, or 67% mark-up

Solid Oak Casket
Funeral Home Price: $4,495
Manufacturer Price: $1,485
Difference: $3,010, or 67% mark-up

Solid Mahogany Casket
Funeral Home Price: $5,695
Manufacturer Price: $1,795
Difference: $3,900, or 69% mark-up

Copper Casket
Funeral Home Price: $5,595
Manufacturer Price: $2,195
Difference: $3,400, or 61% mark-up

These are not small, insignificant numbers. We are talking THOUSANDS of dollars of mark-ups that are being trust onto consumers, who have been led to believe that funeral homes are trustworthy and it would be distasteful to challenge their prices. In fact, the emotional state that most people are in when planning funeral arrangements is the perfect environment for manipulation to flourish. Particularly with encouraged sales techniques such as "this casket truly honors the memory of your husband"...what kind of cold-hearted wife would say no to that?

The fact is that the casket is going to be buried and nobody will ever see it again. It will eventually decompose, regardless of whatever kind of "gaskets" or liners that you are either required or manipulated to buy. Does it really honor the person who died to deplete their children's college fund to pay for their funeral? I think not.

But, the mocking tone and frivolous attitude of the author just goes to show the general pervasive attitude of the funeral and burial industry. The "people need us, so we can do what we want, when we want and to whom we want, because we have an unlimited number of potential clients because everybody dies" outlook. I disagree.

A pre-need funeral plan, developed with a thoughtful and clear mind, taking the quality and costs of various funeral related goods and services into consideration before making decisions is the only way to protect yourself and your loved ones. As I wrote yesterday, the FTC is responsible for regulatory oversight of funeral homes. During their 2008 undercover investigation of funeral homes nationwide, they managed to investigate 104. In 2006, the most recent year for "official" census studies, there were over 29,000 funeral homes in the US. Is 104 really a reasonable sample? I think not. And does it matter...of the 104, over 62% operated in violation of the Funeral Rule.

In short, there is really no disincentive for funeral homes to operate with the best interest of the consumer in mind. There is very little oversight, and if one dares to question their integrity and business principles (gasp), they must be some kind of cold, uncaring individual, subject to mock and ridicule.

That is wrong. Every consumer in this country deserves to be treated fairly. But, by about the time you are old enough to speak, you realize that is not always the case. You can and should protect yourself.

A pre-need funeral plan is a necessary and important step in financial and future planning. Please educate yourself, defend yourself from being victimized and learn how at We help individuals and families everyday to make emotionally appropriate and financially responsible decisions about their funeral, burial, cremation and memorial options. Please learn DOES make a difference and you DO have a voice and a choice.

Thursday, April 2, 2009

Who Can You Trust When Somebody Dies?

Who do most American's turn to when a death occurs? One should exercise caution when putting trust and confidence into funeral homes.

The FTC enforces what is called the Funeral Rule, which is basically a step-by-step guideline to protect consumers from being taken advantage of or misled by funeral homes, crematories and cemeteries. Within this enforcement, the FTC conducts an annual audit of funeral homes across the country. The 2008 results were recently released and, if anything, it makes me feel that consumers are more vulnerable to funeral home manipulation and thankful that I am informed and prepared.

The FTC investigated 104 funeral homes across seven states. Incredibly, almost 62% were cited for significant and/or minor violations!

Orange County, CA was one of the seven states included. In Orange County, incredibly 61% of the 18 funeral homes inspected were cited for significant and/or minor violations. That is likely not much comfort to the countless individuals and families who trusted these and other funeral homes during their time of emotional crisis and grief.

On the bright side, you can be thankful that you didn't have to arrange a funeral in Northeastern Arkansas. Of the 15 funeral homes inspected there, 11 were cited for significant violations and 4 for minor...or simply a 100% FAIL rate.

Of the seven states, only one (Nassau County, NY) ranked below 50% of the funeral homes operating without violations. Of the 18 funeral homes investigated, 2 were cited for significant violations and 3 for minor.

But here is the real interesting part...funeral homes with significant violations can avoid costly and public litigation by agreeing to participate in a 3-year Funeral Rule Offender Program (FROP), which teaches compliance, the Funeral Rule and other topics that reasonable minds would assume they already knew considering they operate as a funeral home and are likely a member of the National Funeral Directors Association (NFDA). Violating funeral homes also make a "voluntary" payment to the U.S. Treasury and pay annual administrative fees to the NFDA.

Let me clarify...violators learn how to operate a compliant funeral home, while continuing day-to-day operations as a funeral home, and pay annual fees to an association that they likely already belong to, ultimately paying themselves. This builds consumer confidence?

It's important for consumers to have some degree of confidence in the integrity of funeral homes considering that multiple reputable sources report that the average cost of a traditional funeral is now over $6,500. In these economic times, coming up with that kind of money to be spent on something like a funeral, which holds no lasting fiscal value, is quite a daunting thought.

But, the empowering and most important thing is YOU CAN PROTECT YOURSELF!

By working with an independent, unaffiliated pre-need funeral planner like Funeral Planners Inc., you can know your rights and options and prepare a comprehensive and documented pre-need funeral plan, where over 100 decisions, arrangements and negotiations are made with the benefit of time and knowledge, allowing for thoughtful and financially responsible decision making.

Learn more at or call today at 219. 728. 1290.

Friday, March 20, 2009

Why is a General Price List (GPL) So Confusing?

The GPL is the keystone of the FTC's "Funeral Rule" ("the rule"). A funeral home must provide a written GPL, for the individual to keep, to anyone who asks, in person, about funeral goods, services or the prices of such goods or services. This includes consumers, journalists, competitors, religious societies, government agencies and consumer groups, among others. If not requested, it must be offered when discussions begin about the type of funeral or disposition that the funeral home arranges, specific goods or services offered and/or the prices of such. The rule provides guidelines and, at times, specific language, on a number of things, such as compliance, types of information required on the GPL, alternative price lists, casket and outer burial container price lists, cost information and disclosures, telephone disclosures, specific prohibited misrepresentations, embalming, record keeping, consumer protections and state exemptions.

The fact that this rule exists at all, with an entire section dedicated to specifying prohibited misrepresentations and providing the actual language that needs to be used, the placement of the text and the type set may lead a reasonable person to assume that without those specific prohibitions, misrepresentation by funeral homes would be rampant. Let's talk about that further...

The rule does not dictate the GPL's format or placement in the pile of papers one is given when arranging an at-need funeral. So, here's a scenario...

A mother of three school-aged children learns that her beloved husband has died suddenly and unexpectedly, with no life insurance. The hospital needs to know which funeral home to send the body to. Without having ever considered that question, she of course names a local funeral home, which she may or may not have prior experience with. She contacts the funeral home and set a meeting to discuss the arrangements. In a complete emotional hurricane, she is provided a GPL, and walked through the myriad of questions, arrangements and decisions that must be made immediately. In a normal state of mind, she would thoroughly read through any contract to understand exactly what she is buying. But, her life has turned upside down and she is looking for a trusted expert to guide her through this devastating time. The funeral director provides her with a written GPL, which is 40 pages in length and includes tables, graphs, poems, pictures, optional and nondeclinable goods and services listed together and line item prices for everything, including "helpful" sections with prices for a couple of different things grouped and various "package" deals. She is clearly emotionally overwhelmed, so the trusted funeral director tells her she has that for reference, but that he can just guide her through what decisions need to be made. Burial or cremation? Burial.

Casket time. Statistics show that consumers generally purchase 1 of the first 3 caskets they view, and select the mid-priced range. Funeral directors know this, so they target the higher mid-priced range of caskets they offer, regardless of whether this is within her budget or not. She first views a $3,000 casket (wholesale $750), then a low-end casket for $2,000 (wholesale $500), and last a "mid-range" for $2,300 ($600 wholesale). She selects the "mid-range".

Interim tally sheet: By walking in the door without a pre-need funeral plan and making emotionally driven decisions without understanding that the funeral director likely has numerous lower cost casket options that he consciously chose NOT to offer, her bill looks like this:
Basic Service Fee (nondeclinable): $1,480
Casket: $2,400
Embalming: $850
Transfer Vehicle to Funeral Home: $275 (from hospital to funeral home)

So, from the get go her bill is already $5,005, without a cemetery plot, outer burial container, visitation (not included in basic service fee), limousine for family, hearse (not included in basic service fee), utility or flower vehicle and other expenses.

No need to belabor this story any longer, I think the point is clear. The Funeral Rule is absolutely designed to identify and enforce consumer protections, but as we all know, there are always methods of "technically" complying outside of the intentions of the law. Many times funeral homes make GPL's intentionally confusing and complex, long and arduous to read and understand, and misleading with "package" deals and other optional items because the opportunity to up-sell or emotionally manipulate is by definition their profit margin. If you take the emotional element of funerals out of the equation, funeral homes are for profit sellers of funeral goods and services who profit when people die. And, there is nothing wrong with that. That is capitalism and this is America...a free market.

My issue is when one party, the funeral home, is in a distinct and meaningful advantage over the consumer who seeks their services. The consumer is an emotional wreck, decisions and arrangements must be made quickly, and comparison shopping is the last thing they have the emotional energy or time to do. The consumer many times become the victim.

That is exactly why Funeral Planners Inc. and the services we provide are absolutely essential. Everybody dies...that is a fact. Now, once again, take the emotion out of it and think with a clear, thoughtful and financially responsible mind about the decisions and arrangements, well over 100, that you can and should make in advance, with the important benefit of time and resources for comparing costs of goods and services. Or, you could choose to not think about it and leave that emotional burden to be carried out by your family and loved ones, with your final gesture of love being the $7,000 funeral bill!

Pre-planning is smart and necessary. Get informed so that you can be prepared.

"Trust" Is A Funny Word With Pre-Paid Funerals

As if further evidence of the manipulation and misrepresentations, coupled with a relaxed or unenforced regulatory environment, associated with pre-need funeral contracts was necessary, the Illinois Funeral Directors Association is now embroiled in two lawsuits alleging the group mismanaged a trust under their oversight.

In fact, calling this vehicle a "trust" is an oxymoron in itself. Under their supervision, the investment trust, which was set up about 30 years ago to invest funds collected by IFDA members who sold pre-paid funeral contracts to consumers, resulted in a $60M deficit last year. At year-end 2007, the ending balance of the trust was more than $300M, representing 49,000 Illinois consumers who "trusted" the funeral directors who sold them. The IFDA contends that they have routinely paid out more for funerals than the value of the contract and their investment strategy of purchasing life insurance policies that invested heavily in corporate bonds was hit hard when corporate bonds went the way of the rest of the economy, doubling the deficit.

Now I do not proclaim to be an economics genius, but I do have some experience with money management, running a business and oversight responsibilities. Their entire premise is flawed from the get go. First, the cost of a funeral is driven by the funeral directors. Using emotional and pressure selling techniques to up-sell consumers and wholesale markups of up to 700% naturally result in higher cost funerals. So, if the contracts they sold were inadequate to cover the inflated funerals they cause, it seems reasonable that they could control and eliminate that shortfall. For instance, rather than selling a casket for 700% over wholesale, sell it for only 300%, or instead of charging $50 for a military bugler, who by the way volunteers his time, charge what is fair which would be nothing, whereby the contract coverage may be adequate. When funeral directors arbitrarily set the final price of a funeral, it is all negotiable. But, like all things, there's a can't have it both ways. You can't sell a pre-paid contract for "x", deplete it immediately by taking administrative or other fees, then employ markups and other practices that drive the final cost of a funeral to exceed the value of the contract you sold to cover it. That's not economics...that's common sense.

Second, what kind of investment strategy takes the entire fund and invests in one single strategy that is market sensitive and not guaranteed? The answer is an investment strategy that is doomed to fail. Since this capital was the fiduciary responsibility of the IFDA, it's logical to think that at least some, albeit most, of the investments would be in steady but unexciting vehicles like U.S. Treasuries or indexed. I believe there is a name for betting the house on one idea...gambling. The IFDA gambled with the "trust" and investments of 49,000 Illinois consumers.

And the cherry on top of this distasteful delight is that state regulators, who clearly failed to "regulate", renamed Merrill Lynch Trust Co. as the new trustee last November. Now, we all have been witness to how trustworthy Merrill Lynch is. Does the madness ever end!

Pre-payed funeral contracts are ripe for exploitation and fraud by design. There is no federal oversight, it lies with the state in which the funeral home does business. State by state, these contracts lack uniformity of language, content or format outside of general contract guidelines, with some (few) states providing explicit parameters and others providing little to absolutely none. There are no standard or best practice codes regarding the consumers ability to modify, cancel or transfer the contract or the method of reimbursement should the funeral home be unable to fulfill the obligations or declare bankruptcy. The method of investment by the funeral home is not standard, with some commingling funds and others holding individual accounts for each payee, and no guidelines on interest income or ongoing administrative or other fees, among others. The licensing grid is confusing and inconsistent, with some states requiring no license whatsoever to sell a pre-payed contract as a representative of a funeral home. And, here's the kicker, some states allow for the funeral home to retain whatever funds are left over rather than returning the funds to the family or estate. It's almost like a custom designed framework to fail.

Stories like the IFDA and so many others will continue until pre-payed funeral contracts fall under the jurisdiction of the FTC, with explicit rules and guidelines similar to "The Funeral Rule", as opposed to putting the fox (funeral directors) in control of the hen house (consumer pre-paid contracts). Until then, consumers will continue to "trust" the funeral director of their choice to do the right thing. A sad state indeed.