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 begin...how 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 funds...you 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 www.FuneralPlannersInc.com to learn how.

copyright Funeral Planners Inc. 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. Unfamiliar...here'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 businesses...insurance, cemeteries, funeral homes...it fell into one of those gray, murky areas of oversight...insurance? 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.

FIRST FLASHING STROBE LIGHT
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.

SECOND FLASHING STROBE LIGHT
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...

RESULT
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.