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  • nps is in trouble again and some more

    http://www.stltoday.com/stltoday/bus...5?OpenDocument

    Texas places prepaid burial businesses into receivership
    By Jerri Stroud
    ST. LOUIS POST-DISPATCH
    Friday, May. 16 2008

    The Texas Department of Insurance has placed National Prearranged Services Inc.
    of Clayton and two affiliated insurance companies in receivership, the
    department said Friday.

    National Prearranged Services sold more than 120,000 prepaid funeral contracts
    to consumers in as many as 17 states. It bought insurance policies to back the
    contracts from two insurance companies, Lincoln Memorial Life Insurance Co. and
    Memorial Services Life Insurance Co., both of Austin, Texas.

    NPS and the two insurers are owned by a trust for the Cassity family, including
    brothers Brent and Tyler Cassity. The trust also owns Clayton-based Forever
    Enterprises Inc., which operates cemeteries in Missouri and California.

    Texas had placed NPS and the insurance companies under supervision in October.
    Earlier this year, the companies agreed to stop selling the contracts, and in
    April an independent manager was appointed for the three companies.

    A Texas court Wednesday issued a permanent injunction restraining the companies
    and their agents from conducting business and restraining other parties from
    taking actions against the companies' properties.

    Texas is expected to appoint a special deputy receiver who will supervise the
    companies and attempt to reorganize them. The receiver will pay claims and
    conduct the companies' business.

    In a press release, the Texas insurance department advised consumers to
    continue to make premium payments on any insurance policies with the companies
    to make sure the policies stay in force. Claimants also should continue
    submitting claims, the department said.
    Sometimes elections have positive consequences!

  • #2
    I may have missed this, but why did this happen?

    Comment


    • #3
      you mean why did this all start? I don't know why it came down on them but I think it's been a long time coming. The earliest I heard of any of this trouble was back maybe in December or January when the cassitys were trying to pay off funeral homes only the balance that was prepaid on the funeral prearrangement (they had always stressed that if you write with them then they would pay according to your current general price list...which is bold and pretty unbelievable) in exchange for a casket made in china. I think that sent red flags and I think Kentucky took notice first and started a bit of a storm with it. Texas followed because Lincoln Memorial and the other Lincoln company are located in TX. then Iowa, ILL, MO, OH and I think OK followed. NPS being in receivership is a good thing but this all will take a while to work out because the paper trail and the money trail is a bit complex from what I understand. A complex shell game basically and one of the articles a week or so ago mentioned the lawyer for the cassitys said something like this pyramid scheme was working fine until the authorities made them stop doing it. This is a bad thing for some funeral homes across mid America who only wrote with NPS and no other preneed company.
      Sometimes elections have positive consequences!

      Comment


      • #4
        hope you all are alright in this, CG

        Official Sponsor of Marco Gonzales and the Productive Out!!!


        Said the Quangle Wangle Quee

        Comment


        • #5
          oh yeah, we're fine. We wrote with them back in the 80's and still have a few that are in force and no matter what happens with NPS, we are going to honor those, of course. It won't affect us hardly at all. Cost of doing business type thing. We have made a practice of not staying with any one preneed company for too long.
          Sometimes elections have positive consequences!

          Comment


          • #6
            http://www.stltoday.com/stltoday/ema...257460001193A3

            Investigators want to know where the funeral funds went
            By Jerri Stroud
            ST. LOUIS POST-DISPATCH
            Friday, Jun. 06 2008

            A couple of years after a retired minister died in 2001, a salesman who said he
            was from Forever Oak Hill Cemetery came calling on the preacher's daughter in
            Des Peres, trying to sell her a prepaid funeral contract.

            She said she declined, but for three years other salespeople showed up on her
            doorstep, without an appointment, insisting on being let inside to present a
            well-rehearsed sales pitch for prepaid funerals.

            "I don't even know where I'll be when the time comes," said the woman, who
            wanted her name withheld. She eventually went to the cemetery and threatened to
            call the police if a salesman knocked on her door again.

            The firm behind the sales pitch is among a web of companies linked to
            Clayton-based Forever Enterprises Inc., the owner of the Kirkwood cemetery and
            others, including one in California that's the final resting place of Hollywood
            stars.

            The prepaid contracts are sold through a Forever Enterprises affiliate,
            National Prearranged Services Inc., also based in Clayton, that's the target of
            investigators in at least 10 states. Regulators have found possible
            irregularities in how money collected was invested. They want to know what
            happened to millions of dollars collected for prepaid funerals yet to be
            arranged.

            "The money dwindled away," said John Greeley, a spokesman for the Texas
            Department of Insurance. "We don't really know where it went."

            The scope could be enormous, with perhaps $1 billion obligated in about 150,000
            contracts in 17 states, including Missouri and Illinois. Also under the
            microscope is the family that controls Forever Enterprises and NPS. NPS was
            founded by Douglas Cassity and now includes his sons, Brent and Tyler.

            For now, the sales pitches are stopped. Regulators are looking into NPS and two
            affiliated insurance companies based in Austin, Texas: Lincoln Memorial Life
            Insurance Co. and Memorial Service Life Insurance Co.

            Texas regulators took control of NPS and the insurance companies on May 14 over
            concerns with the insurance policies connected to the funeral plans. On May 30,
            a special counsel was appointed by Missouri regulators to determine how NPS got
            into trouble.

            MARKETING CALLED AGGRESSIVE

            NPS wasn't alone in targeting the newly bereaved, the elderly or families who
            owned burial plots in its cemeteries. But its high-pressure, slick sales pitch
            was unusual. The company homed in on potential customers' desires to spare
            their families the expense and grief of making funeral arrangements.

            Interviews with regulators and customers, documents from lawsuits and NPS' more
            than 100-page sales manual paint a picture of how the company sold the
            contracts. The company had a direct sales force that sold contracts through
            Forever cemeteries as well as for funeral homes that agreed to serve as agents
            for NPS.

            The NPS sales manual includes scripts and step-by-step instructions on how the
            salespeople should approach potential customers, gain entry to their homes and
            present the "Gift of Love" sales pitch describing the services that will be
            delivered when the buyer of a prepaid contract dies.

            NPS recommended that salespeople call on families whose loved ones have been
            buried at Forever cemeteries and at funeral homes that had contracts with NPS.
            They also asked for referrals to other family members, neighbors and friends.

            One tactic, called the "Cloud Story," calls for the salesman to describe the
            deceased looking down on his family struggling with funeral arrangements. His
            widow is being forced to answer many questions, decide on a casket and plan a
            service when grief makes it nearly impossible to act.

            The salesman describes the prepaid contract, called a "memorial account," as a
            way to take care of the arrangements ahead of time, relieving families of
            stress and locking in the cost of the funeral. Charts that showed funeral
            prices escalating dramatically in the future were used to reinforce the message.

            For widows, the manual suggests that the salesman appeal to her desire to help
            children by making arrangements ahead of time. The pitch also includes a
            "grandchildren protection plan" that would cover funerals for unmarried
            descendents who die before they turn 21, in addition to the funeral for the
            person buying the contract.

            Attempts to contact NPS about its practices were unsuccessful. Most of the
            company's sales and marketing employees were laid off when the company stopped
            selling funeral contracts this year.

            However, one funeral director said it's unusual to market the prepaid plans as
            aggressively as NPS did. In most cases, the director said, funeral homes sell
            the policies mainly when customers ask for them.

            Too often, consumers fall for the "nice sales talk" used to market prepaid
            funeral contracts, said Josh Slocum of the Funeral Consumers Alliance, a
            national group that monitors funeral practices. Salesmen from NPS and other
            purveyors of prepaid funeral contracts often target elderly people or the newly
            bereaved, promising them a way to lock in the costs of funerals.

            But Slocum said the contracts seldom cover every aspect of a funeral, so
            consumers often are surprised at what they have to pay even if they have a
            contract. Cemetery charges for opening or closing the grave, outer burial
            containers, flowers or an honorarium for a clergyman to conduct the funeral
            often aren't covered.

            However, Todd Mahn, a funeral director in DeSoto and Festus, said prepaid
            contracts usually benefit consumers more than funeral homes. Most funeral
            homes, he said, often lose money on the contracts because inflation pushes
            costs up over time.

            INSURANCE QUESTIONS

            The NPS sales manual doesn't mention how the funds will be invested or secured
            in the "memorial account." A sample NPS contract obtained by the Post-Dispatch
            says it's funded by insurance, but it doesn't specify what type of insurance
            would be used or which company would provide it.

            According to documents filed in late April by Missouri insurance regulators,
            NPS initially used funds from contract sales to buy whole-life insurance
            policies from Lincoln Memorial.

            In Missouri, an independent trustee, Bremen Bank & Trust Co. of St. Louis, held
            the whole-life policies and typically was the beneficiary. Bremen was
            responsible for cashing in the policies and paying the funeral homes upon the
            death of the contract holder. In other states, NPS acted as its own trustee and
            was responsible for paying the funeral homes.

            Missouri regulators say Lincoln switched an undetermined number of whole-life
            policies to less costly term-life policies, without notifying Bremen. Lincoln
            also loaned money to NPS, putting up the insurance policies as collateral,
            again without notifying the trustee. Regulators from other states say NPS
            followed a similar pattern in their jurisdictions.

            Whole-life and term policies differ dramatically.

            Whole-life policies always have some cash value, which means they can be used
            to pay for funerals even if the policyholder stops paying the premium, said
            Doug Slape, chief analyst with the Texas Insurance Department's financial
            program. Term policies have no cash value, and they're worthless if the
            policyholder stops paying premiums.

            Typically, term-life policies are taken out by younger people, such as parents
            with children. The polices pay a fixed amount if the policyholder dies before
            the term expires.

            In April, Missouri insurance regulators said the loans and the substitution of
            term policies for whole-life policies without notice to Bremen or contract
            holders was illegal. They ordered Lincoln to replace the term policies with
            whole-life policies. On May 2, Lincoln agreed to abide by the order.

            Through a spokesman, Bremen Bank said it was unaware that the policies were
            being switched to term policies. The bank also said it didn't know that loans
            were taken out against the policies.

            Funeral homes face a major financial risk, Slape said. The prepaid contracts
            obligate funeral homes to pay for funerals for any consumer who has a contract
            with them.

            A Missouri insurance official last week cited the financial strain experienced
            by some funeral homes and holders of prepaid contracts as a reason for the
            state to appoint a special counsel to investigate the companies.

            While investigators from around the country are looking at NPS, Texas
            effectively has taken the lead. It appointed a receiver who is expected to
            determine by late summer whether the insurance companies, Lincoln and Memorial,
            will have to be liquidated. If they're liquidated, benefits could be limited to
            the face value of insurance policies backing the contracts.

            Regulators suspect that many of those policies have little value, although
            further details haven't been released.

            An audit of Lincoln Memorial Life, conducted last year by Texas regulators,
            raised questions about whether there is enough money to pay funeral claims in
            that state as well as about irregularities in transactions. Missouri regulators
            have expressed the same concerns.

            Texas officials also are trying to determine who authorized the switches to
            term policies from whole-life..

            "There were things that didn't fit with the normal practice or their ability to
            cover the insurance they had written," said Greeley, the Texas Department of
            Insurance spokesman.

            Texas placed the insurance companies under supervision in October and tried to
            work with the Cassity family to resolve the problems. The Cassitys initially
            agreed to advance money to NPS, but negotiations with the state broke down.

            In April, Texas forced NPS and the insurance companies to hire Dan Watkins, a
            former assistant attorney general in Kansas, as an independent manager.
            Watkins' term of employment isn't definite, Greeley said. He remains the
            manager of the companies while the receiver seeks to reorganize them.

            One of Watkins' tasks is to determine where the proceeds of the prepaid
            contracts went, Greeley said.

            [email protected] | 314-340-8384


            they are bad people.
            Sometimes elections have positive consequences!

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