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.